VOL.05 Commercial Facility  Developing and nurturing commercial facilities cherished by local people

In Shonan, a scenic area on the Sagami Bay, a large shopping center was opened in November 2011. The giant commercial facilities with a total floor area 3.6 times as large as Tokyo Dome baseball stadium were developed by Sumitomo Corporation.

The integrated trading company started its commercial property development business more than 30 years ago. By acquiring land and building commercial facilities or renovating existing buildings into renewed commercial facilities, the company has developed 15 shopping centers and station buildings across Japan to date.

It aims to create commercial facilities which are closely connected to the local community and make them cherished and indispensable places for local residents. In operating such long-term projects, which require a lot of patience, Sumitomo Corporation makes the most of its tenacity and perseverance, which are often cited as the corporate traits of the company.

Takahiro Hatori has been engaged in the real estate business ever since joining Sumitomo Corporation in 1994.

Takahiro Hatori has been engaged in the real estate business ever since joining Sumitomo Corporation in 1994. He believes all the criticisms and pep-talks he received from his supervisors and senior colleagues on countless occasions have helped his professional growth. "I feel fortunate to have someone who I know will criticize me when needed. You can build a true relationship with someone who gives you genuine criticism."

Completion of commercial facilities as a starting point, not a goal

Property development projects usually have their "goals." In the case of residential condominium development projects, the goal would be the completion of condominium construction and sales thereof, while the goal of office building development projects would be the moment when it is determined who all the building's tenants will be. In many cases, projects are considered to reach their endpoints when they reach their respective goals, although the developers will continue to be involved in relevant properties through subsequent maintenance and renovation processes.

Meanwhile, commercial property development projects do not have such a goal. The primary revenue source of commercial facilities is the rent fee from tenants. Unlike office buildings, rents of commercial facilities are linked to tenants' sales. In other words, the rent revenue of a commercial property will not grow unless the sales of its tenants grow. Property owners need to make continuous efforts and improvements to make their properties a popular destination for customers. "Building a commercial property and launching its operation is not the endpoint of our projects. Rather, it is a starting point," says Takahiro Hatori, Retail Facilities Department, Sumitomo Corporation, who draws an analogy with parenting - in the commercial property business, you will continue nurturing the facilities that you 'gave birth to' with tender loving care.

In addition, reaching the starting point is not easy at all. It requires many meetings and discussions with local stakeholders such as residents, residents' associations, retailers' associations, and local authorities to understand their respective and sometimes conflicting opinions, and to build mutual understanding toward the completion of the facilities in question. "Having been engaged in the commercial property development business for many years, I can tell you it is a business of steady, persistent efforts," says Hatori.

Toshihiko Takano leads the retail facilities development team as the general manager of his department.

Toshihiko Takano leads the retail facilities development team as the general manager of his department. He was assigned to the current section after nearly 10 years' experience in HR since his joining Sumitomo Corporation in 1981. "In the culture of an established company with a long history, some elements should be changed, while some other elements should not be changed. I hope young employees will develop their ability to identify what should be maintained and continued and what should be changed by their own efforts.

Nurturing commercial properties with a group company

Commercial facilities developed and owned by Sumitomo Corporation are managed and operated by its group company, Sumisho Urban Kaihatsu Co.,Ltd.. While the two companies assume different roles, Sumitomo Corporation does not leave all operations subsequent to the completion of the facilities to the group company. That is simply just not the way it does business. Hatori says, "From the development phase, Sumisho Urban Kaihatsu Co.,Ltd. and Sumitomo Corporation work together to decide how the facilities should be operated after their opening, and even after the grand opening, the two companies make collaborative efforts to improve the value of the shopping center. It is fair to say the two companies make one team."

Most commercial facilities developed by Sumitomo Corporation are operated under such a single-team structure. Among them is Terrace Mall Shonan, a large-scale shopping mall opened in November 2011 boasting a total shop area of roughly 63,000 square meters and housing 281 shops. Its grand opening attracted a lot of media coverage and became a high-profile event.

"Terrace Mall Shonan represents the essence of what we have achieved in commercial facilities projects," says Toshihiko Takano, General Manger, Retail Facilities Department. "A panoramic view of blue sky and beautiful sea with a fresh, comfortable breeze passing you by - this is what Shonan has to offer. We wanted to create a shopping mall which cannot exist anywhere else."

Naoki Asahi joined Sumitomo Corporation in 2006.

Naoki Asahi joined Sumitomo Corporation in 2006. He was assigned to the Terrace Mall Shonan project after the shopping center was opened. "Some day, I would like join a dynamic project that develops something from scratch." He always aims to be someone who helps co-workers and who can be helped by co-workers.

Shopping Center completed with the power of Sumitomo Corporation's DNA

There were many stumbling blocks on the road to the grand opening. It was more than 30 years ago when the idea of developing this huge former factory site came up. The idea finally developed into a feasible plan about 10 years ago. With more details specified, the initial schedule was to start the construction in 2008 and open the shopping mall in March 2010. However, the actual opening of the retail facilities was delayed more than a year and half because the project was faced with many challenges such as soaring material and equipment prices, the financial crisis after the collapse of Leman Brothers, and the Great East Japan Earthquake. Takano says, "The project was even suspended for a while. We would not have been able to overcome the problems and completed the shopping center without the power of Sumitomo Corporation's DNA."

Sumitomo Corporation was originally founded as The Osaka North Harbour Company Limited in 1919. The original predecessor was a real estate company operating the development of areas around Osaka Bay. For nearly 100 years since then, the real estate business has long been one of the core operations of Sumitomo Corporation. Throughout this long history, the company has developed the ability to complete development projects under any circumstances, and maintained its commitment to the local community and the determination to grow together with local people. These strengths are what Takano calls "Sumitomo Corporation's DNA." Incorporating this DNA into the integrated trading company's procurement power and project management skills has led to the birth of the super large shopping center.

The facilities came to life after many difficulties and people involved in the project feel an even stronger affection for Terrace Mall Shonan. Naoki Asahi, who is in charge of the facilities, says, "Our job is to make this shopping center grow bigger and better together with our partner Sumisho Urban Kaihatsu Co.,Ltd. and the 281 tenant shops. To make this happen, in other words, to make Terrace Mall Shonan become a cherished shopping destination of customers, each tenant must in turn be cherished by its customers. We will continue to strive to ensure that the growth of individual tenants will lead to the overall growth of the shopping center."

Overcoming problems with tenacity and perseverance(Photographer : KOKYU MIWA  ARCHITECTURAL PHOTOGRAPHY)

Overcoming problems with tenacity and perseverance

The opening of Terrace Mall Shonan has marked the beginning of a new phase of Sumitomo Corporation's retail facilities business, Takano says. "Many people visit to learn about Terrace Mall Shonan, almost on a daily basis. We have been approached by more land owners in other regions and received remarkably more inquires from prospective tenants. I am convinced that the success of Terrace Mall Shonan has helped us leap forward."

Moving ahead, the Retail Facilities Department will focus on two targets: finding new sites and buildings to develop new commercial facilities and further improving the quality of existing facilities. It will pursue this vision while maintaining its unchanged commitment to the local communities and its unchanged policy of growing its facilities in joint development with local people.

"No project can ever go smoothly and without any problems. It does not matter where the project is located. We need to develop a plan meticulously and explain it in minute details to local residents to solve every single problem. Creating a cherished facility through such processes over a long period of time is the real pleasure of this job," says Hatori.

Glamorous commercial facilities with many shoppers and visitors were built and are operated on the strength of behind-the-scenes efforts like this. Sumitomo Corporation's DNA will be inherited for many more years and incorporated into many more facilities to come in the future.

(Honorific titles are omitted)

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