IT demand and headquarters relocation helped keep the market stable despite the sluggish economy
We expect that the vacancy rate probably will increase by 2.5 pps YOY in 2020 due to large-scale new supply in the YBD*. After peaking in 2020, new supply should decline in 2021, providing an opportunity for tenants to secure the benefit of long-term lease contracts of five years or more before market conditions change. Tenants should use increased new supply in 2020 to relocate their offices. Tenants should be able to get rent free benefits in 2020, the year in which new supply is concentrated. Amid investors’ active appetite for office acquisitions, the number of transactions in the YBD area probably will increase due to the concern about the huge office supply in YBD in 2020. If ongoing deals close successfully in this year, the total transaction volume for 2019 probably will be similar YOY.