MGM Resorts International (MGM:US) has scouted the world’s biggest fish market as a potential site for the casino resort it wants to build in Japan, according to two people familiar with the company’s plans.
Chief Executive Officer James Murren visited central Tokyo’s Tsukiji market in March to survey the sprawling warren of fish stalls on about 231,000 square meters (57 acres) of land that the the city may sell after its vendors relocate, the people said.
The site, one of the largest parcels ever offered for redevelopment in the Japanese capital and located near the luxury shopping enclave of Ginza, would be an alternative to the Odaiba district that is seen as the top contender for a gaming resort. While land costs would be higher, Tsukiji promises greater visitor numbers due to its accessibility by transit and proximity to other tourist draws, Jay Defibaugh, an analyst with CLSA, said by phone.
“Tsukiji, in terms of accessibility, is almost unrivaled in Tokyo,” Defibaugh said. Even with the higher costs, casino operators would find the site “very appealing,” he said.
Tsukuji Uoichiba Co. (8039), a seafood wholesaler operating at the site, soared as much as 26 percent today, the most since Sept. 17, 2013, before closing up 11 percent at 143 yen in Tokyo.
The Tsukiji fish market draws 42,000 visitors daily, many of whom come to see the early morning auctions where 420 billion yen ($4.1 billion) worth of seafood, including some of the world’s most expensive tuna, is sold each year. The eating stalls around the almost 80-year-old covered market are popular destinations for freshly caught sushi breakfasts.
The Tokyo government decided in 2001 to relocate the market from Tsukiji to a less cramped facility being built on reclaimed land in Tokyo Bay about four kilometers (2.5 miles) away. The move has been delayed in part because of toxic soil that needs to be removed from the new site.
Tokyo may sell the Tsukiji parcel, about double the size of the area being redeveloped at the Hudson Yards site in Manhattan, after most of its 780 fish and vegetable vendors move to the new site, which is scheduled to be completed by early 2016, according to the city office that manages the market.
Land prices in the Tsukiji area cost about 1.39 million yen per square meter, while the cost of property in Odaiba, on reclaimed land in Tokyo Bay, is about 956,000 yen per square meter, according to the land ministry.
Ed Bowers, MGM’s senior vice president for global gaming development, said the company would need at least 30 acres to build a casino resort. He declined to discuss any specific sites, saying Odaiba and Tsukiji were among several locations that have “surfaced,” with Tokyo’s city government seeming to favor the area of reclaimed land in Tokyo Bay.
“Ultimately, it’s really the city that has the say on where they would like this thing to be,” Bowers said.
While the city sees the land’s sale as a likely outcome, it has not yet decided what the site’s best use would be, including whether it would be an appropriate location for a casino resort, Tadashi Sato, who manages the city’s urban policy division, said by phone.
A few potential buyers have expressed interest in the site, said Sato, who declined to identify them.
The Las Vegas-based company is among the big casino operators, which also include Las Vegas Sands Corp. and Caesars Entertainment Corp., that have said they are prepared to spend billions of dollars to build a casino in the world’s third biggest economy.
Prime Minister Shinzo Abe said in June that his ruling party would seek to pass a casino-legalization bill in the fall. The current legislation asks the government to create a legal framework for casinos within one year of the law’s enforcement. A subsequent bill detailing rules for casino operations would also need to be approved.
Odaiba, a parcel of reclaimed land about five kilometers from the business district around the city’s main train station, was “anointed” as the location of a hoped-for casino by former Tokyo Governor Shintaro Ishihara in 1999, Defibaugh said.
“The birthplace of the casino push was really in Odaiba,” he said.
Odaiba’s lures include shopping malls, the Tokyo Big Sight convention center, a 115-meter-tall ferris wheel and the futuristic headquarters of Fuji Television Network Inc., designed by Pritzker architecture prize winner Kenzo Tange.
Mitsui Fudosan Co. (8801), Japan’s largest property developer, has sought government approval for an entertainment complex and resort in Odaiba with construction firm Kajima Corp. and Fuji Media Holdings Inc., spokesman Yoshinobu Koriyama said by phone. The company has never portrayed the project as a casino development, he said.
Ownership of the Odaiba site that’s open to development is divided among several companies, while the Tsukiji parcel is wholly owned by Tokyo’s government, Bowers said. Sole-ownership could streamline efforts to build a resort, he said.
“Land that’s owned wholly by the city that’s big enough may take less time to assemble than a piece of land that’s owned by multiple parties,” he said.
Tsukiji is also more centrally located, near more train lines and adjacent to both Ginza and the Shiodome skyscraper district, where companies including Softbank Corp. (9984) and All Nippon Airways Co. (9202) have their headquarters. It’s adjacent to the Hama Rikyu park, one of Tokyo’s most-visited traditional gardens.
Ginza, with a commercial history dating back to the 1600s, is undergoing a renaissance of its own. In April, Mori Building Co., Japan’s biggest closely held developer by sales, and LVMH Moet Hennessy Louis Vuitton SA (MC) said they were part of a group that’s spending 83 billion yen to build an office and retail complex that will open in 2016 in the area.
“Tsukiji is closer to town: It’s Ginza, basically,” said Kenji Okamoto, managing director for Japan of Spectrum Asia, a gaming consultant. “Odaiba sounds more like Disneyland: it’s out there, but you can have all the fun there.”
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