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• By April 2021, office-focused listed real estate companies became the worst-performing segment in the MSCI World Core IMI Real Estate Index, on a cumulative basis since January 2020.
• Office’s relatively poor recent performance upset the pattern of returns — across regions and public and private markets — seen in 2020, when industrial outperformed, retail and hotels lagged and office and residential had middling returns.
• Private-market data has not shown such a shift in sector-performance rankings but, looking deeper, we can see the performance of office assets has varied by location type and lease structure.

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- The vacancy rate for Large Multi-Tenant (LMT) logistics facilities in the Greater Tokyo area rose by 0.6 points q-o-q to 1.1% in Q1 2021, marking the first time the vacancy rate has exceeded 1% since reaching 1.1% in Q4 2019. Although the unprecedented surge in demand for facemasks and other daily necessities triggered by the COVID-19 pandemic led to stronger competition for logistics space in 2020, activity now appears to have eased.  That said, overall demand remains stable.

- The LMT vacancy rate in the Greater Osaka area fell to 1.9% in Q1 2021, down 1.8 points q-o-q. This marked the first time the vacancy rate has dropped below 2% since Q2 2016, when it also stood at 1.9%. The fact that rents have risen by 13% over the past two years, combined with increasing uncertainty over future economic performance, has meant that tenants are becoming more cautious, slowing the pace of rent increase.

- The LMT vacancy rate in the Greater Nagoya area fell by 1.7 points q-o-q to 8.6% this quarter. With some 170,000 tsubo of new floor space coming available in 2022, owners are stepping up their promotional campaigns to attract tenants.

- This quarter, CBRE has initiated the publication of LMT indices for the Greater Fukuoka area, where the vacancy rate has remained at 0.0% since Q2 2019. With development of multiple new LMT facilities now underway, properties possessing more user-friendly layouts will command an advantage over the competition.

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• Industrial GVA was negative at -6.7% Q4 2020.
• Average super prime industrial rents were up 0.4% across the quarter. Australian super prime rents average $113/sqm
• Super prime yields have compressed by 57 bps y-o-y resulting in record low yields
• Land values for 1.6ha lots increased by 2.5% q-o-q averaging $570/sqm while 0.25ha lots increased by 5.4% q-o-q to $719/sqm.
• Transaction volumes. Transaction volumes above $5m totalled $393m across 18 transactions. This is 78% down on volumes recorded in Q1 2020.

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• Investment sentiment has improved since the abolition of double stamp duty in November 2020.
  
• Property funds accounted for 33% of investment volume in Q1 2021, including half of the ten largest deals.
  
• Industrial transactions represented 43% of total investment volume, the highest proportion since Q4 2005.
  
• CBRE expects new standard rates for lease modification for industrial redevelopment to boost investment in the sector this year.

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