Toyota Motor Corp. and Mori Building Co. will purchase 79,000-sq. meters of land in Tokyo's Odaiba waterfront area to build a large commercial, office and hotel complex. The new facilities will replace the Palette Town shopping and entertainment complex that currently occupy the site.

As previously mentioned, the scenery of Odaiba will be changing starting in 2010 due to the Palette Town lease expiring.

The new complex will be ready for partial use in 2012 with full-scale use by summer 2013. Construction costs are estimated at 280 billion yen including the cost of the land. The Tokyo Metropolitan Government will be selling the land to the two companies for about 81.4 billion yen.

This is the first development plan worth over 200 billion yen since January, when Mori Trust Co. announced its purchase of the land and facilities for Toranomon Pastoral Hotel in Tokyo's Minato ward.

The purchase shows that although the U.S. subprime crisis has made large development projects in central Tokyo less feasible, there is robust demand for truly attractive properties.

Back in 2006 and 2007, when the real estate market was on a recovery track, large property firms such as Mitsubishi Estate Co. and Tokyu Land Corp. made a series of expensive purchases. But they all turned cautious about launching large development projects after the beginning of this year.

What appears to have prompted Mori Building to make the deal was the scarcity of real estate of this kind.

"In central Tokyo, the number of large, attractive properties for sale has decreased to nearly zero," said Takashi Ishizawa, an analyst at Mizuho Securities Co. This dearth of good property has boosted demand for land in the waterfront area.

An official of a major real estate company said, "It is, and will remain, very rare for a property as promising as the Palette Town site to be put up for sale."

The plans of Mori Building and Toyota include construction of a 19-story office building, a six-story exhibition facility and a 23-story commercial establishment that will be about 100 meters tall. The complex, much larger than the four-story Palette Town, is expected to draw 10 million people annually.

The buildings will be connected by sky bridges to make it easier for people to move among the facilities. About 40% of the site's total area will be covered with greenery. The facilities will have parking spaces for roughly 1,160 vehicles, about 200 more than legally required.

The commercial building will have a hotel and a convention facility that will be operated in an integrated way. The complex is expected to differentiate itself from the Tokyo Big Sight exhibition hall, which is also in the waterfront area, with its capability of offering spaces for conferences and trade shows as well as accommodations. It is expected to attract users from both in and outside Japan.

Toyota is considering creating a facility to replace the Megaweb - Toyota City Showcase (also part of the current Palette Town complex) where people can test-drive models, in a bid to convey the fun of driving to youngsters as well as families at a time when interest in cars is waning.

Excerpts from Nikkei Thursday Morning Edition