Colliers International Japan K.K. (Representative: Masahiro Tanikawa; headquarters: Chiyoda-ku, Tokyo; NASDAQ and TSX: CIGI; hereinafter Colliers Japan), a major comprehensive real estate consulting services provider, has published its “Office Market Report | Tokyo Central 5 Wards, Grade A Office | Q1 2026.” The report analyzes trends in the Grade A office leasing market in Tokyo’s five central wards during the January-March 2026 period. Rents rose sharply by 5.8% quarter on quarter amid limited vacancies. In Q1 2026, new supply totaled 36,300 tsubo, while net absorption was 32,800 tsubo, meaning demand was slightly below supply. As a result, the vacancy rate stood at 1.4%, up 0.1 percentage point from the previous quarter, but remained at an extremely low level. Against this tight supply-demand backdrop, average rent rose to JPY 38,400 per tsubo, up 5.8% quarter on quarter. This was driven by higher leasing terms, mainly among major real estate owners, in line with the change of fiscal year. Free rent periods have also continued to shorten, further widening the increase in effective rents. Hiring competition continues to drive demand, while a lack of vacancies constrains relocations. Supported by solid corporate earnings, demand remains strong for office environment improvements aimed at strengthening recruitment capabilities and employee retention. However, vacant inventory in the market is extremely limited, making it difficult for tenants to compare multiple relocation options. While demand remains firm, the depletion of available space is also restricting the completion of transactions. Rising interior construction costs and longer construction periods are additional risk factors associated with relocations. Tight market conditions are expected to continue for the time being as demand concentrates on properties under development. In Tokyo, more than 100,000 tsubo of new Grade A office supply is scheduled annually through 2030. However, because there is almost n