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Osaka office market Q2 2022 review and outlook

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Osaka 1560 1040

Market withstood large supply with vacancy remaining flat


On August 10, Colliers Japan released "Osaka Office Market Q2 2022 review and outlook". This report is based on Colliers Japan's analysis of the rental office market and future outlook for Grade A office buildings in central Osaka based on data collected independently by Colliers Japan.

Insights & recommendations

The vacancy rate remained flat, in part because a large building with nearly 30,000 tsubo of leasable floor area completed with high occupancy in central Osaka. We expect the pace of new supply to slow down until 2023, and we also expect the vacancy rate increase will flatten through 2023.

We recommend landlords and building owners lock in tenants for existing vacancies now, before the competition for tenants heats up with the large new supply coming online in 2024.

For tenants, the increasing vacancy in the existing offices and some developments in central Osaka scheduled to be completed in 2024 continue to provide a variety of choices which meet their needs for updated workplace strategies.


Supply: Large-scale building completed with high occupancy in central Osaka

The office floors of Osaka Umeda Twin Towers South opened with high occupancy, which pushed up overall net absorption. Going forward, we expect the pace of new supply to slow down until 2023, but we also expect the supply volume in 2024 to exceed the combined five-year supply from 2019 to 2023.


Vacancy & Rent Trends: Vacancy rates remain flat, but rents are falling
Although there was one new building in Q2 2022, its high occupancy rate restrained any impact on the vacancy rate. From H2 2022, the pace of new supply is expected to slow, however we expect rents to continue declining slightly, as landlords prioritize occupancy over rents.


Submarkets: Vacancy rate falls in some areas with remaining vacancies filled
In the Shin-Osaka area, where vacancy rates rose sharply since Q3 2021, some remaining vacant space has been filled, pushing down the vacancy rate. In Umeda, where there was large supply, the vacancy rate increase slightly accelerated.

 

*1  The Grade A office buildings surveyed were selected on our own criteria from office buildings for lease with a typical floor plate of approximately 300 tsubo or more.

 


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Osaka office market Q2 2022 review and outlook

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Kohei Kawai

Director & Head

Research

Tokyo

As Director and Head of Research, Kohei is responsible for leading the research team in Japan with his strong capabilities in the field while moving into a more client-focused role, working closely with our existing client base and internal stakeholders across multiple functions. Reporting into the Managing Director in Japan, Kohei is leading and growing the local research capability with clear and ambitious targets for our clients, producing strategic, rigorous and actionable research that integrates our services across the region.
With 17 years of experience in the real estate industry, Kohei was responsible for analysing real estate market data for internal and external dissemination at XYMAX Real Estate Institute. His rigorous, strategic analysis contributed to developing business strategy plans and making management decisions, leading a team to produce data analyses for various businesses in the commercial real estate sector. 
 

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