What to expect from regional Japanese office markets for the rest of 2024

Temporary disruptions won’t detract from a longer-term growth trajectory.

In a report, Savills said modest rental growth and general improvements in vacancy have been observed across most regional office markets over the past half-year. Indeed, corporate performance has been encouraging, and many companies are taking the opportunity to carry out overdue office relocations and layout changes. 

“Moreover, companies nationwide appear to continue phasing out flexible work arrangements. The labour shortage is also increasingly incentivising companies to provide office layouts with superior amenities that support wellbeing. As such, the strong appetite among tenants for modern office space looks to reinforce this positive situation moving forward,” the report added.

Here’s more from Savills:

2024 will see large new office supply introduced to many regional markets, and temporal fluctuations are a distinct possibility. That said, pre-leasing appears to have proceeded uneventfully among many incoming developments, while developers are providing some incentives. Indeed, premium new office space should be welcomed as a sign of confidence in the growth possibilities of respective regional markets. Though secondary vacancies and bifurcation may be observed in areas with weakness, the sound overall appetite for office space should ensure the stable and gradual absorption of existing vacancies. 

We anticipate that this stable situation should continue throughout 2024. Temporary disruptions are likely to take place due to the completion of large amounts of new supply, but this should not detract from a longer-term growth trajectory, supported by strong business sentiment and demand for long overdue office relocations.