A growing number of newspaper companies are starting to view their prime real estate in urban centers as a new source of revenues to support their core business operations.

The new perspective comes as more companies decide to either renovate old facilities or relocate their head offices, thereby resulting in redevelopment projects.

But as circulation and advertising revenues remain weak, more newspaper executives support building commercial and office complexes on their real estate and other properties, thereby financially sustaining the troubled newspaper business with new revenues.

Pursuit of profit is one thing. But contributing to the public good is another. The newspaper companies are contributing to the rejuvenation of regional economy with their development projects, while re-designating corporate landmark facilities as vaults for information dissemination and the staging of cultural activities.

(Sample models of newspapers’ real estate businesses)

The Mainichi Shimbun in spring 2007 opened the Midland Square high-rise office and commercial complex in front of JR Nagoya Station, working with Toyota Motor Corp. and other companies. The complex comprises a five-story commercial building which houses upscale brand shops and restaurants, and the 47-story office building. All of the rental units were filled several months before the complex opened.

Yasushi Kimura, a deputy manager in the Mainichi’s property administration office, said the main aim of the newspaper company’s real estate undertakings is to financially sustain the newspaper’s publishing business.

According to Kimura, the Mainichi’s revenues from real-estate dealings surged by almost 150% in the five-year period through fiscal 2007. Its Midland Square project in Nagoya is one of the Mainichi’s recent successes in the field.

Satoru Araki, deputy manager at the Yomiuri Shimbun’s property management division in Tokyo, confirmed that real estate is a solid source of stable income for the newspaper company. “As reported by our top executives, real-estate dealings have become the third-largest source of revenue after sales and advertising,” Araki said.

The Yomiuri opened a commercial facility, named Marronnier Gate, in Tokyo’s Ginza district in September 2007. The 12-story building is the Yomiuri’s first wholly commercial facility, which houses upscale fashion and other brand shops. On the other side of the street stands Printemps Ginza, a department store in which the Yomiuri has a stake, and Yomiuri officials are pinning hopes on a synergistic effect from the two commercial facilities continuing to draw in visitors. And indeed, the occupancy rate at Marronnier Gate has been 100% since its opening, according to the Yomiuri.

Among the regional newspaper publishers, the Kobe Shimbun runs M-INT KOBE, a multi-purpose commercial and office facility in front of JR Sannomiya Station. The 18-story building (with two basement floors) opened in October 2006 on the former site of the newspaper company’s head office, which was severely damaged in the 1995 Great Kobe Earthquake. Locals see the new structure as a symbol of Kobe’s long overdue rehabilitation from the quake’s devastation.

According to Arata Orito, a director and head of management planning at the Kobe Shimbun, the new building attracted 12 million visitors in its first year of operations. This year’s total is estimated to be about 9 million visitors. Business performance remains robust. Yearly revenue amounts to about 2.8 billion yen, or more than 10 percent of the company’s newspaper-publishing business. Orito said that by expanding tie-ups with related businesses, the newspaper company will aim to financially sustain its core business with the help of real estate.

(New developments to follow)

Other real-estate projects run by newspaper companies will follow this fall and beyond against a continuing backdrop of declining circulation and advertising revenues that continue to affect the newspaper industry.

The Chunichi Shimbun is to in October start building a first office building for rent at the site of its former Tokyo head office in Shinagawa Ward. The 19-story high-rise (with three basement floors) is to be completed around the end of 2010.

The Asahi Shimbun is preparing to build a large-scale complex, of twin high-rise buildings, each 200 meters tall, as part of the redevelopment of Nakanoshima district in Osaka, where its Osaka head office is located. Dubbed “Nakanoshima Festival Tower,” the eastern part of the structure is to be completed in 2013 and the western part in 2018.

The Asahi is said to have recognized the importance of real estate only one or two years ago after launching the Nakanoshima redevelopment project. Nobuyuki Okada, an assistant to the chief of the property management office, said that in the 130-year history of the newspaper company, the Asahi has acquired land plots for newspaper development. “From now on, we must make the best use of our assets to sustain the newspaper business,” Okada said, adding that for the Asahi, the purpose of its real-estate business is just to reinvigorate its newspaper business, and not the other way around.

(What real estate business means)

Asked about the appropriateness of a newspaper company engaging in real-estate dealings, the Mainichi’s Kimura said that it is difficult to set any clear-cut limit on the scale of its real-estate activities. In this connection, he pointed to such major risks in real estate as the huge costs of possessing property, the trend toward falling land prices, a steep surge in the price of building materials due to oil price rises, the departure of tenants due to a deteriorating business climate and other changes in the social situation. He said that he would like to promote real estate as a basis for a well-balanced strategy. “Real estate must never be seen as a magic wand with which we can secure the future of our newspaper company,” he said.

Kimura and executives of other newspaper companies pointed to other purposes of their real estate, such as turning out people to town centers and creating new bases for cultural activities and information dissemination. The Mainichi’s Kimura said, “Association with the local community holds the key to the success of our real-estate undertakings. We newspapers should stand at the forefront of corporate contributions to the local communities and urban centers.”

(Contributing to the local community, in the public interest)

Indeed, the Mainichi’s Midland Square helped revive the heavy turnout of people in front of Nagoya Station. Its office building houses a public hall that seats about 200. At the request of the Nagoya municipal government, the facility hosts lectures once a month for employees working at neighboring companies as part of its efforts to make the site “a base for cultural activities.” At present, more than 100 companies in the vicinity of Midland Square are registered members of the lecture series. The facility will also be used for such cultural events as performances by rakugo storytellers.

The Kobe Shimbun is focusing on the use of its M-INT KOBE facility for the promotion of cultural events and information dissemination.

Kobe is called the birthplace of Japan’s movie industry. The M-INT building houses a cinema complex and the newspaper company’s culture center. The large-screen LED display at the facility is used for news, information about tourist spots in Hyogo Prefecture and local specialty products. In an agreement with Japan Broadcasting Corporation (NHK), the equipment will be used to deliver emergency information in the case of an earthquake or other disaster. The Kobe Shimbun’s Orito said that the newspaper company belongs to the information industry and that the new facility has been designed to become a “base” for information dispatching.

In the case of the Chunichi’s office building which is now in the planning stage, a day nursery for 50 to 60 infants is to be introduced at its low-rise annex structure, while a multi-purpose conference room in the first basement of the main building will be used as an evacuation center in case of emergencies. Hiroyuki Komuro, a director and chief of Chunichi’s Shinagawa development office, said that the company had had its Tokyo head office at the site for the new office building for over 40 years and local residents were attached to it. He said that contributing to the neighborhood community and the public interest was a main aim of the development project. He specifically pledged to deliver a plaza-type open space for the public and a meeting room for neighborhood residents.