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Background information: the reorganization and investment programmes of the Swedish railways

In order to fully appreciate the Stockholm City West development, as well as any station development in Sweden, it is essential to know something about the current reorganization and reorientation of the activities of SJ (the Swedish railways). Furthermore, the Swedish approach to market orientation of the railway business appears to be particularly successful, at least relative to that adopted by many other countries in Europe. Some insight into that approach, particularly for the property issues that are concerned, is certainly worthwhile. Its most relevant features are: the establishment of a property division; the travel centres and the environmental programmes; and the development of high-speed X 2000 services.

The property division is one of the four divisions into which SJ was split in 1988. The other three are passenger transport, freight transport, and engineering. At the same time, track construction and maintenance became the task of a fully separate, government-owned company called Banverket (BV). The objective of the property division of SJ (with 300 employees, one head office, and four regional offices) is the continued development of attractive and new travel centres and development of adjacent real estate...increasing the value of and activating SJ's real estate holdings, and at the same time coordinating all SJ's interests, both internal and external, in questions related to physical planning. (SJ Real Estate Division, n.d, p. 3)

In 1994, real estate management accounted for 4% of SJ's revenues. About one-third of SJ's real estate holdings are externally leased, and the percentage is growing. In 1994, the real estate division had an operating revenue of SKr 1.008 million and an income after depreciation of SKr

412 million. These figures correspond to respectively 9.7% and 248% of the parent entity's revenue.

The emphasis on travel centres is important, as the travel centres programme embodies the essence of SJ's property philosophy. Real estate development next to stations and promotion of train travel are seen as complementary; these goals are pursued accordingly. Travel centres are to be developed as 'transportation interchanges with an urban location'. A travel centre is not just a railway station. It includes the surrounding areas, access roads for buses and cars, and parking spaces for cars and bicycles. The travel centre should also act as a commercial centre, providing services to passengers and other visitors. Development plans call first of all for eliminating the run-down image of railway stations. This entails turning them into centres offering a wide range of goods and services to make train travel more convenient. This must provide good parking facilities, easy access to local buses, car hire agencies, shops, banks, post offices, and possibly hotel and office space.

What could be better for a company whose business involves travelling than being located close to or even on top of a railway station? As we see a greater number of highspeed rail connections in the upcoming years this of course will be of great importance. For those who have their offices in a station complex the journey time from city centre to city centre is approximately the same by rail or air and on the train travelling time is not wasted. You can work on your computer, make important phone calls, hold meetings, eat or just relax. (The director of SJ property interviewed in Sweden Today, 1994)

Four actors are identified by SJ as important players in the process of station development: SJ; the local authority (main resource: planning instruments); the national rail administration, Banverket (controls infrastructure, is controlled by the state); and the regional transport company (controls local networks, is controlled by the local authorities, is financed also by the state). External financing is vital. But the problem is the present oversupply of office space. An increase in demand is not expected. The reverse is more likely. Rationalization of administrative work means that less space is needed. This is why the fifth actor—the developer—is scaling down its activities. Investors are very cautious. The expectation is that they could be interested only in very special locations like Stockholm City West and a few others. Essentially, they would consider only the central locations in the three biggest cities.

Particularly important for the development of travel centres is the relationship with the other key actor, the municipality. In Sweden (comparable to, for instance, the situation in the Netherlands) the municipality plays a particularly strong role in urban development. The typical development approach entails making early contact with the local authority and developing a common vision on the site. Signing a cooperation agreement is typically the first step. Thus established, the cooperation is extended throughout the development process. It begins with the joint definition of a programme. Once in place, that programme constitutes the basis for relationships with third parties, such as consultants working out alternative solutions or developer consortia bidding for contracts to carry them out. Later in the process, and after several rounds of negotiations, an implementation agreement is signed with the winning developer consortium. At the same time, a development agreement is signed between the railways and the municipality. The preparation and approval of a detailed development plan, which will give the development proposal legal status, run parallel to this process. The detailed development plan is the responsibility of the municipality.

In recent years, slack property markets have made it harder to get projects off the ground. However, the director of SJ Real Estate is optimistic (unlike many others in the troubled Swedish property industry), because 'we own some of the most attractive real estate in Sweden'. The approach has been amended to give higher priority to marketing and an early search for potential tenants. A more active role and direct involvement in the planning process appears to be required. The traditional tactic of 'wait and see' is no longer possible. Under changing market conditions, efforts have been concentrated on the more important travel centres. Moreover, implementation of the major projects (those at Stockholm, Malmö, and Göteborg central stations) is to take place in stages. According to SJ:

In the future real estate market, good locations will be of decisive importance. SJ's real estate holdings, in attractive locations close to communications, are considered to offer interesting investment potential, and are likely to be even more attractive in the long term. The current recession is being used to prepare for our development and travel centre projects. The time-consuming planning process means that it normally takes 2-5 years to produce definitive plans and sign a final implementation agreement. These activities tie up a relatively small amount of capital in relation to the increase in value the planning process is expected to generate once the real estate market has recovered. (SJ Real Estate Division, n.d., p. 6)

The travel centres programme must be seen as part of a wider strategy. In particular, it must be connected to the expansion of X 2000 services and the environmental programme. Together, these two innovations have boosted the use of stations and trains.

The Swedish version of the HST, the X 2000, started service in 1990, running between Stockholm and Göteborg. The X 2000 resembles the Italian Pendolino in that both trains— thanks to a tilting device—can reach high speeds without needing special track. Maximum speeds (~200 km/h) are lower than those possible on the French TGV (~300 km/h), but the great advantage is that existing track can be used (if sufficiently improved). Furthermore, like the German ICE, the service has relatively high frequency and a high level of comfort (conference rooms, comfortable seats with tables, coat hangers, telephones, faxes, on-line information, etc.). Rather than just providing fast point-to-point connections (like the TGV), the system should be seen as a diffused network interconnecting multiple centres (like the ICE; see Figure 7.1). An adaptation of the X 2000 is being developed as a fast regional transportation system for the greater Stockholm region. Unlike Italy, Sweden does not plan to switch to a dedicated HST network in the future. Given the country's low urbanization densities, the traffic potential does not justify the investment. Since 1996, high-speed trains have run regularly between the capital and all the major urban centres. In 1994, for the first time, the train surpassed the aeroplane in market share on the Stockholm-Göteborg route. SJ's goal is for the train to become the fastest means of transport between destinations at distances between 100 km and 600 km. HSTs are part of a system that includes intercity (same routes with more stops), interregio (high-speed cross-connections bypassing Stockholm), and night trains. Furthermore, combinations of train, air, ferry, bus and car services are being developed. The whole range of travellers is important. Special facilities are available on board and in stations for each of the categories identified by SJ: commuters, business travellers, parents with children, students, teenagers, retired, and disabled persons. The special facilities include wheelchair seats, family carriages, sockets for PCs, and so forth. The overall market share of SJ, as measured in passenger-kilometres, rose from 5.4% in 1976 to 6.1% in 1990. In 1994 it was 13% for trips longer than 100 km. The train has a 35% share of all commuting traffic in the Stockholm region.

A second important element of the modernization of the Swedish railways is the environmental programme. Between 1989 and 1993, around 100 stations were completely refurbished. Not only were their functional standards raised significantly, they were also equipped with a diverse range of services. The improvement is evident: visiting railway stations in Sweden today provides an experience that has little to do with earlier feelings of shabbiness and insecurity, still so common in stations around the world. Interior improvements include better waiting rooms, new lighting, customer services, a new system of signs, and doors that open automatically. Outside, station buildings and their surroundings have been given a facelift, platforms and entrances have been upgraded, and stations have been adapted to the needs of the disabled. An interesting feature is the frequent choice for restoration of the historical station building, possibly as a sub-element of a new complex. Besides providing an appealing image, this choice has enhanced the physical relationship with the existing urban centres. As part of this programme, a completely modernized Stockholm Central station was reopened in August 1994.

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