Office rents to drop in quake aftermath, rebound in 2012: JLL


Rents of class A office buildings in Tokyo will decrease by 3% to 5% in 2011 as a result of the impact of the Great East Japan Earthquake. Jones Lang LaSalle made this forecast in its report titled “The Impact of the Tohoku Earthquake on the Office Market in Tokyo” released on April 18, also suggesting that rents would rebound and increase by 5% to 10% in 2012.
JLL believes that office expansion and consolidation demand will weaken as corporate performance grows uncertain due to restricted corporate activities and reduced consumption resulting from the power shortage. Primarily foreign companies are looking at relocating their offices to locations in western Japan such as Osaka and Fukuoka, which will also weigh negatively on the Tokyo market.
Based on these circumstances, JLL predicted that rents for offices in Tokyo will drop in the short term. As demand related to reconstruction efforts will help the economy pick up, however, JLL forecast the class A office building market will start recovering in 2012.
Meanwhile, some investors are putting property acquisitions on hold, but in most cases, this was due to the need for a physical damage inspection to assess the earthquake’s impact on the buildings.
“Foreign investors, who have made investments from a global and mid- to long-term perspective, have expressed positive views towards investment in Japan, and have flagged potential opportunities and their intention to increase their presence in the market,” JLL commented. Foreign lenders have not shown any change in their financing attitude, and there is also no significant change in the financing environment at the moment.

[Related site]
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