Tokyo Commercial Land Prices Hit 33-Year High as Office Vacancy Rate Drops to 0.8%
nashnova research
Tokyo commercial land prices topped ¥3 million per square meter, the highest since the 1993 bubble; office vacancy in the five core wards fell to 0.8%, handing landlords full pricing power and signaling a shift from post-Covid recovery to a supply-starved seller's market.
Land prices at a 33-year high — is the bubble back?
Tokyo commercial land averaged ¥3 million per square meter in 2026, up 11.4% year-on-year, marking the fifth straight annual gain at an accelerating pace.
Yet the 1993 bubble peak was ¥4.18 million. This means → today's level is still nearly 30% below that top — a demand-driven recovery, not a rerun of the bubble.
In plain terms = prices are climbing fast, but the distance to the last blow-off top provides a margin of safety.
What does a 0.8% vacancy rate actually mean?
Large office buildings across Tokyo's five core wards — Chiyoda, Chuo, Minato, Shinjuku, and Shibuya — had a vacancy rate of just 0.8% as of end-June, far below the 5% equilibrium benchmark.
In plain terms = only 8 out of every 1,000 offices sit empty — landlords can pick tenants and raise rents instead of competing for them.
Average office rent reached ¥42,109 per tsubo, up 16.4% year-on-year. This reflects a sustained return-to-office trend, with real corporate demand backing the numbers.
Ryota Takemoto, a senior researcher at Mitsubishi UFJ Trust Banking, expects new supply to stay low for five years, with vacancy continuing to fall through 2027 and rents rising further.
Why is Taito Ward the biggest gainer?
Among Tokyo's 23 wards, Taito posted the largest increase at 19.6%. Land near Senso-ji temple hit ¥4.9 million per square meter, up 26.9% — the steepest gain citywide.
This means → the driver is not office demand but tourism. International visitors to Tokyo reached 28.65 million in 2025, up 15.6% to a record high, fueling hotel and retail land demand.
19 of 23 wards posted double-digit gains, one more than the prior year — the rally is spreading outward from the core.
Is the residential market heating up too?
Tokyo residential land prices rose 5.8%, reclaiming the top spot nationwide for the first time in 12 years, overtaking Okinawa.
Average prices for new condos in the 23 wards exceeded ¥140 million in the first half of 2026. In plain terms = one new apartment in central Tokyo now costs roughly $900,000 on average — a steep entry point.
Yet there are early signs of cooling in the resale segment: the average listing price for secondhand condos in July was ¥127 million, down 0.1% month-on-month for the second consecutive month.
Why is foreign capital accelerating into Tokyo?
CBRE data shows total Japanese real-estate investment hit ¥7.03 trillion in 2025, up 41.3% year-on-year — the highest since comparable records began in 2005.
Residential property investment surged 86.2% to ¥984.3 billion, with foreign capital as a key driver — Canada's Brookfield alone has acquired over ¥100 billion in rental-apartment assets across Tokyo and major metro areas.
This means → global institutional money now treats Tokyo as a core Asia allocation target, drawn by low interest rates, near-full occupancy, and yen valuations that still look attractive.
Institutions piling in while individuals cool off — how to read the contradiction?
Institutional capital is flowing in at record volumes. Secondhand condo prices are slipping for two months running. The two forces point in opposite directions.
This reflects a structural divergence in Tokyo's property market: institutions buy entire rental blocks and commercial buildings, underwriting rental yield; individual buyers face a ¥140 million average new-condo price that stretches affordability to the limit.
In plain terms = the big money is still pouring in, but ordinary buyers are starting to hesitate. This divergence is the key variable to watch for Tokyo real estate's next move.
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