More station SCs, large and small

Railway operators continue to accumulate more share of retail sales, with a welcome impact on their bottom line. As well as upgrades to existing buildings, making stations much more attractive places to shop and dine, railway operators and partner developers like Aeon are building more station shopping centres every year with wide variation in SC size, from large malls to the tiniest metro corridor.

Retail investment continues to concentrate around railway stations with a host of new railway and near railway SCs due to come online in the next couple of years. At Saitama Shintoshin Station for example a 33,000 sqm SC is being built by Katakura Kogyo for opening in 2015. Katakura Kogyo already operates the Cocoon Shintoshin SC at the same station, featuring Life and Kinokuniya as anchors.

Aeon, which leads in scale and pace of SC development by a huge margin, has so far concentrated on ‘bigger is better’ out of town SCs and a few suburban neighbourhood malls, but recently began to champion a hybrid format, mixing the scale and choice of an out of town suburban SC with the convenience of a station location. One of these, opening in Spring 2015, will help to revive the centre of Asahikawa in Hokkaido. Located next to the station with total floor space of 47,000 sqm, it is being built in cooperation with the local government’s city revival committee.

Aeon has numerous other station developments in the pipeline. This year alone it will open major station malls in Chiba, Kyoto, Hino in Tokyo, and Okayama, all of which are 70,000-80,000 sqm. It also has a deal with JR East to redevelop other stations around Tokyo. Other notable station developments include:

A 28,000 sqm station building called Kirarina at Kichijoji station developed by Keio, due to open in April with 98 stores, mostly fashion. Popular chains like Beams, Journal Standard and Urban Research will open in the area for the first time alongside some entirely new stores like Mash Style Lab’s new concept F Organics.

In May Nomura Real Estate will add to the competition in Kichijoji with a more modest 7,000 sqm SC three minutes walk from the station, of which 2,800 sqm will be taken over by Uniqlo.

In April Mitsui will open a similarly sized mall at Musashino Kosugi, the popular residential area between Tokyo and Kawasaki, with 72 tenants. It is a key new development for Mitsui Real Estate being the first in a chain called Mitsui No Sumai Mall (roughly Mitsui Residential Mall) developed for residential areas of larger cities and suburbs. As well as fashion tenants and food zones, a high ratio of services are offered to make the SC a repeat destination. Core to this is what Mitsui calls Lala Terrace Clinic Mall, housing five medical clinics specialising in opthalmology, paediatrics, dermatology and so on.

As well as large scale SCs, metro operators are looking to squeeze the maximum revenue from the smallest spaces while also brightening up station corridors, which makes sense given the density of traffic. Tokyo Metro pioneered this through its Echika chain of mini SCs and now the Tokyo Metropolitan Government plans to open shopping facilities in stations in the Toei subway line – a network with 106 stations and annual passenger traffic of around 850 million. The first stations to get investment will be Hibiya and Jimbocho, opening in 2015.

In western Japan too, developers are upgrading and adding retail space at stations:

• JR West opened a new retail space in the busy Sannomiya station in Kobe last summer.
• In Kyushu, JR has broken ground on a new development at Oita Station which will complete in Spring 2015 offering 31,000 sqm of sales space.
• JR Kyushu is also taking a leaf from Lumine’s book by unifying the branding on many of its station buildings to maximise the value of its station SC network. The popular Amu Plaza brand will be retained for large SCs but 16 smaller station facilities will be branded Ekimachi 1 Chome this Autumn.
• Also in Kyushu, Japan Post has started work on construction of a large commercial tower at Hakata Station mixing offices, shops and hotel. The SC alone is expected to be around 30,000 sqm and will open in Spring 2016.

Retail lifts profits for railway firms

Greater investment is helping lift retail revenues for many railway operators, but it is the rise in profits that is particularly notable.

In Kanto JR East saw station sales rise 2.1% in FY2013 to ¥418 billion, but operating profit increased 10.6% on the back of new developments such as Tokyo Station and Central Street. Tobu retail revenue rose 3.7% and operating profit 52%. Although Odakyu sales were flat at ¥224 billion, operating profit rose 10.2%. Tokyu retail sales rose 1.6% to ¥528 billion, but profits fell 9.7% due to ongoing problems with the Tokyu Store chain which is being restructured – SC operations saw a double digit rise in profits.

In central Japan JR Tokai’s profits jumped 25.7% from sales of ¥209 billion (up 2.1%) with strong performances from key facilities like JR Takashimaya Nagoya. JR West was the only railway firm to post a loss last year on sales up 0.5% to ¥234 billion, the loss almost entirely due to the failure of the Isetan-Mitsukoshi store. Nankai saw profits jump a healthy 81% from sales up 3.7% to ¥26 billion thanks to upgrades at Namba City.