Tokyo office vacancies may hit 7-yr high -developer

TOKYO, July 13 (Reuters) - The vacancy rate for Tokyo's big office buildings this year is likely to climb to a seven-year high before gradually improving, a Japanese developer said on Monday.

Companies are still scaling down operations as the world's second-largest economy struggles to get out of its deepest recession in decades.

The proportion of unused office space in big buildings in central Tokyo's 23 wards is seen rising to 7.1 percent at the end of this year, the highest since 2002 and up from 3.8 percent at the end of 2008, developer and market researcher Mori Building group said in a report.

The expected gradual recovery in the country's macroeconomic outlook would likely lead to brisker corporate activity, however, helping push the vacancy rate back down to 6.3 percent in 2010 and 5.7 percent in 2011, Mori Building said.

Tight budgeting and a murky business outlook had led some 7 percent of respondents give up plans to rent new office spaces last year, the report showed.

The research underscores the tough conditions in the office building market in Tokyo, where building owners such as Mitsui Fudosan (8801.T) and Mitsubishi Estate (8802.T) are coming under increasing pressure for rent cutbacks, dealing another blow to their revenue which has also been hurt by weak apartment sales.

Last week, office broker Miki Shoji said the office vacancy rate in Tokyo's five central wards nudged up to 7.25 percent in June, the highest in almost five years. (Reporting by Mariko Katsumura; Editing by Hugh Lawson)