TOKYO -- The office vacancy rate for Tokyo's five downtown wards has fallen to 3.94% -- the lowest level in roughly eight years -- according to figures announced Wednesday by office brokerage company Miki Shoji.
Vacancy rates in Chiyoda, Chuo, Minato, Shinjuku and Shibuya wards in the heart of Tokyo touched a low in 2007 during what has been called the fund bubble era and then began to climb. As a result of economic sluggishness sparked by the Lehman shock of 2008 and the Tohoku earthquake of 2011, vacancy rates reached 9.43% in June 2012. Since then, however, they have been on a downward arc as a rebounding economy has lifted demand for office space.
In particular, vacancy rates have dropped as tenents flock to office buildings completed in the past several months. The JR Shinjuku Miraina Tower, which was completed in March, is already virtually at full occupancy, according to JR East Building Co. Mitsubishi Estate's Otemachi Financial City Grand Cube and Seibu Properties' Kioi Tower were also both full when they opened their doors.
Companies enjoying strong performance are adding personnel, necessitating more office space. The desire to boost efficiency by consolidating multiple locations has pushed occupancy rates higher in large buildings.
Average lease rates have risen to the highest level in nearly six and a half years, although the recent increase was small. The average asking rent in Tokyo's five downtown wards is 18,271 yen ($180) per 3.3 sq. meters. The rate has now increased for 31 straight months but has yet to reach the levels seen before the Lehman shock.