Developer gives up on redevelopment plans near Sendai Station

Sakurano Department Store SendaiTokyu Land have abandoned redevelopment plans for the West Exit of Sendai Station due to low profitability forecasts. The land was acquired during the market peak in 2006~2007.

Tokyu sold their 80% share of the land under the Sakurano Department Store to a fund in December 2014. At the end of August 2015, they sold 1,095 sqm of land, which included the land under the Sendai Toyo Building and the site of the former Asahiya Building, to a separate fund for an undisclosed price. Earlier this year Tokyu had considered redeveloping the smaller site, but made a final decision to sell.

According to the developer, the expensive land acquisition costs as well as the rising cost of construction meant that the project would not be profitable. The Sendai Toyo Building was acquired in 2006, and the former Asahiya Building and Sakurano Department Store was acquired in 2007.

In October 2010, Tokyu put their redevelopment plans on hold due to weak economic activity and low consumer demand. Sendai City suffered from a property market slump following the Lehman Shock in 2008, and several redevelopment projects were postponed. In September 2010, the office vacancy rate in Sendai City reached 20.54%. It has since halved to 10.42% as of July 2015.

Sources:
The Kahoku Shimbun, August 29, 2015.
Miki Shoji Office Report.
The Nikkei Shimbun, October 22, 2010.