Since 1986, Mori Building Co., Ltd. (Minato-ku, Tokyo; President & CEO Shingo Tsuji) has regularly conducted market surveys of supply and demand trends for 10,000m2-class or higher office buildings that were constructed in Tokyo's 23 Wards since 1986 (hereinafter referred to as "large-scale office buildings"). Through a diverse analysis of the results of this survey, we are also able to develop forecasts of future office market trends. We are pleased to present you with the results of our survey in the following report.

■ The buildings comprising the supply of large-scale office buildings in Tokyo's 23 wards are becoming larger and are progressively more centralized in the city. Supply will increase between 2018 and 2020, with a concentration in the specified areas (designated for urban development) centered in and around the Central 3 Wards. It is forecast that this area will experience increased competitiveness as a business area through the Olympic year.
■ Demand for office space is steady, with the trend continuing for firms wanting more contiguous space per floor and/or wanting to move to a better location. The vacancy rate at the end of 2016 improved for the 4th consecutive year and it is predicted that the limited supply in 2017 will cause this trend continue. It is forecast that the vacancy rate will rise slightly in 2018 due to an increase in supply.

General Trends in Supply Volume
○ Supply Volume in Tokyo's 23 Wards will be high in 2018 and 2020.
○ Like the last 5 years, offices with a gross office floor space of over 30,000m2 are forecast to account for over 80% of total supply volume over the coming 5 years.
○ The supply rate in the Central 3 Wards for the next 5 years will be approximately 70%.In particular, it is forecast that between 2018 and 2020 roughly 70% of supply volume will come from the 5 specified areas in and around the Central 3 Wards.

General Trends in Demand
○ The vacancy rate in Tokyo's 23 Wards at the end of 2016 dropped to 3.2% due to absorption capacity exceeding supply.
○ It is forecast that the vacancy rate at the end of 2017 will drop to 2.8% due to a limited supply and steady demand by firms.