Estates Gazette

25/06/2005

Tokyo’s most famous entertainment district, Roppongi, is changing. Even some guidebooks are lamenting what they see as the loss of the frantic and often sleazy character of Tokyo’s answer to London’s Soho or even Ibiza.

The local edition of Time Out, for example, carries some surprisingly detailed observations about the development of Mori Building’s high-end Roppongi Hills, and advises that “another company” is planning a second major scheme nearby. It advises visitors to Tokyo: “The next few years may be the last stand of old Roppongi. Make the most of it while you can.”

Of course, the property industry doesn’t tend to mourn when a slightly down-at-heel area of a city – albeit one with an international reputation for partying – gets a makeover courtesy of a couple of huge mixed-use regeneration schemes.

Roppongi, in south-west Tokyo, has attracted revellers from time immemorial. Its streets, lined with coffee shops and late-night karaoke bars, and laced with the unmistakeable whiff of ramen parlours, are often the first port of call for visitors arriving in Tokyo from abroad – especially on a Friday night. Walk the streets on a hot spring evening and you could well be in Magaluf or Ayia Napa, albeit without the binge drinkers.

But not everyone is a fan. Locals often see Roppongi as a tourist trap. The workers who line the streets handing out flyers and dragging people into bars are perceived as a nuisance by office commuters trying to catch the train home.

Luxury development

Changes to Roppongi’s frivolous character first began when Mori Building set about creating the luxurious Roppongi Hills in the 1990s (see below).

The pattern is set to be continued by rival developer Mitsui Fudosan – the “other” developer mentioned by Time Out – which is planning a 6m sq ft mixed-use scheme, known as Tokyo Mid-town Project, less than half a mile away.

It’s difficult to imagine any other city in the world where such a density of development could be contemplated. But Tokyo tends not to follow the rules.

Mitsui is one of Japan’s largest real estate groups, involved in development, leasing, construction and property management, in both the commercial and residential sectors.

The 19.3-acre Mid-town Project site was formerly owned by the Japanese Defence Agency. Before that, it was the site of an Edo-period palace, relics from which are proudly displayed in Mitsui’s glass-fronted site office, alongside a rather flashy, illuminated scale model of the development.

Yoichi Kunikane, one of Mitsui’s executive directors, illustrates how the lights can be made to flicker on and off before introducing a smooth corporate DVD, which describes Mid-town as “a community unlike any the world has ever seen”. It says the development will inject the “passion and vigour” of Europe into central Tokyo.

Mitsui beat off five competitors for the right to develop Mid-town. Takashi Nakayama, the scheme’s project manager, says he thinks the company was successful because it managed to capture something of Japan’s 21st-century zeitgeist.

“For the past 10 years, Japanese people have been suffering from debt and financial difficulties following the bursting of the economic bubble,” he explains. “The Tokyo government wanted to revitalise the capital city. We want to re-evaluate Japanese values and pass them on to the world.”

Mid-town’s centrepiece tower

Hyperbole aside, there’s no denying that Mid-town is a pretty special project.

The centrepiece of the scheme is a 54-storey tower containing 1.3m sq ft of offices – most with 35,000 sq ft floorplates – on the 7th-43rd floors and the new Ritz-Carlton Tokyo hotel on the floors above that. At 813ft, the building will be Tokyo’s tallest, trumping the Tokyo Metropolitan Government Building and Roppongi Hills Tower.

The scheme includes a number of other buildings. The 388,000 sq ft Mid-town east is a mix of offices and residential, while the 267,000 sq ft Mid-town front is composed mainly of offices, which have been prelet to photography and electronics firm Fuji.

In addition, a separate residential block called Parkside is planned, as well as a multi-storey shopping centre. And there is still room for around 10 acres of green space.

Nakayama stresses the effort the developer has taken to create a truly integrated mix of uses. “Traditionally, some Japanese city developments have had independent offices, residential and commercial areas. This development is aiming for more of a mixture.”

Although Mitsui may not agree, the Mid-town Project is perceived as an attempt to mimic the Roppongi Hills template. As well as mixing retail and offices, the scheme is aiming to outdo Roppongi Hills’ Grand Hyatt in the posh hotel stakes, too.

Greg Turnbull, a tenant representation specialist at Colliers Halifax in Tokyo, says both Roppongi Hills and Tokyo Mid-town Project are “city within a city” mixed-use schemes that have blossomed in the past five years. “Tokyo Mid-town must be seen as a competitor with Roppongi Hills,” he says.

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Developer brings Le Corbusier to Tokyo

Developer Mori Building has a history of delivering major mixed-use schemes in Tokyo. Fifty-two storeys up at the Tokyo City View observation deck, part of the firm’s latest and largest scheme, Roppongi Hills, you can see earlier developments – ARK Hills, Atago Green Hills, Moto-Azabu Hills – puncturing the skyline all over the place.

Minoru Mori, the company’s president and CEO, has a vision to create new “cities within cities” – primarily suffixed by the word “Hills”. A fan – and collector – of modernist architect and artist Le Corbusier, he says property development is like making movies, and it is his role to be the “producer”. Mori is also something of a perfectionist, having spent over a decade assembling 29 acres of land for his crowning achievement, Roppongi Hills.

That period was spent negotiating with 500 landowners who were reluctant to move out in order for development to take place. Mori came up with in innovative solution to get them on side: many are now residents of one of the scheme’s 800 high-end residential apartments.

The development dwarfs anything of its type seen in the UK, and has been credited with repositioning Roppongi as a favoured location for multinational office occupiers. At the centre of the giant 8.1m sq ft scheme is the 54-storey Roppongi Hills tower, a swaggering brute of a building with 4m sq ft of floorspace. The building houses the impressive Mori Arts Centre – said to be the highest art gallery in the world – and the Tokyo Grand Hyatt Hotel, but most of it is taken up by offices. Floorplates weigh in at a whopping 48,000 sq ft.

According to Toru Nagamori, a director of Mori Building, Minoru Mori brought various influences to the table in the design of the Roppongi scheme.

“Ark Hills is clearly a prototype for what we have here. It also contains many of the elements that go into our ‘city within a city’ mixed-use concept,” he says.

“The idea was developed a long time ago by Mori based on his own trips to cities around the world, his feelings on architectural design, and the ideas of Le Corbusier.”

And just as Mori imported ideas from the US and Europe, so the scheme could influence mixed-use development on the global stage.

Developer Mori is doing a similar scheme in China. The 101-storey Shanghai World Financial Centre is scheduled to be the world’s tallest skyscraper when it is completed in 2007. Le Corbusier, eat your heart out.

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Tokyo’s mixed-use evolution

Tokyo is arguably the global capital of large-scale mixed-use development. From its beginnings, when designs tended to copy New York, developers are today forging ahead with some uniquely Japanese propositions.

But Britain could learn a lot about mixed-use from Japan, although schemes on the scale of those seen in Tokyo are unlikely to find a home in the UK. “Multi-use is a new concept in relative terms, starting in the early 1980s,” says Greg Turnbull of Colliers Halifax. “Over the past 10 years, there has been a generational increase in the sophistication of the product.”

Mori’s Roppongi Hills, Mitsui Fudosan’s Mid-town Project (pictured above) and the redevelopment of the Japan Railways-owned Shiodome site have defined modern mixed-use development in Tokyo. They are characterised by very tall towers and upmarket restaurants, with substantial green spaces and even museums of art.

Green space is taken seriously by developers – Mori has published a 150-page book called Creating and Nurturing Scenery – although planting trees is not necessarily a philanthropic act. As Turnbull’s colleague Richard van Rooij points out: “In exchange for putting in more green space, developers are allowed more volume on site. It allows them to build upwards.”

The lack of available land forces development upwards. Forerunners to the latest batch of schemes include Sapporo Breweries’ Ebisu Garden Place, completed in 1995, and Mori’s Ark Hills (1986), which introduced restaurants and retail centres on-site. Japanese developers also ensure that large, mixed-use schemes are integrated into the core of the subway system. If there’s no station nearby, a new one is built. Complex underground walkways linking developments to existing stations are par for the course, even where the station is some distance away. Unlike in Britain, the pressure for transport integration doesn’t necessarily come from local or national government. Instead it is the occupiers – and specifically their staff – that demand it.

Yoichiro Hamaoka, managing director of Jones Lang LaSalle in Japan, believes the mixed-use boom will continue, but with one proviso: “The issue is finding the right sites for schemes like this.”

A further fly in the ointment for Tokyo’s multi-use schemes is the direction from where new tenant demand will come. “Few multinationals are looking for space, and Japanese companies tend to own their old buildings,” explains van Rooij. Developers have recently had to “poach” their own tenants from other buildings they own in order to fill new ones. Mori, for example, moved both Lehman Brothers Japan and Goldman Sachs from Ark Hills into Roppongi Hills when the latter scheme was completed.

Estates Gazette

25/06/2005

Octopus dipped in batter – or takoyaki – is the food of choice for all right-thinking residents of Osaka. And, if it’s possible to define a city by its gastronomic speciality, then battered octopus balls do just that.

Earthy, straightforward but tinged with a little mystique among outsiders, all these things describe both Osaka and its favourite cephalopod-based snack. But if local and national government gets its way, Osaka’s regeneration will soon make the city as well-known as Tokyo.

Arriving in Osaka by shinkansen bullet train from the capital, the feel of the cities is considerably different. Whereas Tokyo has a chaotic, almost alien feel thanks to its sheer size, the vibe in Osaka, capital of the Kansai region, is a little more down to earth.

Ex-pats from Australia and the US meet in the English-themed Covent Garden bar in Osaka’s trendy Horie district, and like to think of themselves as having discovered something largely unknown outside Japan. To an extent, they have. Despite being regarded as Japan’s second city, Osaka is often ignored in favour of neighbouring Kyoto by most visitors to the country.

But the Japanese government is trying to change the way the city is perceived, especially by international businesses. As in Britain, the government wants a “renaissance” of the country’s regional cities. And Osaka is at the top of its list. Having taken a battering in the recession of the early 1990s, Osaka is one of four designated Japanese Priority Urban Redevelopment Areas. In 2003, an Urban Revitalisation Task Force – similar to a UK urban regeneration company – was established in the city. This was the first in Japan, and another will soon follow in Nagoya.

Toru Takahashi, deputy director of the Osaka office of the task force, says much of the advantage that can be given to these areas concerns site volumes.

“Japan has very strict controls on density, based on access to sunlight. We are able to give incentives, such as allowing an increase in the floor-area ratio, to encourage development,” he explains.

More priority sites

Osaka has more priority sites than other cities in Japan, according to Takahashi. The largest is Kita Yard – literally meaning North Yard – in the Umeda area of Osaka, close to the city’s main railway station.

Most of the 76-acre (31ha) site is still used by Japan Railways as a freight distribution yard. It is to be developed along similar lines to those seen at Shiodome in Tokyo, which is another former JR site.

Professor John Worthington, a director and co-founder of UK-based strategic design consultancy DEGW, who has done work with the City of Osaka, compares the regeneration project to London’s Kings Cross scheme. “It’s a similar size to Kings Cross, and, like Kings Cross, there is development happening all around the edges.”

By this, Worthington is referring to JR’s plans for a 2.2m sq ft tower development on a neighbouring site and Hankyu’s proposals for a new office tower above its department store, among others.

The first phase at Kita Yard, due for completion in 2011, covers around 17 acres (7ha), split into three areas. Areas A and C – 2.7 and 3 acres respectively – are owned by JR, but the 3.7-acre Area B has been taken in hand by the government to allow more control over development. The remainder of the site will be public space and access.

The concept of co-ordinated, strategic regeneration, rather than ad hoc redevelopment, is relatively new in Japan, so the government’s involvement is a little unusual. A detailed pre-planning process, involving a number of private sector companies, is also considered innovative.

Alex Stewart, of Osaka-based Alexander Capital Access, explains that this process – known as makizukuri – led to the idea of creating a “knowledge city” aimed at hi-tech businesses for Area B. General contractor Takenaka, with engineer Arup and architect Derek Lovejoy, also came up with a wacky-sounding idea entitled “Mother Forest”. But the race for development rights remains open, with Takenaka and fellow general contractor Kajima among those competing.

No-one knows whether all three areas in the first phase will be handed to one developer, or whether different developers will be granted permission for sites A, B and C respectively. Takahashi suggests the city’s preference is for one developer to take control of the overall site.

Fortuitous that large site is available

Seiichiro Matsumoto, secretary general of Takenaka’s Kita Yard development department, believes the scheme as a whole is crucially important to Osaka’s future.

“People in the Kansai region have felt a period of economic crisis, so it’s fortuitous that this size of development site is available in the centre of the city,” he says.

Matsukazu Maeda, general manager of Kajima’s project development department, says: “If you can include the hi-tech knowledge city idea, it has the effect of elevating the region and helping to bring people in.”

But some are sceptical. One Japanese official responsible for promoting international investment says: “There is no demand from occupiers outside Osaka. And what exactly is a knowledge city? There are question marks over who will use the space.”

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Osaka fights off its ’second-city’ challengers

As in the UK, Japan’s capital Tokyo, with a population of 12.2m, dwarfs its regional cities. And, as in the UK, no-one can quite agree on the identity of Japan’s second city.

Measured purely in population terms, Yokahama is closest to Tokyo, with 3.5m residents. The problem is it’s geographically close to Tokyo, too – only 20 minutes from Tokyo by shinkansen in fact – meaning it is usually viewed as a mere extension to the sprawling capital city.

Step up, Osaka (pop 2.5m), the capital of the Kansai region and the main contender for second city status. With its industrial and mercantile past, the city is comparable with Manchester and in fact has a partnership agreement with the UK city. Modern Osaka is dominated by the hi-tech sector, as Sharp, Sanyo and Panasonic all have bases nearby.

However, the city was also hit hardest by the recession of the early 1990s and, even more so than Tokyo, has found it difficult to recover.

“The city’s economy is continuing to struggle and I don’t know what the long-term prospects are,” says Brett Jensen of Colliers Halifax in Osaka. “It has suffered a lot more than other places. There has been a hollowing-out of the industrial base, which has moved off-shore. Osaka is trying to restructure itself.”

The city’s woes have allowed its rivals to sneak up and attempt to steal that second-city status. At the head of the pack is Nagoya. Thanks to the influence of Toyota, which is to expand its operations close to the city, Nagoya is beginning to thrive.

According to one official involved in attracting inward investment to Osaka, Nagoya will be the second city within 10 years. This is partly because the city also has a new airport and because it is the closest major city to the highly publicised 2005 Expo event being held in Aichi.

Peter Gensheimer of Cushman & Wakefield in Tokyo points to Fukuoka in the Kyushu region as an emerging market.

But while Osaka’s long-term prospects are far from certain – and foreign investors certainly are not rushing in, according to agents in Tokyo – there is one possible salvation.

Pretty much everyone agrees that the emerging markets of Asia are going to continue to strengthen, and this could boost Osaka, which has always been regarded as an outward-looking city.

Says Jensen: “Osaka, more than any other city, has better, closer links with South Korea and China. It’s just one-and-a-half hours from Osaka to Seoul, and Osaka could do well as those places expand.”