Retail rail hubs picking up steam

Increasing urbanisation around the globe has seen the growth of mixed-use developments including retail, dining, community, residential and services precincts. But rail hubs have – mostly – been a bit slow to adopt this successful model.

Japan

An exception to this is, of course, Japan. Perhaps because its railways are privately owned, or because cars are not a necessity in Japanese cities, it has long been a global leader in rail-hub retail. As early as the 1930s Tokyu Rail Corporation, which was established in 1922, started surrounding its hubs with commercial and retail buildings. As of 2006, these retail hubs were responsible for 20 per cent of the corporation’s profit.

Retail offerings by other train corporations such as JR East increased markedly in the early 2000s, shifting from kiosks, stalls selling bento box lunches, and standing noodle shops on platforms to mainstream retail.

Japan has now coined the term ekinaka (literally, “station-in”, with a secondary meaning of gain/benefit/use), to describe the concept of shopping complexes inside train stations, rather than above or next to them. Without going outside of the ticket gates, commuters can buy apparel and specialty food, go to the supermarket, and get manicures, haircuts, and massages. Some stations have daycare and babysitting services.

Hong Kong

World-leading MTR Corporation operates a “retail + property” model where mixed-use and commercial developments are built above and next to its rail stations, so that the rail station becomes a community anchor (sort of in the same way that new Australian housing developments are sometimes anchored by a new shopping centre). MTR partners with private developers to build properties then takes a share of the profits the developers make. This model is self-sustaining, profitable and doesn’t require government funding.

The MTR serves 1.6 billion passengers a year across 87 stations, and commercial developments sit above approximately half of these.

United States

A number of the larger stations in the US are historic sites and have taken advantage of this to offer sightseeing tours, and cultural events and attractions.

Union Station, Washington, DC, has its own website outlining tourism, 35 restaurants, events and retail. Within the retail section there’s a special section for “shops with superb style”. Categories retailed at the station include electronics and entertainment (Best Buy, Verizon Mobile, Walgreens), health and beauty, books and cards, jewellery, apparel (eg H&M, Victoria’s Secret, New York New York), shoes, restaurants, and specialty.

Fulton Center, NYC: Adjacent to the World Trade Centre transportation hub, Oculus Hall contains 78,000 square feet of retail and dining including Apple, H&M, Sephora, and Tumi. Over the next few years the mall will link to another 290,000 square feet of retail space.

Europe

The historical nature of some of the rail sites and structures means redevelopment is trickier, so progress hasn’t been as swift, and the scale of the retail and dining options isn’t as large as in parts of Asia or the US.

Rotterdam Station has 25 stores, including some of the usual chains such as Starbucks and Burger King, as well as other local stalwarts such as Dudok, Rituals and Sissy Boy.

Paris’s Gare du Nord has a number of brasseries as well as food kiosk offerings. The closest supermarket, Monop, is a two-minute walk away.

London: Transport for London, which operates the famous Tube, have a 10-year program of station development totalling more than £3.5 billion ($6.43 billion) across 270 stations. As at 2013, TFL owned only 1000 retail units, mostly small and only a small part of earnings.

Where to in Australia?

An Arcadis report released in March this year reviewing 27 of the world’s rail hubs placed Sydney Central second to last; Melbourne’s Southern Cross and Brisbane’s Roma Street also languished in the bottom ranks. New York’s Grand Central – “New York’s living room” – was top of the list, for its incorporation of retail, commercial, residential and cultural attractions. Ranking criteria included the station being a destination in its own right, and providing local areas with an economic boost.

It remains to be seen if rail developments in Australia (such as those currently under way in Sydney for Central and Martin Place, and Melbourne’s Metro) similarly take advantage of retail and mixed-use opportunities in the rapidly developing urbanisation model.

One hopes that the involvement of Hong Kong’s MTR Corporation in Sydney’s Northwest Rail Link is a step in the right direction.

Norrelle Goldring has 20 years’ experience in retail, category, channel and customer strategy, marketing and research, working in and with global retailers, manufacturers and research houses

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