Until recently, there has been little progress in the development of Large multi-tenant (LMT) logistics properties in the Greater Nagoya Area. Consequently, the market has been extremely tight, with the vacancy rate standing at 0% at the end of Q3 2016.
Aichi Prefecture ranks #1 in Japan for the value of manufactured goods shipped, and the area’s population continues to grow. Demand for logistics facilities is therefore expected to remain strong for both industrial and consumer goods.
New supply is forecast to be 150,000 tsubo over the next two years. Although this will be a volume equivalent to the stock of space in Q3 2016, it is unlikely to resolve the shortage of logistics facilities, given the strength of latent demand.
The vacancy rate is forecast to rise to around 15% in Q2 2017, when new supply will peak. However, the vacancy rate is then forecast to trend downwards, and is likely to settle at around 9% by Q4 2018.
Effective rents began to rise at a faster rate in H2 2014. As of Q3 2016, effective rents stood at JPY 3,410 per tsubo, 17% above the market trough. They are expected to continue to rise at a moderate pace.