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- The vacancy rate for Large Multi-Tenant (LMT) logistics facilities in the Greater Tokyo area rose by 0.6 points q-o-q to 1.1% in Q1 2021, marking the first time the vacancy rate has exceeded 1% since reaching 1.1% in Q4 2019. Although the unprecedented surge in demand for facemasks and other daily necessities triggered by the COVID-19 pandemic led to stronger competition for logistics space in 2020, activity now appears to have eased.  That said, overall demand remains stable.

- The LMT vacancy rate in the Greater Osaka area fell to 1.9% in Q1 2021, down 1.8 points q-o-q. This marked the first time the vacancy rate has dropped below 2% since Q2 2016, when it also stood at 1.9%. The fact that rents have risen by 13% over the past two years, combined with increasing uncertainty over future economic performance, has meant that tenants are becoming more cautious, slowing the pace of rent increase.

- The LMT vacancy rate in the Greater Nagoya area fell by 1.7 points q-o-q to 8.6% this quarter. With some 170,000 tsubo of new floor space coming available in 2022, owners are stepping up their promotional campaigns to attract tenants.

- This quarter, CBRE has initiated the publication of LMT indices for the Greater Fukuoka area, where the vacancy rate has remained at 0.0% since Q2 2019. With development of multiple new LMT facilities now underway, properties possessing more user-friendly layouts will command an advantage over the competition.

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• Industrial GVA was negative at -6.7% Q4 2020.
• Average super prime industrial rents were up 0.4% across the quarter. Australian super prime rents average $113/sqm
• Super prime yields have compressed by 57 bps y-o-y resulting in record low yields
• Land values for 1.6ha lots increased by 2.5% q-o-q averaging $570/sqm while 0.25ha lots increased by 5.4% q-o-q to $719/sqm.
• Transaction volumes. Transaction volumes above $5m totalled $393m across 18 transactions. This is 78% down on volumes recorded in Q1 2020.

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• Investment sentiment has improved since the abolition of double stamp duty in November 2020.
  
• Property funds accounted for 33% of investment volume in Q1 2021, including half of the ten largest deals.
  
• Industrial transactions represented 43% of total investment volume, the highest proportion since Q4 2005.
  
• CBRE expects new standard rates for lease modification for industrial redevelopment to boost investment in the sector this year.

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• While there were still companies such as those from the technology sector looking to expand their operations, other tenants are in the process of contemplating ‘rightsizing’ as they adopt remote working practices.

• Leasing activity also came from tenants looking for replacement space as they are being forced to move from older buildings slated for redevelopment later this year. Moreover, due to the construction delays in upcoming new buildings, tenants with expiring leases in the near term may renew their leases or look for alternative space now.

• Sentiment amongst landlords of Grade A offi ces has been bolstered by delays in new supply, more workers returning to offi ces as limits on remote working measures get lifted and a healthy offi ce investment market.

• The overall vacancy rate in Savills basket of CBD Grade A offi ce buildings continued to increase for a fourth straight quarter by 0.3 of a percentage point (ppt) to 7.3% in Q1/2021.

• In Q1/2021, although the URA’s offi ce rental index for the Central Region showed a 3.3% quarter-on-quarter (QoQ) increase, the average monthly rent in Savills basket of CBD Grade A offi ces fell for a fi fth consecutive quarter, albeit at a moderated pace of 1.2% QoQ, to S$9.41 per sq ft. We maintain our -5% YoY rental forecast.

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