Taking the trades around the lease in-house (1996)

Diversification as filling in next door

This run of subsidiary formations was not an expansion into unrelated ground but the work of filling in, one at a time, the plots adjoining the business it already had. Brokerage, lending, management, gas — every one of them is work that necessarily arises between a landowner who has built a rental block and the tenants who live in it, and each has the character of pulling back in-house an income that had been handed to outside operators. What president Tada Katsumi described with the word “totalization” can be read less as opening a new market than as recovering what had been leaking out of the market he had made himself. Being debt-free, with an investment portfolio on the order of ¥100bn, was what let him do the recovering all at once.

What was not settled at the time was what to put beyond the last adjoining plot. Heavier than the failure to hit the five-year plan’s revenue target is the fact that, so long as the company remains a builder, the surrounding income is itself bound to the number of housing starts. The investments from the 2010s onwards — overseas property, nursing care, asset management — can be read as the reverse side of that: there is little left to fill in around domestic rental housing. The 1990s question of how much of the adjacent ground to own outright reaches, in altered form, into today’s capital allocation.