New research reveals office rents in Japan decline steadily due to aging, with large properties depreciating faster than smaller ones.
Office rents in Japan depreciate at an annual rate of 1.4% for approximately 25 years after construction, according to a study using lease contract data from XYMAX Group. The decline slows thereafter, aligning with trends observed in U.S. commercial properties.
The research highlights that depreciation rates vary by property size, with large-scale offices losing value slightly faster than small-to-medium ones. Small-to-medium properties continue depreciating even after the initial 25-year period, while large properties stabilize.
The study updates the Bank of Japan’s Services Producer Price Index methodology, which previously relied on 2007 data and did not account for recent market shifts.