Jones Lang LaSalle has compiled the first quarter 2011 edition of its real estate market report, “Asia Pacific Property Digest.” The average rents for good office buildings, which JLL independently ranks as Grade A, in the three wards (Chiyoda, Chuo and Minato) of central Tokyo declined 1.3% quarter-on-quarter (QoQ) to 29,505 yen [$110 per m2].

The quarterly decline has remained around 1% since the second quarter of 2010, which JLL said in its report indicates that “the market is close to the bottom.” However, predicting that tenants are likely to adopt a wait-and-see approach toward office expansion in the aftermath of the Great East Japan Earthquake, JLL further estimated that “rental values will decline moderately” over the next 12 months.

Vacancy rates rose by 0.1 points QoQ to 5.9%. Net absorption, which indicates the amount of market demand, sharply decreased from the 90,000 m2 in the preceding quarter to 9,000 m2.

As factors behind the sharp decrease, JLL cited tenant relocations - most of which were for office consolidations - and a drop in new completions to 20% of that in the preceding quarter.

The survey is conducted every quarter and targets rental buildings in the three wards of central Tokyo. JLL defines Grade A buildings as buildings with 10,000 m2 or more of total rentable floor space that are 60 m or taller and that were completed in 1982 or later.

Note: Net absorption in the article represents [(advertised space at the beginning of the term) + (advertised space in the buildings completed during the term) – (advertised space at the end of the term)]


[Related site]
- Announcement from Jones Lang LaSalle (PDF)