MA R K E T B E AT TOKYO Office Q1 2021

YoY 12-Mo. Bifurcation in Economic Recovery Chg Forecast The Business Conditions Index dropped 1.3pp m-o-m in February to record 89. A key factor was tight supply and demand for semiconductors and components, leading to a fall in automobile production and shipments. The BOJ’s tankan survey for large manufacturers’ sentiment improved to -3.54% plus 5 in March, matching the pre-COVID-19 level of September 2019. Exports have led the recovery, with economies such as the U.S. and China Rental Growth, YoY returning to steadier growth. However, face-to-face services have stalled, with sentiment among large non-manufacturers gaining only 4 pp to minus 1. The index was at plus 20 in December 2019, although it has recovered 16 pp from the bottom in March 2020. The unemployment rate 5.31% stood at 2.9% in February. The government estimates that unemployment of 2.7% in April-June 2020 was contained by around 3 pp thanks to the Vacancy Rate unprecedented support measures taken, such as employment subsidies, which far surpassed those of the Global Financial Crisis. -0.71% Vacancy Rate at Nearly Seven Year High Absorption, QoQ Average Grade A office asking rent in Q1 was JPY37,011, down 1.79% q-o-q. The overall vacancy rate rose 1.09 pp q-o-q to reach 5.31%, the tenth consecutive monthly rise and the highest level in six years and nine months. Asking rent in Shibuya Ward, which had peaked, started to drop immediately with COVID-19. However, lower rents attracted new tenants, and the vacancy rate edged down 0.11 pp in March. Vacancy rates in Minato Ward and Shinjuku Ward rose to 7.81% and 6.22%, respectively. The overall office vacancy rate in central Tokyo continues to climb as new JAPAN ECONOMIC INDICATORS supply enters amid the continuing trend of floor space reduction. In a Teikoku Databank survey, 85.6% of respondents indicated "no change," while Q4 2020 4.9% said "shrink" and only 4.1% stated "expand." Although floor space reductions are prevalent in the five central wards of Tokyo, they are less commonplace nationwide. But we can expect the trend to continue in response to the continuing pandemic and government measures. YoY 12-Mo. Chg Forecast Co-Working Sector Continues Expansion 11.7% As new ways of working evolve, the supply of co-working space is expanding, with firms from diverse industries – such as Fujifilm Business Real GDP Growth Innovation, AOKIHD, and Nippon Parking Development -- now entering the market. Rail and real estate players are expanding their presence. JR East aims to open 1,000 Station Work in-station offices by 2023 and offers teleworking plans at 14 Daiwa Roynet Hotels. West Japan Railway is planning 40 remote work locations at stations, while Tokyu Corp are operating New Work and Relark shared workspace offerings and Tokyu Bus is -1.0% testing the Satellite Biz Liner shared workspace-equipped commuter bus. With a wide variety of co-working businesses emerging, the supply side is Core CPI Growth responding to the new normal.

New Supply (Tokyo 5 Wards) Asking Rent & Vacancy Rate (Tokyo 5 Wards)

3.0% Tsubo C&W FORECAST JPY/Tsubo/Mon C&W FORECAST Unemployment 3,00,000 40,000 10% 35,000 8%

Source: Cabinet Office, Statistics Bureau. GDP Growth is 2,00,000 30,000 6% annualized, based on the real seasonally-adjusted quarterly figure. Core CPI is YoY figure, seasonally-adjusted. 25,000 4% 1,00,000 20,000 2%

15,000 0% 0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Chiyoda Chuo Minato Shibuya Shinjuku 10-Year Moving Average Source: Cushman & Wakefield MA R K E T B E AT TOKYO Office Q1 2021

STOCK (RENTABLE) ABSORBED AREA (RENTABLE) GRADE A ASKING RENT MARKET VACANCY RATE ABSORPTION RATE TSUBO SF TSUBO SF JPY/TS/MO USD/SF/MO EUR/SF/MO

TOKYO CBD GRADE A TOTAL 5.31% -0.71% 3,608,565 128,404,651 -24,532 -872,912 37,011 9.40 8.01 EUR/JPY = 110.71 EUR/JPY = 129.80

MAJOR TENANT RELOCATION

EXPECTED RELOCATION INTO FROM EXPECTED OCCUPIED SPACE TENANT TIMING BUILDING SUBMARKET BUILDING SUBMARKET TSUBO SF Kasumigaseki Bldg, Art Village CTC group Jun - September 2021 Kamiyacho Trust Tower Toranomon / Kamiyacho Kasumigaseki, Osaki, etc 10,000 355,833 Osaki Central Tower, etc Higashiyama Bldg, Pasco Meguro Pasco May 2021 Meguro Knowledge Plaza Meguro Bldg, Japan Map Center, Meguro, Hachioji 2,579 91,769 Myojincho Bldg COLOPL, 360Channel, COLOPL NEXT Feb 2022 Midtown East Roppongi Yebisu Garden Tower Ebisu 2,240 79,707

Link and Motivation Oct 2021 Kbukiza Bldg Ginza GINZA SIX Ginza 1,800 64,050 Sumitomo Fudosan Hanzomon SAP Japan, Concur April 2021, August 2022 MITSUI & CO. Bldg Otemachi Hanzomon 1,700 60,492 Ekimae Building Source: Nikkei Real Estate Market Report

MAJOR SPACE REDUCTION AND CANCELATION OF RELOCATION HIDEAKI SUZUKI, PhD Head of Research & Consulting EXPECTED RELOCATION EXPECTED REDUCED SPACE TENANT BUILDING SUBMARKET TIMING +81 3 3596 7804 / [email protected] 坪 SF

Mitsubishi Tanabe Pharma Cancelled TOKIWABASHI TOWER Otemachi 2,340 83,265 ERIKA WATANABE Sumitomo Fudosan Roppongi Grand Research Analyst Fringe81 Reduced Roppongi -580 -20,638 Tower Kokusai Fashion Center Building, Shin- Mitsubishi Materials Reduced Marunouchi / Saitama -1,076 -38,288 Kokusai Building MDI Reduced Kabukiza Tower Higashi Ginza -1,150 -40,921 cushmanwakefield.com DWANGO Reduced Ginza Matsutake Square Ginza -1,600 -56,933 A CUSHMAN & WAKEFIELD RESEARCH PUBLICATION MAJOR GRADE A OFFICE SUPPLY 2020 Cushman & Wakefield (NYSE: CWK) is a leading global EST. GROSS FLOOR SPACE real estate services firm that delivers exceptional value for COMPLETION STATUS PROPERTY SUBMARKET WARD (INC. NON-OFFICE) real estate occupiers and owners. Cushman & Wakefield is TSUBO SF (Inc. Expected) among the largest real estate services firms with approximately 51,000 employees in 400 offices and 70 Completed World Trade Centre Bldg South Tower Shinbashi / Shiodome Minato 28,810 1,025,150 Mar countries. In 2018, the firm had revenue of $8.2 billion Marunouchi / across core services of property, facilities and project Under Construction TOKYO TORCH Tokiwabashi Tower Chiyoda 44,165 1,571,536 Jun Otemachi management, leasing, capital markets, valuation and other Kasumigaseki / services. Hibiya FORT TOWER Minato 31,936 1,136,374 Jun Uchisaiwaicho ©2021 Cushman & Wakefield. All rights reserved. The information KABUTO ONE Nihonbashi Chuo 11,849 421,627 Jun contained within this report is gathered from multiple sources believed to be reliable. The information may contain errors or omissions and is Source: Nikkei Real Estate Market Report presented without any warranty or representations as to its accuracy.