The recent restrictions on leaving one’s home to prevent the spread of COVID-19 are likely to accelerate the use of e-commerce in total push up demand for logistics facilities in Tokyo, according to CBRE Japan.

CBRE Japan Research's latest report on the sector found while the floor area requirements differ between the central and suburban areas of Greater Tokyo, e-commerce is likely to drive logistics demand in both these areas for some time to come.

Data from the firm indicates that demand for logistics facilities showed significant growth during 2019, with net absorption of Large Multi-Tenant (LMT) properties in the Greater Tokyo Area exceeding 700,000 tsubo in 2019.

This amounts to 1.6 times the net absorption figure recorded in 2018.

According to the report, pre-leasing has also progressed at properties currently under construction.

Of the 430,000 tsubos of LMT space scheduled for completion in the Greater Tokyo Area in 2020, 49.7 per cent of the total has already been pre-let (as of Q4 2019, CBRE estimate) - the strongest level of demand for logistics ever seen in Japan. 

CBRE Japan Research Executive Director Kazuko Takahashi said e-commerce had been a "particularly strong" driver of demand for logistics facilities.

"Until recently, third-party logistics (3PL) occupiers were the primary driver of logistics demand, and they benefited from the trend towards outsourcing logistics functions by Japanese corporates," he said 

"According to CBRE's research for the Greater Tokyo area LMT market as of January 2020, 3PL occupiers accounted for 61 per cent of tenants contracted prior to end-2018.

"This was followed by retail/wholesale sector with a 20 per cent share, and e-commerce with 8 per cent. 

"On the other hand, looking at lease contracts or pre-leases with tenants in 2019, the e-commerce share increased to 30 per cent.

"While the logistics sector share remains the highest at 44 per cent, e-commerce is now becoming the key driver of demand."

Click here to download a copy of the report.

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