"Tokyo Vacancy Rate at 0%, Rents Hit Record High"...What Is the Strategy for K-Brands Entering Japan?

[Financial News] As K-brands continue to expand into Japan, vacancy rates in Tokyo’s core retail districts have been found to be around 0%.
According to the ‘CBRE Korea Retail Insight Note Vol. 2: Tokyo’ published by commercial real estate services firm CBRE Korea, vacancy rates in Tokyo’s major retail districts currently stand at 0.0% to 0.1%, effectively making them zero. Competition to secure space has consequently intensified.
Rents have also reached record highs. Prime rents in Ginza are ¥298,000 per tsubo—approximately 3.3 square meters—per month, while those in Omotesando and Harajuku are ¥252,000. As prime properties along major streets become increasingly scarce, demand is spreading to back streets and buildings slated for redevelopment. Some global brands are even considering purchasing buildings rather than leasing them to secure long-term bases.
The report noted that K-brands’ expansion into Japan, particularly Tokyo, is being driven by the spending power of Japanese tourists observed in Seoul’s major commercial districts and the large-scale inbound tourism demand in Japan. Japanese consumers are estimated to have spent approximately 610 billion won across Seoul’s seven major retail districts over the past year, accounting for 12.7% of total foreign consumer spending. In addition, with the number of foreign visitors to Japan reaching 42.68 million last year, Tokyo’s offline stores are emerging as key bases from which K-brands can target both domestic consumers and global tourists.
Accordingly, the report compared the characteristics of Tokyo’s five key retail districts—Shibuya, Harajuku, Omotesando, Ginza and Shinjuku—based on the features of Seoul’s commercial areas. It characterized Shibuya as combining Myeong-dong’s foot traffic with Seongsu-dong’s buzz, while Harajuku was described as a district that blends Hongdae’s culture with Seongsu-dong’s pop-up ecosystem. Omotesando was presented as a high-end district with Hannam’s refined sensibility and Dosan’s flagship-store function, while Ginza was described as combining Cheongdam’s luxury appeal. Shinjuku was assessed as a district that, like Gangnam District, converts high foot traffic generated by an extensive transportation network into sales. The report emphasized the importance of carefully selecting commercial districts suited to each brand’s characteristics.
CBRE Korea advised brands seeking to establish themselves successfully in the Tokyo market to develop a systematic strategy from the initial stages, beginning with analyzing districts that match their goals, identifying available properties and reviewing lease terms. It particularly stressed that cooperation with partners possessing local networks and expertise will be crucial, given Japan-specific leasing practices such as obligations to restore interiors to their original condition.
Ryan Kim, executive director overseeing retail at CBRE Korea, said, “As the standing of K-brands has risen, Japan has become a major overseas expansion hub. Because each Tokyo district has a clearly defined role, it is important to adopt an execution-oriented strategy that identifies suitable locations from the outset and connects them to actual store openings.”

[email protected] Jeon Min-kyung Reporter