Rebuilding the Edobashi warehouse at Nihonbashi as a rental office tower (2010)

The wall it kept, the contents it swapped

Read only as the preservation of a historic building, this project’s core is missed. What Mitsubishi Logistics carried out here was a recapitalization: land in the centre of Tokyo, lying dormant with a book value of $802.2M (¥85bn) against a market value of $2.5B (¥265bn), exchanged for eighteen floors that produce rent. Keeping 70% of the old outer wall appears to have been the condition it accepted so that the district and the city authorities would accept that exchange. “The place where the company began” worked as a reason to pay the extra cost and the extra months as well as a reason to preserve.

The swap was not repaid at once. The investment grew from about $118.1M (¥13bn) at announcement to about $130.4M (¥14bn), and in the year to March 2015, when the building was finished, the property business actually earned less than the year before. Through the three years of construction the head office camped in rented space at Shinkawa while a prime Nihonbashi site stood as a building plot earning nothing. Converting an unrealized gain in land into rent requires that much time and money paid up front. The reason a warehouse company’s property business can only be planned on a long horizon is visible here in full.