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Office vacancies in Tokyo at lowest rate since 2009

Bloomberg

The office vacancy rate in Tokyo fell in September to its lowest level in four years as the amount of space taken up in the month more than doubled, according to broker Miki Shoji Co.

The rate, a measurement of unoccupied space, fell to 7.9 percent last month from 8.16 percent in August and was at its lowest since October 2009, according to data released Thursday by the Tokyo-based company.

The Topix Real Estate Index rose 1.1 percent to its highest closing level since Oct. 1.

Tokyo’s office market is improving amid a return of confidence among large businesses as Prime Minister Shinzo Abe introduces extra stimulus to boost the economy ahead of the consumption tax increase scheduled for April.

The Bank of Japan has pumped $404 billion into the financial system since April, pushing down the value of the yen, boosting both exports and the country’s banking industry.

“The vacancy rate was better than I had expected,” said Daisuke Fukushima, an analyst at Nomura Securities Co. who had predicted the rate would decline to 8 percent. “Economic sentiment is improving and that has had a positive impact on the office market.”

Large businesses now are the most confident they’ve been since before the collapse of Lehman Brothers Holdings Inc.

About 19,000 “tsubo” of space was absorbed in one month, according to the Miki Shoji report. That is more than double the 8,400 tsubo of space signed in August, it said. One tsubo is 3.3 sq. meters.

“We expect the Bank of Japan’s monetary easing to produce the desired effects and look for increases in government spending and public works investment to continue through 2015,” Masahiro Mochizuki, an analyst at Credit Suisse, wrote in a research note Monday. “Under this scenario, strong demand for office space should drive down vacancy rates in Tokyo’s five central wards from now through 2015.”