"There are not enough offices." If we were to sum up Tokyo's real estate market in 2025 in a single phrase, this would be it.
According to CBRE research, new office demand across Tokyo's 23 wards in 2025 is projected to reach a record high of 330,000–360,000 tsubo (approximately 1.1–1.2 million square meters), while new supply is expected to fall short of even 55% of that figure, at just 180,000 tsubo. The vacancy rate has dipped below 5% — the lowest since the COVID-19 pandemic. Corporate executives are increasingly voicing frustration: they cannot find suitable relocation options, and rents keep climbing.
Yet we do not see this situation as a mere "temporary supply-demand mismatch." We view it as an important signal that the management structures of Japanese companies are undergoing a fundamental shift.
Why Is Office Investment Rising Now?
When remote work became widespread during the COVID-19 pandemic, there was intense debate about whether offices would become obsolete. Indeed, between 2020 and 2021, many companies downsized their office footprints and vacancy rates rose sharply. So what happened to that trend?
The answer is straightforward. The value of "a place where people gather" is not fundamentally a productivity question — it is a cultural one. When a company truly wants to attract top human capital, it needs not only a well-equipped remote work environment, but also a physical space that makes people want to be there. The location of headquarters, the quality of the floor, the prestige of the address — these are part of the corporate brand, and they send a silent message in the competition for talent.
In our daily interactions with ultra-high-net-worth individuals and executives of high-growth companies, we consistently observe that the emphasis on "place" has grown stronger than ever. This is not a conversation about luxury — it is a conversation about strategy.
The Structural Problem: "We Cannot Build"
Rising construction costs are often cited as the reason supply is not increasing, but the core of the problem runs deeper. Labor shortages in the construction industry, procurement difficulties for materials, and increasingly complex administrative procedures have combined to create a structural barrier: companies want to build, but simply cannot.
Major projects such as Torch Tower (scheduled for completion in 2028) and NTT Hibiya Tower will certainly contribute to a medium- to long-term increase in supply. However, they will not arrive in time to address the acute shortages of 2025–2026. In other words, companies that need office space now must shift their thinking — not toward "waiting for new construction," but toward "how to make the most of existing stock."
From this perspective, properties that are older in age but well-located and well-maintained are gaining relative value, and interest in renovated properties and those repurposed for office use is on the rise. Among the properties we manage and broker, there are indeed such "hidden gems."
The "Real Risk" as We See It
In this market environment, many commentators focus on the risks of "rising rents" and "inability to secure space." That is true. But the "real risk" we see lies elsewhere.
It is the risk of slow decision-making.
In a supply-constrained market, the speed at which prime properties are leased increases dramatically. While one company is still deliberating internally, another makes a decision and signs the contract. The luxury of "spending several months negotiating on a property you like" no longer exists in today's Tokyo office market.
What we consistently tell executives is this: "Apply the same speed to real estate decisions as you would to any major business decision." We are entering a market environment where the failure to act out of fear of making a mistake can become the most costly choice of all.
The Osaka and Kansai Market: An Alternative Perspective
While the office shortage is often discussed in the context of Tokyo's concentration of corporate headquarters, we would like to add a perspective from our position as a firm with a base in Osaka: the re-evaluation of the Osaka-Kansai region.
The 2025 Osaka-Kansai Expo, the Integrated Resort (IR) development plans looking ahead to the 2030s, and broader infrastructure investment across the Kansai economic zone are all converging to bring steady change to Osaka's office market. We expect that companies finding it increasingly difficult to secure space in Tokyo will continue to relocate some of their functions to the Osaka-Kansai region.
By maintaining bases in both Tokyo and Osaka, we are positioned to provide a one-stop solution for these multi-city real estate needs.
Human Capital and Real Estate: Inseparable Management Resources
Finally, we want to share the perspective we consider most important.
The most valuable asset for any company is its human capital. Ensuring that human capital can perform at its highest level is one of the core responsibilities of leadership. We believe offices should be viewed not as a "cost" but as an "investment in human capital."
It is not uncommon for a candidate's decision to accept a job offer to be influenced by the location and atmosphere of the office. The most talented individuals read a company's level of commitment from its physical space. The prestige of headquarters, the quality of the working environment — these are intangible assets that shape the corporate brand, and they are important targets of investment from the perspective of human capital management.
"Where you plant your flag" is not merely a real estate decision — it is a declaration of your management philosophy and the kind of company you aspire to be. We are proud to serve as your partner, fully supporting your decision-making every step of the way.
