The logistics sector in Japan is expected to continue its upward trajectory, driven by strong demand and a tightening supply pipeline. According to Savills, the leading global real estate advisor, vacancy rates in Greater Tokyo have declined for the first time since 2020, while Greater Osaka has absorbed new supply with only a modest increase in vacancy.
Supply Constraints Support Rental Growth
Savills’ report highlights the impact of supply constraints on rental growth. As construction and land costs rise, combined with labor shortages, new supply is expected to decline nationwide, further tightening market conditions. This development will likely place upward pressure on rents, with increases being passed through the supply chain.
Automation and Digitalization Transform the Sector
Structural shifts are also transforming the logistics sector in Japan. Operators are accelerating automation and digitalization to address labor constraints, leading to modern facilities designed for efficiency. These new facilities often feature multi-tenant layouts, advanced systems, and worker-focused amenities.
Autonomous Freight Transport on the Horizon
Government initiatives to introduce autonomous freight transport are progressing, with limited operations targeted from 2027. This development has the potential to further transform the logistics sector in Japan, driving innovation and efficiency gains.
Sector Remains Resilient Amid Higher Operating Costs
Despite higher operating costs, Savills expects the logistics sector to remain resilient, supported by inflationary conditions and sustained occupier demand. The sector’s strong fundamentals will likely see it continue to thrive in the years ahead.
A Strong Outlook for Japan’s Logistics Sector
- Declining supply and ongoing operational reforms position the sector for sustained momentum.
- Rising development costs will put upward pressure on rents, with increases likely to be passed through the supply chain.
- The sector remains resilient amid higher operating costs, supported by inflationary conditions and sustained occupier demand.
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