Tokyo Prime RetailMarket Summary2016 Q4

Retail indicators shows signs of improvement There were signs of improvement in consumption as the decline in large scale retail store sales in Tokyo eased from October (-3.0% y-o-y) to November (1.2% y-o-y). Visitor arrivals continued to rise during the same period, supporting a recovery in tourist consumption which grew 1.3% y-o-y in 4Q16 compared with a 2.9% y-o-y dip in the previous quarter.

Demand holds up but retailers increasingly cautious Although healthy demand persisted for prime retail space in 4Q16, an increasing number of retailers were cautious about new store openings given the changing spending patterns of visitors. Key openings in the quarter included Cartier Ginza Boutique, Ginza Kitcho and Bills at the newly opened Okura House.

Rents grow moderately in Ginza Rents at end-3Q16 averaged JPY 275 ,000 per tsubo per month in Ginza, flat q-o-q and increasing 1.9% y-o-y while that averaged JPY 215,000 per tsubo per month in Omotesando, flat q-o-q and y-o-y.

Outlook: Rental growth to slow further in 2017 According to Oxford Economics, nominal private consumption is expected to rise 0.8% y-o-y in 2017, supported by rising disposable income which is forecasted to grow 1.8% y-o-y. The number of visitor arrivals is anticipated to increase, but the slowdown in tourist consumption could persist given the shift in spending from luxury goods.

Despite the tight-demand supply environment, rental growth is expected to be moderate as rents near the previous peak level.

Kenji Yoshikawa / Associate Director / Retail Services+81 3 5511 3383 kenji.yoshikawa@ap.jll.com

COPYRIGHT© JONES LANG LASALLE 2017

Disclaimer : The JLL prime retail rent value is the intellectual property of JLL. Prime retail rents have been estimated taking into account interviews with market participants, comparable transactions in the vicinity and economic indicators, and do not suggest the feasibility of asking rents or achieved rents of individual cases. Leasing agreements of commercial space in prime retail areas vary by individual cases, and thereby unit rents vary widely depending on a range of conditions, including location, façade, total rent and leasing term.

Naoko Iwanaga / Research+81 3 5501 9239 naoko.iwanaga@ap.jll.com

Milan

Paris, Dallas, New York,Houston, San Francisco

Sydney

Mumbai

Delhi

DubaiBeijing,Boston

Moscow

Berlin,London

Los Angeles

Singapore

Hong Kong

Rental GrowthSlowing

Rental ValuesFalling

Rental GrowthAccelerating

Rental Values Bottoming Out

Americas

EMEA

Asia Pasific

TokyoShanghai

Washington DC

Madrid

Chicago

US positions relate to the overall marketSource: JLL, January 2017The JLL Property ClocksSM

Global Prime Retail Property Clock

3Q16 OutlookPrivate consumptionq-o-q +0.3%

2016 OutlookVisitor arrivalsy-o-y +21.8%

Nov 2016Large-scale retail store salesy-o-y -1.3% -

Department store salesy-o-y -1.4% -

↑↑

Source : CAO, Japan Department Stores Association, Oxford Economics, METI, JNTO

Ginza Chuo-DoriGround Floor

JPY 275,000per tsubo per month

USD 792 per sqft per annum

OmotesandoGround Floor

JPY 215,000per tsubo per month

USD 619 per sqft per annum

Source : JLL

↑

Outlook Outlook

Rents

Key Performance Indicators

↑

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