Tokyo Logistics Vacancy Tightens to 8.3%

Greater Tokyo's logistics vacancy rate fell to 8.3% at the close of 2025, down from 9.1% a year earlier, as net absorption outpaced new supply for the first time in five years. Tenant take-up reached approximately 2.4 million square metres against roughly 2.1 million square metres of fresh completions, reversing a prolonged oversupply cycle that had pressured rents since 2020. Average asking rents for prime Grade-A facilities climbed 2.7% year-on-year to JPY 4,520 per tsubo per month, with inner-ring submarkets commanding steeper premiums. The shift marks a decisive turn for one of Asia-Pacific's deepest industrial investment markets.

  • Vacancy rate (Greater Tokyo): 8.3% (down from 9.1%)
  • Net absorption 2025: ~2.4 million sqm
  • New supply 2025: ~2.1 million sqm
  • Prime rent: JPY 4,520 per tsubo/month (+2.7% YoY)
  • Prime cap rate: 3.8%

Market Context

The absorption surge is anchored by third-party logistics operators and e-commerce platforms scaling automated fulfilment networks within a 40-kilometre radius of central Tokyo. Submarkets including Ichikawa, Funabashi, and the Tokyo Bay corridor recorded vacancy tightening below 5%, while outer-ring Saitama and western Kanagawa still hold double-digit availability. Developers had paused speculative starts through 2024 after a glut of completions drove vacancy above 10% in mid-2023, and that supply discipline is now feeding through to landlord pricing power. Pre-leasing rates on projects scheduled for 2026 delivery have climbed to 62%, compared with 44% a year earlier.

Transaction volumes reinforce the recovery narrative. Japanese J-REITs and offshore institutional capital deployed an estimated JPY 1.1 trillion into logistics assets in 2025, a 14% increase over 2024, with GLP, ESR, and Blackstone-managed vehicles leading acquisitions. Prime cap rates compressed marginally to 3.8%, holding Tokyo as the tightest-priced industrial market in the region alongside Seoul. Cross-border buyers accounted for 38% of deal flow, led by Singaporean and Canadian pension capital seeking yen-denominated income hedges.

Pipeline Pressure Eases

Completions scheduled for 2026 total roughly 1.8 million square metres, the lowest annual pipeline since 2019, which should sustain the absorption-led rental recovery. CBRE and JLL research desks forecast vacancy falling to the 6.5% to 7.0% range by year-end 2026, with prime rents advancing another 3% to 4%. Construction cost inflation — steel, concrete, and labour collectively up 18% since 2022 — continues to deter new speculative starts, structurally constraining supply.

What This Means for Investors

For institutional buyers, Tokyo logistics now offers a rare combination of rental growth momentum and yield stability in a deep, liquid market. The 3.8% prime cap rate still delivers a spread of roughly 240 basis points over 10-year JGBs, attractive relative to Sydney at 150 basis points and Singapore at 120 basis points. Investors should prioritise inner-ring assets with automation-ready specifications, where tenant stickiness and rental reversion potential are strongest. Outer-ring plays remain viable but demand disciplined underwriting on lease-up assumptions given persistent submarket vacancy disparities.