OSAKA MEANS BUSINESS Some of Osaka's Biggest Companies Have Joined Forces in a Bid to Create a New Commercial District to Take on Tokyo's
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Insight OSAKA MEANS BUSINESS Some of Osaka's biggest companies have joined forces in a bid to create a new commercial district to take on Tokyo's. Mitchell Labiak reports alk across Umeda’s business in Osaka, which is why 2.5 million people to the area designated as one 59-acre main footbridge the rst train station in the city every day. Only one other area business improvement district Wand pretty much was built here in the 1870s. of Japan boasts a higher footfall: (BID), which would be one of the everything you see, from Commerce in Umeda grew so Shinjuku, Tokyo. rst public-private partnerships department stores to o ces, quickly that by 1910, the old Hankyu Hanshin, which under the new BID regulations from hotels to six of the district's station had been demolished and already generates more than introduced in 2018. seven train stations, is owned by replaced with a bigger one. 50% of its ¥224.7bn (£1.68bn) Norio Mizuno, manager for Bay one company: Hankyu Hanshin. Fast-forward 100 years and annual real estate revenue in Area development at the city of The business district in Japan's the formation of the Umeda Umeda, believes the area has Osaka government, says that second city, Osaka, is already an Area Management Alliance in the capacity to handle far more such is the momentum behind impressive sight thanks to the 2009 between Hankyu Hanshin, tra c. It says that two more train the scheme that even if there brilliantly futuristic Grand Front Japan Railways (JR) and the joint stations – a JR station that will is a change in government, it is Osaka – a 19-acre mixed-use venture company that owns connect directly to the airport unlikely to hamper progress. o ce, retail, hotel and residential the Grand Front Osaka marked and a Hankyu Hanshin station, “The people in charge of the scheme developed by Hankyu an important step change in which has yet to receive planning project might change, but the Hanshin in a joint venture with 11 development. consent – are project keeps going,” he says. other companies and completed The aim of set to be built “In Japan, a political party would in 2013 in the rst phase of the the alliance Azusa Takada in Umeda never stymie a project.” Umekita redevelopment. is to improve Hankyu Hanshin as part of Now, as all eyes are on Japan the business Umekita Di erent planning system as it hosts the Rugby World Cup and retail Phase Two. Taniguchi adds that the planning and prepares to host the 2020 environment It's cheaper It is hoped system in Japan is di erent from Olympic Games, the Japanese of Umeda than Tokyo and that this that in countries such as the UK. real estate and railway giant is and mitigate will increase “In Japan, the private sector has gearing up with its partners for some of the people are more the number more in uence on development,” the mammoth 40-acre second economic reasonable of inbound he says. “As long as all the phase of the Umekita scheme. damage passengers to partners in the joint venture The goal is for Osaka to take created by the area and, company agree on what needs to on Tokyo. It is an audacious Osaka’s declining population. in turn, make it a more attractive happen in Umekita Phase Two, vision, but as Akihiko Taniguchi, “Underpopulation and the desire place to shop and to do business. the city government is on board.” executive o cer of Hankyu to turn Umeda into a business Umekita Phase Two, which is The challenge now will be to Hanshin’s Umekita area district meant we had to team slated to open in summer 2024, get occupiers on board. Azusa management development up with our competitor [JR],” will also comprise 166,000 Takada, assistant manager division, explains to Property says Taniguchi. “That was the sq ft of public park space, a of Hankyu Hanshin's urban Week following a tour of the motivation for this alliance." 10,000-person-capacity outdoor management division, does not site, the pieces of the puzzle are At the heart of the new event space, 1.89m sq ft of o ce think this will be a problem. nally coming together. business district is Osaka Station space, 1.65m sq ft of residential Companies will be attracted Despite its humble beginnings — which is owned by JR and has space, 979,000 sq ft of hotel by the general business – 150 years ago it was at been knocked down and rebuilt space and 445,000 sq ft of retail. environment and relative cost, agricultural land (Umeda means ve times since the 1870s, most Hankyu Hanshin hopes the she says: “It’s cheaper than Tokyo plum eld in English) – Umeda recently in 2011. Umeda's seven two phases – the culmination and people are more reasonable. has long been the centre of stations bring an estimated of 17 years' work – will be It’s also less crowded compared 40 4 OCTOBER 2019 PROPERTY WEEK INTERNATIONAL PROPERTY WEEK INTERNATIONAL 4 OCTOBER 2019 41 Insight with Tokyo and a train journey into town takes less time.” Mapped out: an Cheap as Osaka may be, it is not architectural model the bargain it once was. O c e of Umeda's future rents jumped 10.4% between the second quarter of 2018 and second quarter of 2019, according to a report from CBRE. So, rather than simply trying to encourage businesses to move from Tokyo by promoting the city's relative a ordability, Hankyu Hanshin is trying to o er a more appealing business Towering ambition: environment, says Takada. the Grand Front Osaka mixed-use Co-working space scheme This is where GVH#5 comes in. The co-working space and start-up school, which Hankyu Hanshin has been investing in, is inspired by Canary Wharf’s Level39 and o ers cheap co- working space, as well as small o ces for start-ups of up to eight people for ¥18,000 per month. Kengo Nikawa from Hankyu Hanshin's urban management division says the company makes little to no pro t on the rent. The idea is that businesses will mature here – thanks to Hankyu Hanshin’s nancial investment and business support – then move on to the more expensive and central co-working space in Ready and Grand Front Osaka. waiting: view The hope is that one day from the Osaka some of these rms will become Grand Front of big enough to rent an o ce the site where building from Hankyu Hanshin Phase Two somewhere in Umeda. will sit Hankyu Hanshin is also trying to promote Osaka by making Umeda a tourist destination. When charm missing from many Nakazakicho because “it will largest amount of retail space in I visited, the rm put me up in a Japanese cities. undermine the local colour”. one area anywhere in Japan. four-month-old hotel just outside Locals riding bicycles down He adds that while there are O ce occupancy in Osaka and the Umeda area. Within Umeda, alleyways anked by narrow exceptions, most developers the Umeda area is also high, with it owns ve hotels and a sixth is early-20th-century buildings are not building big apartment a CBRE report for Q2 2019 stating opening in November this year. occupied by craft shops, cafés complexes in the area because of that vacancy rates have fallen Hankyu Hanshin knows and art galleries make this quaint government regulations limiting to an all-time low of 1.2% for that hotels alone will not draw spot feel a million miles — and a the size of residential buildings the whole of Osaka and 0.2% tourists to Umeda or Osaka. The hundred years — away from the on its narrower streets. for Umeda. city needs a cultural quarter – glistening steel towers of Umeda. There are, however, signi cant somewhere with history and In reality, it is only a 10-minute Tourist appeal challenges ahead. With the 2020 hipness. It is hoping Nakazakicho walk. “It’s like time travel,” Hiroki While it may yet be a far cry from Olympics in Tokyo less than a will t the bill. Kawame, manager of Hankyu Tokyo in terms of being a global year away, the resources of the The only neighbourhood Hanshin’s urban management business location, there are signs entire construction industry are in Osaka with buildings that division, declares. that Hankyu Hanshin and other stretched and costs have soared. survived the bombing campaigns Kawame is not concerned developers' investments into Takada admits that she of the Second World War, the about the threat of gentri cation. Umeda are beginning to pay o . is concerned about how area’s architectural uniqueness He insists Hankyu Hanshin has The business and retail district rising costs will a ect the BEEBOYS/SHUTTERSTOCK gives it an old-fashioned no intention of developing in can already brag that it has the pro tability of the schemes the 42 4 OCTOBER 2019 PROPERTY WEEK INTERNATIONAL Green oasis: Umekita Phase Two's planned park space Historic charm: the artistic district of Nakazakicho real estate giant is planning. is Umeda’s dependence on ago. Kenichi Saito, manager of the o ering. Kawame argues that Then there is the question retail. Although the business Hankyu Hanshin hotel Property the gap left by Chinese shoppers of competitiveness. Hankyu district’s high density of shops, Week stayed at, fondly recalls has been lled with domestic Hanshin is so dominant in the restaurants, bars, cafés and the Chinese tourists who would shoppers and tourists from other area that it could be perceived as department stores is presented stay in Hankyu Hanshin hotels, countries.