For decades, East Japan Railway (JR East) helped shape how people moved through Tokyo. Now, the company is trying to shape where they spend their time once they arrive.
The railway operator is repositioning itself as an urban developer through the massive redevelopment of the ¡°Greater Shinagawa Area¡± in southern Tokyo, spanning five stations: Oimachi, Shinagawa, Takanawa Gateway, Tamachi and Hamamatsucho.
The grand openings of Takanawa Gateway City and Oimachi Tracks in March ¡ª projects with price tags totaling more than ?700 billion ($4.4 billion) ¡ª highlight the scale of the company¡¯s ambitions.??
Industry observers say JR East is seeking to expand its nonrail businesses, as Japan¡¯s shrinking population and the lingering effects of the COVID-19 pandemic weigh on long-term demand.
¡°The conventional model of transporting mass volumes of people and capturing their spending at railway stations seems to be reaching its limit,¡± says Kazuta Fukushima, a senior research officer at Sompo Institute Plus, a Tokyo-based think tank. ¡°I think the company is looking to foster urban development to drive revenue growth.¡±
Nearly 70% of JR East¡¯s sales come from railway operations, though the company also runs nonrail businesses including real estate, hotels and retail.
The rise of telework during the pandemic has continued to weigh on railway usage, with the company struggling to push rail revenue past pre-pandemic levels.
JR East also operates many low-ridership lines outside the Tokyo Metropolitan Area. The combined deficit from those unprofitable routes totaled about ?79 billion in fiscal 2024.
To reinforce the sustainability of its rail operations, JR East introduced its first fare hike in nearly 40 years in March, with prices rising by an average of 7.1%.
Against that backdrop, the company has increasingly set its sights on urban development.
From railways to real estate
Given its history as the former state-owned national railway operator, JR East owns vast tracts of land that it has leveraged into an extensive real estate business.
But rather than simply acting as a landlord, the company aims to integrate its real estate operations into broader urban development efforts while capitalizing on its role as a rail operator.
¡°Developing a town along with a station gives JR East opportunities to create a culture unique to the area. This could lead to increasing the flow of visitors there,¡± Fukushima says. ¡°The company can also take initiatives to shape the lifestyles of the residents. This could enhance the value of properties in the town, allowing the real estate holdings to generate greater returns.¡±
JR East can also build facilities based on concepts of its choosing, allowing them to more strategically shape the clientele they attract for both marketing and retail purposes, Fukushima adds.
Tokyo has seen a number of major redevelopment projects in recent years, but JR East stresses the growth potential of the Greater Shinagawa Area going forward.
On top of the planned Chuo Shinkansen maglev line, which will stop at Shinagawa Station, JR East is also aiming to open a new rail line ¡ª tentatively known as the Haneda Airport Access Line ¡ª by fiscal 2031, directly linking Tokyo Station with Haneda Airport via a railway that passes through the Greater Shinagawa Area.
¡°The area is expected to play a bigger role as an international business gateway to Tokyo, driven by further upgrades to the transit infrastructure,¡± JR East says in an email. ¡°We will focus on the development of this area, which will be a revenue foundation for our group.¡±??
The Greater Shinagawa redevelopment is expected to continue through the mid-2030s, with JR East projecting more than ?100 billion in revenue from the project by then.
A new target market
Takanawa Gateway City stretches about 1.6 kilometers from north to south across a 95,000-square-meter former railyard site. Its footprint ranks among Tokyo¡¯s largest redevelopment projects: Mori Building¡¯s sprawling Azabudai Hills complex, completed in 2023, sits on an 81,000-square-meter site.
The complex consists of four high-rise buildings housing offices, shops, hotels, convention halls, an international school and residences, along with a cultural facility.
The development is anchored by Takanawa Gateway Station, which opened in 2020 as the Yamanote Line¡¯s first new station in 49 years and serves as the primary entry point to the project.??
Fukushima says Takanawa Gateway appears to be targeting high-value customers, noting that many of its shops fall into a higher price range.
¡°It seems Takanawa Gateway is less like a neighborhood built for its current local residents and more like one designed for a specific target audience in the future,¡± he says.
Fukushima adds that the target demographic includes long-term international visitors, whose numbers are expected to grow thanks to the planned transportation links.
JR East says Takanawa Gateway City welcomes all visitors, featuring some free-to-visit spots, including the MoN Takanawa: Museum of Narratives cultural facility and high-floor public gardens in one of the commercial buildings.
Additionally, catering to the neighboring residential area, the development features pet-friendly cafes, eateries and a supermarket for everyday use while promoting community engagement through projects like local hop cultivation.
Oimachi Tracks, which opened in late March near Oimachi Station, further expands JR East¡¯s urban development footprint just two stops from Takanawa Gateway Station on the Keihin Tohoku line.
While Oimachi Tracks integrates office spaces, retail storefronts and a hotel, the complex feels more like a casual destination for local residents, with reasonably priced shops that contrast with the upscale atmosphere of Takanawa Gateway City.
Given Oimachi¡¯s reputation as a residential district with retro charm, JR East likely aims to blend the new complex into the neighborhood¡¯s existing character.?Whether the redevelopment will become a major new growth driver for JR East remains unclear, as the company has little experience with urban development on this large scale.
Still, the company says it plans to pursue similar urban development initiatives in other regions.
¡°We will be promoting development of major terminal stations and the surrounding areas in a unified manner,¡± JR East says.
The company is also strengthening its real estate business, which is closely tied to its redevelopment efforts. To further expand the sector, JR East plans to merge its real estate subsidiary with Itochu Group¡¯s real estate subsidiary in October.
JR East holds a distinct advantage in urban development because of its extensive land holdings, which help streamline project execution.
Developers without their own land often spend enormous amounts of time negotiating with local property owners. Mori Building, for instance, spent decades coordinating with residents before completing the Azabudai Hills complex.
¡°Our railway network, company-owned land and customer touch points are key competitive advantages,¡± JR East says.
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