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Tokyu Corporation & The Future of Tokyo's Skyline
Tokyu Corporation is arguably the most important company in Japan's urban development industry. Founded in 1922, this leviathan has left indelible footprints across the Japanese landscape. A conglomerate with a multifaceted business portfolio, Tokyu Corporation's influence is both wide and deep, with involvements ranging from real estate and retail to transportation and leisure services.
Beyond its sprawling rail network, which ferries millions of commuters across the city every day, Tokyu Corporation's has built much of what we associate with modern Tokyo.
However, Tokyu’s financial position has been challenged in recent years. Earnings have been declining at an average annual rate of -47.9%, while revenues have been diminishing at an average rate of -6.7% per year.
But Tokyu remains undeterred, relying on an unwavering belief that Tokyo's retail market will bounce back, and a tourism boom will revitalize its commercial buildings and complexes. If the bet pays off, it will be a victory to remember; however, if it doesn’t, the financial implications will be devastating. The lessons of Evergrande’s collapse and other recent real-estate conglomerate failures serve as a stark reminder of the stakes involved.
Tokyu, like the ill-fated Evergrande, is pushing forward with an audacious series of urban development projects, banking on a hopeful resurgence of tourism in a post-pandemic world. As Evergrande's tragic saga played out in China, the world got a glimpse of what could happen when real estate bets sour. If Tokyu's dice roll doesn't land favorably, it risks a similar fate.
Betting Big on 'Greater Shibuya'
Unfazed by the financial tempest, Tokyu is charging ahead with its ambitious "Greater Shibuya" vision. The corporation dreams of transforming the 2.5-kilometer radius around Shibuya Station into what Tokyu calls “an urban utopia, a harmonious blend of work, residential, and recreational spaces”. Several projects have already been built, such as Hikarie, Scramble Square, Shibuya Stream (Google Japan’s HQ) and Fukuras (home of Japan’s highest rooftop nightclub, Ce La Vie), each one an enormous gamble on the corporation's future.
Shibuya’s Latest Megaproject: The Shibuya Sakura Stage
The Shibuya Sakura Stage, set for completion in November 2023, is a complex multi-district endeavor that promises a blend of commercial, residential, and cultural spaces.
Shopping Galore': The Tokyu Plaza Harajuku "Harakado"
Just a few months later, in spring 2024, the doors to Tokyu Plaza Harajuku "Harakado", a new shopping landmark in Harajuku, will swing open. This is basically an upgraded version of the Tokyu Plaza Harajuku on the opposite side.
The future of sustainable living: Forestgate Daikanyama
Meanwhile, the Forestgate Daikanyama project, opening in October 2023, is aiming to redefine retail and lifestyle experiences with a 100% carbon neutral, 70% wooden structure that offers a mixed office, shopping and living space with a small public park built into the structure.
A Towering Dream: Kabukicho Tower
In Shinjuku, the beating heart of Tokyo's vibrant nightlife, a new giant has just opened its doors. The Kabukicho Tower opened in April 2023 and is a 48-story multipurpose complex that promises to be a hub of cultural activities, housing hotels, movie theaters, and performance venues. This colossal tower represents a significant investment for Tokyu and aims to change the image of Kabukicho as a red-light district into a family-friendly area. If the bet succeeds, it could revitalize the whole neighborhood.
The Futakotamagawa Gamble: A Paradise or Mirage?
In 2015, Futakotamagawa witnessed a revolution. The completion of the 2nd phase of development in this area was hailed as a triumph, turning a once sleepy suburban neighborhood into a vibrant urban oasis. A key aspect of this transformation was the addition of the Futakotamagawa Rise Towers, a multi-purpose complex that brought in approximately 10,000 new workers and created a bustling hub of activity.
However, the question that looms large is - at what cost? While the development project brought about an urban renaissance, the economic viability of sustaining such a complex mix-use development in the long term remains uncertain, and the stakes are immense.
With office space being less sought after and Tokyu’s biggest client in the area, Rakuten, on the brink of bankruptcy, the massive complex could soon be abandoned.
The Ultimate Gamble: The Shibuya Upper West Project
But nothing quite encapsulates Tokyu's audacious vision like the Shibuya Upper West Project. The planned development, a collaboration with L Catterton Real Estate, is an audacious endeavor that will reshape the very skyline of Tokyo. The project, set to complete in 2027, will feature a towering 330-meter skyscraper that will stand as the tallest mixed-use building in Japan.
The Shibuya Upper West Project isn't just a skyscraper; it's a daring statement of intent. It's Tokyu betting its future on the belief that Tokyo's real estate market will not just recover but flourish. If this project succeeds, it could secure the company's fortune for the next generation.
But if it fails, the financial ramifications could echo the collapse of Evergrande…
Tokyu is Walking the Tightrope
Tokyu's ambitious urban development strategy is a precarious balancing act. The economic uncertainties posed by a recovering global economy, changing retail landscapes, and evolving residential demands make the real estate market a veritable minefield. Yet, Tokyu is charging headlong into this uncertain territory, much like Evergrande did before its fall.
What makes this gamble even more daring is the scale at which Tokyu is operating. The company isn't merely dabbling in a few projects; it's reshaping entire neighborhoods, pouring billions of yen into the concrete and steel skeletons that will define Tokyo's future. It's an all-or-nothing game, and the stakes couldn't be higher.
But for Tokyu, a company that has shaped Tokyo's past, there seems to be an unshakable belief in its ability to shape the city's future. Perhaps it's this audacity, this tenacious refusal to back down in the face of adversity, that has seen the company weather the storms of the past century. But as the specter of Evergrande looms ominously in the background, the question remains: Will this audacity prove to be Tokyu's triumph or its downfall? Only time will tell.