Interesting piece on Japanese private railway development

[bikkuri bahn]

I wonder why this hasn't been looked at earlier (like within the last twenty or thirty years...)

The Secret to Tokyo's Rail Success

 

Eric Jaffe9:40 AM ET

 

Twice during my recent trip to Tokyo, once at Shibuya and again in a suburb to the west of the city, I exited a subway platform only to find myself swaddled in a massive department store. This was the Tokyu store. In Shibuya, at least, it felt every bit as gigantic as Macy's gigantic flagship store on New York's 34th Street. It had at least 10 stories to its name and a curious arrangement of chairs outside the elevator bank, which people sat in so attentively, you'd think that's exactly what they'd awakened to do.

 

In other words the railway itself was just a sideline attraction. This is no accident. As John Calimente reminds us in the latest issue of the Journal of Transport and Land Use [PDF], a major reason Tokyo's private rail lines are so successful is that they've diversified the business beyond transportation into real estate holdings and retail outlets. At the end of the day this means both profitability for the company and better transportation for city residents.

 

http://www.theatlanticcities.com/commute/2012/05/secret-tokyos-rail-success/2044/

 

Journal article referenced above (pdf download):

https://www.jtlu.org/index.php/jtlu/article/view/280

[bill937ca]

Isn't illegal to combine real estate and railways in the US?  Traction companies with non-transportation businesses were broken up in the 30s. The claimed reason is restraint of trade, but really it protects oil interests from competition.

[bikkuri bahn]

Isn't illegal to combine real estate and railways in the US?

 

 

I don't know, though railroads are big landowners- the Union Pacific RR is the largest landowner in the U.S. west of the Mississippi River and the second largest overall in the nation, after the U.S. government.  It would be strange that a law would restrict a railroad from building a shopping center or a high rise building next to their track.

[bikkuri bahn]

By the same author, most of what he says we probably already know:

http://www.theatlanticcities.com/commute/2012/05/new-yorkers-sadly-lopsided-scorecard-tokyo-transportation/2022/

[bill937ca]

I wonder why this hasn't been looked at earlier (like within the last twenty or thirty years...)

 

I remember back in the 60s and 70s there were American TV shows exposing the efforts of General Motors and oil companies like Chevron to wipe out railways and transit. Their lobby had immense influence in Congress.  Light rail only came to the US because San Diego's initial line was locally funded with no federal funds. Light rail had already existed in Canada for at least a decade in Calgary and Edmonton.

[bill937ca]

More articles:

 

Japanese Private Railway Companies and Their Business Diversification

 

http://www.jrtr.net/jrtr10/f02_sai.html

 

The PDF version has charts detailing revenues and profits for the 15 major private railways in 1994 by railway, bus and other segments.  It is very unusual to see this information by segment. Generally the bus segment does not make money, but doesn't loose huge amounts either. Keisei is the only major private railway without substantial revenues from other operations. Nishitetsu is the only major with railway revenues below 20%.

 

Alas, I can`t post a PDF link.  

 

Diversification Strategy of The Minor Private Railway Companies in Japan

 

https://docs.google.com/viewer?a=v&q=cache:Uoeh7AWIbLkJ:www.thredbo.itls.usyd.edu.au/downloads/thredbo7_papers/thredbo7-workshopC-Shoji-Killeen.pdf+&hl=en&pid=bl&srcid=ADGEESiDQLtFvF-shJngoKEKe7o8WoXRW2-guNN7JXjy8CMwhP8u7JayEducBCIhiJQFmPmGb4Aoksri9lFl3cHk1cE71Ckh0LrVTC2LWzFlUejcRV8ECuSANCCJXal6oHR_WnD2lbIA&sig=AHIEtbQyEKm7xQwx3EkIEOGj-s4JfzibjA&pli=1

 

Regarding the hanging ads in Japanese railways.

 

http://www3.nufs.ac.jp/~michael/Archives/05_ACE_1/kotoe.htm

 

The hanging ads in the aisles appear to be a major source of revenue.  The runs can be as short as 3 days.

 

How Japan's Hankyu Railway Became a Retail Powerhouse

 

www.calrailnews.com/crn/0802/0802_45.pdf

[bill937ca]

Isn't illegal to combine real estate and railways in the US?

 

 

I don't know, though railroads are big landowners- the Union Pacific RR is the largest landowner in the U.S. west of the Mississippi River and the second largest overall in the nation, after the U.S. government.  It would be strange that a law would restrict a railroad from building a shopping center or a high rise building next to their track.

 

The other point to remember is that zoning laws are non-existent in Japan (at least by North American standards) and the private railways don't have to go through the same approval process as transit agencies would here.

[Nick_Burman]

Isn't illegal to combine real estate and railways in the US?  Traction companies with non-transportation businesses were broken up in the 30s. The claimed reason is restraint of trade, but really it protects oil interests from competition.

 

 

 

Bill, it was/is illegal for a power company to own a trolley/interurban line and v.v.. Many power companies had to divest of their trolley line (for instance, Potomac Edison). Had they been able to retain it I beli8eve the history of many US interurbans would have been very different.

 

As BB well mentioned, various US railroads own non-transportation interests.

 

Cheers NB

[KenS]

Isn't illegal to combine real estate and railways in the US?  Traction companies with non-transportation businesses were broken up in the 30s. The claimed reason is restraint of trade, but really it protects oil interests from competition.

 

The Interstate  Commerce Comission, now replaced by the Surface Transportation Board, regulated commercial activities of U.S. railways from 1887 to 1995, although much of its regulation was disassembled in the 1970s and 1980s by Congress. It had always been focused on rates and services to ensure that companies wouldn't be undercut by competitors and to ensure that "captive" shippers couldn't have their rates raised arbitrarily. With the 1935 Motor Carrier Act the ICC's authority was extended to truck and bus companies. The ICC could control creation of new common carriers, and eventually (I'm not sure when) this gave rise to a prohibition on multi-modal ownership (railroads couldn't own trucking companies, for example). But I don't know of any prohibition on general commercial/retail activity outside the railway business. However, that activity would have been subject to ICC regulation (I think) if owned by a railway, which could have made it uncompetitive with other companies that weren't so regulated.

 

Interurban railways often owned commercial interests (or both were owned by a parent), in particular resort facilities (water parks, etc) at the ends of lines to promote weekend ridership. And like railways they owned and sold propety abutting lines (early western railroads created whole towns, interurbans created "planned" suburban commuter communities, much in the same way Japanese railroads still do today).

 

That commercial aspect fell away at some point.  I haven't read of railroads doing it after the 19th century, and the Interurbans didn't have money to do development after the beginning of the Depression.  But I don't think it was due to any specific regulation (although potentially it could have been an ICC regulation; I just couldn't find any reference to one when I went Googling, and I don't recall ever reading of one). But since U.S. railroads were primarily freight and inter-city passenger lines, not suburban passenger lines, they didn't really have any motive to develop retail commercial centers.

 

Which isn't to say railroads didn't have suburban passenger lines.  It's just that it was a niche business, and after 1900 largely ceded to the Interurbans, and later to public entities.

[bill937ca]

 

In other words the railway itself was just a sideline attraction. This is no accident. As John Calimente reminds us in the latest issue of the Journal of Transport and Land Use [PDF], a major reason Tokyo's private rail lines are so successful is that they've diversified the business beyond transportation into real estate holdings and retail outlets. At the end of the day this means both profitability for the company and better transportation for city residents.

 

http://www.theatlanticcities.com/commute/2012/05/secret-tokyos-rail-success/2044/

 

Journal article referenced above (pdf download):

https://www.jtlu.org/index.php/jtlu/article/view/280

 

I read the article written by John Calmente last night and got the impression he could never have been to Tokyo or let alone looked up a Tokyu timetable. He talks of morning and evening peaks but makes no mention of the third peak late at night.  If he had looked at a timetable (and English timetables are becoming more common Keio and Seibu have them  and I haven`had the time to  check any others) he would have noticed the traffic doesn't die after 1800 hours.  There also is no mention of the various stopping patterns which are also indicators of elevated status of property at key locations.

 

He looks at peak trains per hour and hours of service per day, but totally misses the total number of trains per day and the number of trains each hour (which generally peaks around 0800 and then remains relatively constant from 1000 to 1600 before increasing--generally until the end of the day.

[bill937ca]

 

Which isn't to say railroads didn't have suburban passenger lines.  It's just that it was a niche business, and after 1900 largely ceded to the Interurbans, and later to public entities.

 

 

Illinois Central had suburban electric lines out of Randolph Street Chicago. These are now run by Metra.  Reading Company had suburban electric lines out of the Reading Terminal in Philadelphia. These are now connected to former Pennsylvania Railroad electric suburban lines and operated by SEPTA.  Reading Terminal survives but no longer is a train terminal.  The Long Island Railroad ran electric lines into  New York`s Pennsylvania Station. This is now part of MTA.

 

Other than terminals I don`t any these really got into commercial real estate with a direct connection to the railroad.