[Latest Office Market Report Released] Office Vacancy and Potential Vacancy Rates Remain Flat

Sanko Estate Co., Ltd. (Headquarters: Chuo-ku, Tokyo; President: Shojiro Fukushima) has released the "Office Market June 2026" report, summarizing market data for large office buildings*1 in central Tokyo's five wards (Chiyoda, Chuo, Minato, Shinjuku, Shibuya) and six major cities nationwide (Tokyo, Sapporo, Sendai, Nagoya, Osaka, Fukuoka) for May 2026.

*1: Large buildings = Rented office buildings with a floor area of 200 tsubo or more per floor. *Survey as of: May 31, 2026, and as of December 31 of each year.

Vacancy Rate & Potential Vacancy Rate for Large Buildings in Central Tokyo's Five Wards

Vacancy rates remained almost flat from the previous month. The downward trend is expected to continue due to the low level of new supply.

The vacancy rate was 1.12%, down 0.03 points from the previous month. While new buildings with vacancies were completed and secondary vacancies emerged, vacancy absorption progressed through relatively large-scale expansions within buildings. The potential vacancy rate was 2.56%, up 0.01 points from the previous month. Although both rates remained almost flat, the downward trend is expected to continue as new supply remains at a low level.

Rental Rate Rise for 7 Consecutive Months; Strong Sense of Scarcity for Available Floor Space

Rental rates have risen for seven consecutive months. Rent levels in central Tokyo have increased, and there is a strong sense of scarcity for available floor space, with some cases where tenants cannot find relocation properties that fit their budgets. In addition, against the backdrop of supply constraints and soaring crude oil prices due to the worsening Middle East situation, costs required for pre-move-in construction and restoration work have risen further. Tenants are required to bear costs exceeding their initial expectations, which makes decision-making difficult in some cases.

28 Consecutive Months of Increase Since February 2024

Year-on-year growth in rental rates has been positive for 28 consecutive months since February 2024. The pace of increase over the last three months has been in the 10% range, a level comparable to February 2008, before the impact of the global financial crisis.

Analyst Perspective

Although the possibility of an economic slowdown is increasing due to the prolonged conflict in the Middle East, there is a tendency for the free-rent period to lengthen before office rents shift to a downward phase. Therefore, there is often a time lag before it affects quantitative data. In addition, when looking at rental rates year-on-year, the trend is relatively stable, and the upward trend in rents is expected to continue. (Market Research Office: Toyokazu Imazeki and Hiromi Tsuda)