Commercial Real Estate News
Japan's Retail Property Market Upticks in Early 2023
According to CBRE, Japan's national department store sales in the January-March quarter of 2023 was up by 14.2% year-over-year. The growth was driven by a double-digit increase in the number of customers visiting stores all through the quarter. The successful new-year sales in January (supported by no activity restrictions) contributed to this trend, and sales in February and March were boosted by clothing and other products, as opportunities to go out increased. Throughout the period, sales of luxury and duty-free goods also continued to rise.
Japan's consumer confidence index also rose by 2.6 points m-o-m in March 2023 to 33.9 points, the first increase in two months and also the largest single-month increase since June 2021. The major factors behind the improvement were the normalization of economic activity and rising wages.
Because of this, Tokyo's high street vacancy rate for Q1 2023 fell by 1.4 points q-o-q to 6.2%. The main reason for this fall was due to the opening of a pop-up store in a relatively large premise. Ginza high street rents rose by 2.8% q-o-q to JPY 257,600 per tsubo per month, marking a return to the pre-pandemic levels of Q4 2019. As in the previous quarter, the demand from luxury brands drove up the rents.
Osaka's high street vacancy rate for Q1 2023 also fell by 3.0 points q-o-q to 4.6%. This was due to the leasing of several vacancies in the Shinsaibashi-suji shopping district, including a space of over 200 tsubo. Shinsaibashi high street rents were up 7.9% q-o-q to JPY 164,000 per tsubo per month, with accelerated demand from drugstores and duty-free stores for properties in the Shinsaibashi-suji shopping district on recovering inbound tourist demand.
In addition, Nagoya's high street vacancy rate for Q1 2023 was flat q-o-q at 0.0%. As in the previous quarter, there were no new vacancies. High street rents in the Sakae district of Nagoya remained unchanged from the previous quarter at JPY 71,000 per tsubo per month. This quarter, a jewelry brand was confirmed as the new tenant for a property on the Otsu-dori high street which had struggled for some time to attract demand. The contracted rent was seen to be at par with the current market level.
