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Logistics MarketBeat is a brief summary of the logistics sector in Japan, providing comment on recent trends as well as market data and analysis of the impact on the commercial real estate.


Distribution Costs On the Rise

The Japanese economy grew by 2.5% in the second quarter, marking the sixth consecutive quarter of growth. The tight labor market with an unemployment rate below 3% is putting upward pressure on wage growth. This is particularly evident in the Logistics sector as there are an increasing number of cases where increasing costs are being accepted, just to maintain operations. It appears just a matter of time before those costs are transferred into groceries.

Gaikan & Route 16 Areas Sustain High Rents

Rent growth for the Gaikan & Route 16 areas has been observed since Q2 2017, thanks to access to labor. By contrast, the Kenoh area alongside the Tohoku Road towards Ibaraki prefecture is showing more vacancy with increased supply and weaker access to labor. The supply-demand balance in Kenoh Road Saitama & Kanagawa Inland areas appears stable. While the Osaka Inland area shows strong leasing activities, the competing Osaka Bayside area is losing its momentum. Supply and demand in Fukuoka continues to be in balance and change has not been observed.

Asset Selection Evident due to Labor Accessibility

Transport access for commuters has become more a rental driver than ever, and the polarization of demand will progress further with the labor accessibility. Although there is little room for further growth in the Metropolitan Bayside area, there still appears room for growth for assets in good locations in the Gaikan and Route 16 areas.