Japan continues to occupy a pivotal role in the global economy. As the world’s third largest economy and with the Greater Tokyo Area being one of the largest metropolitan economies, Japan offers a large affluent population, making it one of the most attractive retail markets globally.

The growth story for Japan is alive and well as after Shinzo Abe took the reins as Prime Minister in late 2012, he unleashed a three pronged economic revitalization policy dubbed “Abenomics,” focusing on fiscal expansion, monetary easing and structural reform. Since the inception of “Abenomics,” Japan’s monetary base has essentially tripled, the yen has sharply weakened against the US dollar, temporarily to approximately 50%, and the average stock price has dramatically increased, even doubling for a period. These positive factors have elicited an increased wealth effect for Japanese consumers. Subsequently, Japan has gone 5 straight quarters posting positive GDP growth and is forecast to post moderate growth over the coming years.

Tourism and the 2020 Tokyo Olympic Games is a powerful growth catalyst for the Japanese economy. Starting in 2013, the Abe government began relaxing visa requirements for selected countries mainly in Southeast Asia. This is particularly important as among the countries that were approved for relaxed regulations are China, Brazil, Thailand, Malaysia, Myanmar, India, Indonesia, the Philippines, and Vietnam. In tandem with a weakening yen, this relaxation has triggered an influx of tourists. In mid-2014, Prime Minister Abe set an inbound tourism target of 20 million people by 2020 Summer Olympics in Tokyo but in 2016, due to unprecedented tourism figures in 2015, the government adjusted their 2020 target to an ambitious 40 million visitors, which will create a large opportunity for Japanese retailers. Japan continues to achieve high tourism figures, hitting 24 million tourists in 2016. Driven by high tourism figures from regional tourists, figures continue to rise into 2017 as first quarter figures were up 13%. These high figures represent a powerful opportunity for retailers in Japan.


GDP growth
Consumer spending
Manufacturing production 3.5%1.7%1.1%-0.7%1.1%
Unemployment rate (%)
Inflation 0.5%0.8%1.2%1.8%1.1%
YEN¥/€ (average) 123.8131.9134.5135.6136.5
YEN¥/US$ (average) 113.3117.3118.5118.5118.3
Interest rates 3-month (%) -0.3-0.2-
Interest rates 10-year (%)

Note: *annual % growth rate unless otherwise indicated. E estimate F forecast
Source: Oxford Economics

Population 126.7 (2017 estimate)
GDPUS$ 4.59 trillion (2016 estimate)
Parliament Unitary Parliamentary constitutional monarchy
Prime Minister Prime Minister: Shinzo Abe Deputy Prime Minister: Taro Aso
Retail Volume-
Retail Value1.

Tokyo (23 Wards)9,421,085
Cushman & Wakefield Inc, Japan

loading map - please wait...

Tokyo (23 Wards): 35.689488, 139.691706
Yokohama: 35.466188, 139.622715
Osaka: 34.686297, 135.519661
Nagoya: 35.170694, 136.881637
Sapporo: 43.062096, 141.354376
Kōbe: 34.690083, 135.195511
Kyoto: 35.021247, 135.755597
Fukuoka: 33.590355, 130.401716
Kawasaki: 35.529667, 139.703848
Saitama: 35.861729, 139.645482
Hiroshima: 34.396560, 132.459623


Zensho Holdings: Budget Dining, Skylark Group: Family Restaurants, Colowide: “Izakaya“ (Japanese style pubs), McDonald’s Japan, Yoshinoya Holdings: Budget Dining, Diamond Dining: Budget Dining, Y’S Table: Budget Dining


Fast Retailing, MUJI, Nitori, Aeon Mall Retail, Tomorrowland Co., BEAMS Co. Ltd, Bay Crews Co. Ltd., United Arrows, World Co., Shimamura, Aoyama Shoji, Mitsukoshi Isetan Holdings, J-Front Retailing, Yamada Denki, Don Quixote Holdings


Inditex (Zara, Bershka), Nike, H&M, LVMH, Apple, New Balance, Richemont, Kering


Higa Industries: Wendy’s (Re-entry), Burger king (re-entry), Krispy Kreme, Auntie Annie’s , Zest
WDI: Hardrock Café, Bubba Gump’s Shrimp, Tony Romas, TRANSIT: Max Brenner, bills


10.30 - 20.0010.00 - 20.0011.00 - 20.00

Japan is the second-largest luxury goods and retail market in the world, according to 2016 Bain & Company study on luxury goods, representing between 10%-20% of global sales in the market and remains a firm base for luxury goods consumption posting 10% growth in 2016. Tokyo is one of the largest cities in the world and locals are known for having an extremely keen sense when it comes to fashion and quality. Tokyo is the fourth largest luxury retail goods market after New York, London and Paris.

Retail in Tokyo is vibrant and eclectic, providing ample excitement and options for all types of shoppers. Though the retail market has traditionally been centered in the department stores and high street shops of Ginza since the late 1800’s, it has since expanded to include Shinjuku, Omotesando, Shibuya, Harajuku and Ikebukuro. While Omotesando filled the need for high street shopping on the western side of Tokyo, Shibuya and Harajuku provided a home to some of Japan’s more eccentric retailers. The retail environment in Shinjuku and Ikebukuro developed naturally due to the positioning of the associated stations as key transportation hubs for surrounding commuter bed towns.

Department stores and local textile trading companies have traditionally held the most power and influence in apparel and luxury retail, however, many shopping centers and their developers have been gaining momentum due the shift in shopping trends amongst the youth and middle-aged professionals, the overall aging of the population, and the increase of international retailers occupying key locations in the shopping centers.

There are a few big box retailers such as Costco, IKEA, Seiyu (Walmart’s Japanese subsidiary) and Nitori, the largest Japanese furniture and interior retailer that operates more than 430 stores in Japan and boasts 29 consecutive terms of increased sales and profits. Japan’s popular electronic stores such as Yamada Denki, Yodobashi Camera and Bic Camera also compete in the big box space.

E-commerce has also been gaining foot in the Japanese retail market as large online marketplaces like Rakuten, eBay’s Japanese counterpart, and Amazon have been reporting increasing profits and sales. The popular online fashion shopping site “Zozotown” has been able to sustain revenue growth in excess of 140 percent on y-o-y basis in March 2017. The e-commerce fashion market is able to maintain consistent growth because department stores and each brand have started to work actively to create multi-channel retailing strategies.


New Entrants to the market


Narita International AirportChiba29,000116,968,000,0001978
LAZONA Kawasaki PlazaKanagawa79,30078,800,000,0002006
LACUA OsakaOsaka53,00076,100,000,0002011
LaLaport Tokyo BayFunabashi102,00075,500,000,0001981
JOINUS YokohamaKanagawa34,91861,892,000,0001973
Terrace Mall ShonanKanagawa63,00054,000,000,0002011
Tamagawa Takashimaya Shopping CenterTokyo48,62051,080,000,0001969
Lumine ShinjukuTokyo19,79448,453,000,0001976
LaLaport YokohamaKanagawa93,00048,400,000,0002007
Lumine EstTokyo19,20348,347,000,0002006

Source: Senken Shinbun, 2016

Lease TermsStandard Lease or Old Lease Law (OLL): Typically 2 years with automatic renewal; or the Fixed Term Lease or NLL (NLL): nonrenewable, with terms being less than 1 year up to 20 years, but typically between 5 and 15 years in length.
Rental PaymentFrequency of Rent Payable: Monthly in Advance. Rent Deposits: Usually 10 to 24 months. Paid in cash to the landlord at beginning of lease. Non-interest bearing. Turnover Rent: Usually only seen in mall transactions, percentage rent is computed based upon total sales or sales above a natural or artificial break point which is based upon the tenant’s profit after payment of the base rent.
Rent ReviewCPI and rental market under OLL; as negotiated under NLL.
Service Charges, Repairs and Insurance Internal: Tenant
Common Areas: Landlord (charge back via service charges)
External/Structural: Landlord (charge back via service charges)
Property Taxes and other costs Building Insurance: Landlord (charge back via service charges)
Local Property Taxes: Landlord (charge back via service charges)
VAT Payable on Rent: Consumption tax equal to 5% on rent and service charges
Disposal of a LeaseAssignment/Sub-letting: Assignment prohibited.
Sub-letting, may be negotiated on a case by case basis under NLL; almost never allowed under OLL

Early Termination: Yes, by giving 6 months prior written termination notice to the landlord under OLL, or by specific negotiation under the NLL.
Tenant’s Building Reinstatement Responsibilities at Leases End: Original Condition, allowing for wear and tear
Valuation MethodsShops are valued on a 'zoning' basis. The retail zoning principle recognises that the area at the front of the shop, adjacent to its primary window frontage (normally referred to as “Zone A”) is the most valuable in rental terms. The rate per square foot halves back through regular depths towards the rear of the ground floor, with “Zone B” valued at A/2, “Zone C” at A/4, “Zone D” at A/8 and a “Remainder” zone, typically valued at A/12. Upper and lower sales floors are similarly valued as a proportion of the “Zone A” rate, with basement and/or first floor sales accommodation typically taken at A/10, and ancillary at A/20. There will occasionally be local variations to these rates, which will also depend on the quality and functionality of the accommodation, relative to the market norm. For corner units, it is usual to add a small percentage to the value of the ground floor, the amount of which will depend on the degree of overall prominence.
LegislationTwo co-existing and very different lease styles: the Standard or Old Lease Law (OLL) and the Fixed-term or New Lease Law (NLL).

Japan Contacts

Masahiro Tanaka

Retail Services Japan
T +(81 3) 3596 7070
M +(81 90) 9014 7824

Timothy Gregersen

Research Japan
T +(81 3) 3596 7070
M +(81 90) 6005 4382