Shinjuku records the largest annual office rent decline in Tokyo 

Rents declined 3.3% in Q2.

In the second quarter of 2022, office rents in Shinjuku declined 3.3% QoQ to JPY26,750 per tsubo, translating to an annual decline of 13.7%. According to Savills, this is the largest annual decline in the C5W by far. 

“It is also clearly the cheapest ward in the C5W, and the only member to have seen average rents dip below JPY30,000 per tsubo. Meanwhile, vacancy has loosened by 0.7ppts this quarter to 2.5%,” Savills adds.

Here’s more from Savills:

There have also reportedly been some movements into the ward. For instance, system integrator Otsuka will be moving from its current premises in Koto to the Sumitomo Fudosan Iidabashi Building No. 3 where it will take a 1,300 tsubo lease. With the largely corrected rents in Shinjuku and the pandemic approaching an endemic stage, the ward could see some recovery as some opportunistic companies look to take advantage of the situation and secure discounted rents. 

Despite the grim situation in Shinjuku, it is important to note that some buildings are faring notably better than others. In general, buildings that are older and located further away from main stations are doing poorly, while newer buildings with good accessibility are performing well. 

Overall, Shinjuku station is a key terminal station in Tokyo, and offices that have good access to it should remain stable while some other buildings might take a longer time to recover. Upcoming developments around Shinjuku station should also improve the attractiveness of the area and spark new interest in the submarket.