Key Points — Converted to Required ADR, ¥19.07 Million per Room Falls Below the Brand’s Hokuriku Level

To state the conclusion first: ¥19.07 million per room — the roughly ¥3.89 billion total project cost divided by 204 rooms — corresponds to a required ADR of about ¥8,700 under standard limited-service assumptions of a 6% target yield, 80% annual occupancy and 45% GOP margin, which sits at almost the same level as Fukui City’s estimated settled ADR (¥8,922 average over the last 12 months, N=36–38 properties). The last-12-month estimated settled ADRs of the brand’s Hokuriku properties at Toyama Ekimae (204 rooms) and Kanazawa Eki Nishiguchi (188 rooms) are ¥12,851 and ¥13,780, so selling at brand level would put the yield in the 8–9% range. On the other hand, 47.3% of the 2,796 existing rooms within 1km of Fukui Station are concentrated in the ¥8,000–10,000 estimated settled ADR band, and only 685 rooms (24.5%) are at ¥13,000 or above. The ¥10,000–16,000 band that the 204 rooms target currently holds only 761 rooms (27.2%), and this thin band is the project’s revenue opportunity. Rooms added since the Hokuriku Shinkansen reached Fukui in March 2024 have gone into the ¥16,000+ band, not this one.

Project Overview — How a Department Store Annex Site Became a Hotel Site in Five Years

First, let us organize the primary information. “Daiwa Roynet Hotel Fukui (tentative name)”, developed by Daiwa House Realty Management (Tokyo), is located at Chuo 1-chome 105–112 and other lots, Fukui City, about a 5-minute walk from Fukui Station. It will be a 9-story building with 204 rooms; construction was scheduled to start on August 3, 2026, completion is scheduled for January 31, 2028, and opening is planned for spring 2028 (PR TIMES, distributed July 27, 2026). Daiwa House Industry handles design and construction, and this will be the brand’s first property in Fukui Prefecture. The Fukui Shimbun (July 29, 2026) reported the building as a 9-story steel-frame structure with a total project cost of about ¥3.89 billion; neither the site area nor the gross floor area appears in any of the materials.

The site’s history is a typical example of how a large-store site in a regional prefectural capital turns into a hotel. According to the Fukui Shimbun, the former Seibu Fukui annex closed in February 2021, and in September 2022 Haseko Corporation signed a purchase agreement with the then building owner (a real estate company). Haseko later abandoned its provisional registration of the ownership transfer, and ownership passed to Daiwa House Realty Management in August 2025. The above-ground structure has already been demolished, and five and a half years will have passed from closure to the start of construction. The fact that the buyer changed once between closure and construction suggests to landowners holding department store or large-store sites that the first contract is not necessarily the final outcome. The share of department store sites nationwide that have been converted to hotels, and how many times the market median their required ADR is, are compared across 14 cases in Department Store Sites Converted to Hotels: 6 of 14 Cases — Required ADR 1.4–3.1x the Market Median.

The local government’s involvement takes the form of a fund subsidy. The “Prefectural Capital Machinaka Revitalization Fund” (県都まちなか再生ファンド), to which Fukui Prefecture and Fukui City each contribute ¥1.2 billion for a total of ¥2.4 billion (project period FY2022–FY2026, administered by Machizukuri Fukui), offers subsidies for shop renovations in Chuo 1-chome and 3-chome (2/3 subsidy rate, up to ¥3 million), as well as a support menu for rebuilding and joint rebuilding in the area south of Densha-dori with a subsidy rate of up to 2/3 and a cap of ¥200 million (Fukui Prefecture, “On the Prefectural Capital Machinaka Revitalization Fund Project” Document 2-2 and Prefectural Capital Revitalization Council materials; the ¥200 million cap per the Fukui Shimbun). According to the Fukui Shimbun, this project is the first to be approved for the ¥200 million maximum subsidy under the south-of-Densha-dori menu, and ¥200 million corresponds to about 5.1% of the total project cost. The effective investment after deducting the subsidy is about ¥3.69 billion, or about ¥18.09 million per room.

Redevelopment around the same blocks is proceeding in stages. According to the Cabinet Office’s profile of the Urban Renaissance Urgent Development Area (as of April 1, 2024), Ekimae Densha-dori North District Block A (FUKUMACHI BLOCK), with about 71,200㎡ of floor area and about ¥44.9 billion of construction investment, partially opened in March 2024; Block B (Chuo 1-chome Block 5), with about 6,800㎡ and about ¥4.9 billion, has a construction period of FY2024–FY2025; and the Ekimae Minami-dori District (Chuo 1-chome Block 10 South and Blocks 11 and 22), with about 28,900㎡ and about ¥14.0 billion, includes lodging among its uses and is scheduled for construction from FY2024 to FY2028 or later. In other words, lodging floor space may also come from the Minami-dori District around the time this project opens in spring 2028, so from a supply-pipeline perspective it needs to be read at the block level rather than as a standalone project.

Comparing ¥19.07 Million per Room with Published Construction Cost Benchmarks — What Can Be Read Without the Floor Area

Neither the press reports nor the release state whether the total project cost includes land. Here we first look at the implications if the ¥3.89 billion total project cost is regarded as “construction, design and other costs excluding land”, and handle the adjustment for the land-inclusive case in the next section on required ADR. Hotel construction costs based on MLIT’s “Statistics on Building Construction Starts” were ¥1.955 million per tsubo (3.3㎡) as the all-structure average in 2024 (RC ¥1.738 million, steel ¥1.650 million), and in 2025 were ¥1.952 million for all structures and ¥2.405 million for steel (archi-book tabulation; the use classification changed to “hotel or ryokan”, so care is needed when comparing with the prior year) — levels that have stayed elevated after rising +41% in two years from ¥1.38 million in 2022.

Because the gross floor area has not been published, we back-calculate using three cases of 30, 35 and 40㎡ of floor area per room: if the entire total project cost is regarded as construction cost, the cost per tsubo is ¥2.10 million, ¥1.80 million and ¥1.58 million respectively. As a comparison, the Chuo 1-chome District 18 Quality Building Development Project (Dormy Inn Fukui, 189 rooms), built in the same Chuo 1-chome between November 2017 and February 2019, had about 6,200㎡ of floor area and about ¥2.0 billion of construction investment per the Cabinet Office’s published figures — about ¥10.58 million per room and 32.8㎡ of floor area per room. Applying the same 32.8㎡/room to this project gives about 6,700㎡ (about 2,024 tsubo) and about ¥1.92 million per tsubo, below the 2025 steel-frame figure of ¥2.405 million. This project is being delivered under Daiwa House Industry’s integrated design-build approach, and the fully in-group structure may be helping to contain the total project cost, though it also remains possible that the floor area per room is smaller than 32.8㎡. Either way, ¥19.07 million per room can be considered a realistic cost level for making a limited-service hotel in front of the station work in an environment where construction costs have risen about 1.8x over seven years. The national level of construction cost per room back-calculated from 31 planned hotels (about ¥20.67 million, with a room unit area of 35.0㎡) is shown in Hotel Construction Cost of ¥20.67 Million per Room — Back-Calculated from 31 Planned Projects with a 35.0㎡ Room Unit Area, and this project’s ¥19.07 million sits slightly below that level.

Back-Calculating the Required ADR — ¥8,700 at a 6% Yield; 8–9% Yield at the Brand’s Hokuriku Level

Required ADR was calculated as “total project cost × target yield ÷ (GOP margin × 365 days × 204 rooms × occupancy)”, with a GOP margin of 45%. In listed REIT disclosures, Invincible Investment Corporation’s 91 MHM-operated properties had a GOP margin of 38.9% (fiscal period ended December 2024), so 45% is an assumption about 6 points higher. Because the meaning of the yield changes depending on whether land is included, we first show a grid with the ¥3.89 billion total project cost used as-is in the numerator.

Overlaying this table on observed market values shows where the project sits. Fukui City’s business hotels (by category) had an estimated settled ADR averaging ¥9,144 over the last 12 months (October 2025–September 2026, N=11–13 properties), and the all-segment median was ¥8,922 (N=36–38 properties). The required ADR of ¥8,707 at a 6% yield and 80% annual occupancy is almost the same as this market level. Meanwhile, the last-12-month averages of the brand’s four existing Hokuriku/Tokai properties were ¥12,851 at Toyama Ekimae (204 rooms), ¥13,780 at Kanazawa Eki Nishiguchi (188 rooms), ¥14,065 at Kanazawa MIYABI (177 rooms) and ¥12,812 at Gifu (203 rooms) (all N=12 months) — ¥3,700–4,900 above Fukui City’s market level. If this project could achieve ¥12,800–14,000, in line with the brand’s existing properties, at 80% annual occupancy, the yield on total project cost would be 8.8–9.6%, with roughly another 0.5 points on the ¥3.69 billion basis after deducting the ¥200 million subsidy.

We also include an adjustment for whether land is included. If the total project cost excludes land, assuming a site of about 1,600㎡ (an assumption based on the site area of District 18, where 189 rooms were built in the same Chuo 1-chome) and a land price equal to Chuo 1-chome’s official posted land prices of ¥430,000–454,000/㎡, the land cost is about ¥690–730 million, bringing total investment to about ¥4.6 billion, or around ¥22.5 million per room. In that case, the required ADR at a 6% yield and 80% annual occupancy rises to about ¥10,300 — still below the level of the brand’s existing properties. In short, the project’s economics are closer to the question of “does it work even at Fukui City’s market level?” than “can it sell at brand level?”, and the cost structure appears to bring a target yield of around 6% within reach even in the former case.

Supply Within 1km of the Station — 47.3% of 2,796 Rooms in the ¥8,000–10,000 Band; the ¥10,000–16,000 Band the 204 Rooms Enter Holds 761 Rooms

Next, we check the depth of the market that the 204 rooms will enter. Within a 1km radius of Fukui Station, 23 properties with 2,796 rooms had price observations in the last 3 months (July–September 2026) (properties with known room counts; plus one ryokan with an undisclosed room count), so the 204 rooms represent +7.3% on existing stock. In the area room-supply time series based on opening and closing dates, stock fell from 32 properties / 2,636 rooms in 2019 to 27 properties / 2,441 rooms in 2021–2023, then recovered to 28 properties / 2,693 rooms in 2024, the year the Shinkansen opened, and 29 properties / 2,845 rooms in 2026. The 2024 increase was mainly Courtyard by Marriott Fukui (252 rooms) in Ekimae Densha-dori North District Block A, and the 2026 increase mainly Onyado Nono Fukui (御宿 野乃福井, 152 rooms), which opened in February — both properties that thickened the upper price bands within 1km.

By price band, rooms within 1km are concentrated in the ¥8,000–10,000 estimated settled ADR band with 7 properties / 1,321 rooms (47.3%), followed by under ¥8,000 with 5 properties / 291 rooms (10.4%), ¥10,000–13,000 with 5 properties / 497 rooms (17.8%), ¥13,000–16,000 with 2 properties / 264 rooms (9.4%), and ¥16,000 and above with 3 properties / 421 rooms (15.1%) (each property’s July–September 2026 average; the room-weighted median is ¥9,410). The ¥10,000–16,000 band, which the 204 rooms are expected to enter judging from the level of the brand’s existing Hokuriku properties, currently holds only 7 properties / 761 rooms (27.2%). Courtyard by Marriott Fukui and Onyado Nono Fukui, both opened in 2024 or later, are in the ¥16,000+ band, so no new supply has been added to this band. After opening, the band will grow by 204 rooms to 965. Competitors within the band are Dormy Inn PREMIUM Fukui, which has a natural hot-spring large bath, and the city hotels in front of the station; this project will differentiate itself with the brand’s standard format of a limited-service hotel a 5-minute walk from the station.

Rates Before and After the Shinkansen Opening — Fell Below the Opening-Year Summer in 2025, Surpassed It in Summer 2026

Overlaying Fukui City’s estimated settled ADR by month reveals a three-stage pattern: the Hokuriku Shinkansen opening year (2024), the pullback in 2025, and the recovery in 2026. The July–September three-month average was ¥8,917 in 2024, ¥8,684 in 2025 and ¥9,869 in 2026; summer 2026 was +13.6% year on year and +10.7% above the opening-year summer. In the most recent finalized months, August 2026 was ¥10,988 (+11.3% YoY) and September ¥9,516 (+13.3% YoY). Business hotels alone were ¥9,555 in September (+13.2% YoY, N=13 properties), so months exceeding the prior year by more than 10% are continuing across all segments.

Behind this lies a change on the demand side. In the Japan Tourism Agency’s “Overnight Travel Statistics Survey” finalized figures for 2025, total guest nights in Fukui Prefecture were 3,929,570, down 2.4% year on year, so the post-opening-year pullback persisted on a guest-night basis. Even so, one reason rates rose in 2026 is that 404 rooms in the upper price bands were added within 1km between 2024 and 2026, lifting the city-wide median. This is a phase in which supply increased and rates rose too, and our current reading is that it differs from a phase in which adding 204 rooms would push down market rates. The tiered structure within Fukui Prefecture (station area, hot springs, dinosaur area) is covered in Fukui’s three-cluster ADR hierarchy; this article focuses narrowly on the cost and site origin of a single station-front project (see also: Why are hotels in Obihiro, Asahikawa, Fukui and Okayama expensive? and Fukui’s breakfast premium).

How Weekdays and Saturdays Fill — Wednesdays Start at 58% at LT45, Saturdays at 84%

Even with the same development cost, how occupancy is built differs by day of week. Comparing booking curves for all segments in Fukui City (a fixed cohort whose OTA-listed allotment is 30% or more of total rooms; 29–33 properties, 1,636–1,666 rooms) for September 16, 2026 (Wed), September 19 (Sat, first day of a three-day weekend), September 30 (Wed) and October 3 (Sat): on weekdays, estimated OCC at LT45 stays at 51.7–58.3%, building up close to the date to 67.7–80.7% at LT14 and 84.3–96.8% at LT1. Saturdays, by contrast, already reach 80.0–84.0% at LT45 and 94.5–99.2% at LT1. Daily estimated OCC in September averaged 90.1% Sunday–Thursday versus 92.3% Friday–Saturday, and 90.9% versus 93.7% in August — a difference of only 2–3 points on average, but the timing of filling differs greatly.

The same pattern can be seen in property-level inventory. Targeting stays on Saturday, September 19, 2026, and extracting business hotels in Fukui Prefecture whose OTA-published allotment is 30% or more of total rooms yields 39 properties with data out of 94 targeted, of which 13 passed the criteria. The six located within 4km of Fukui Station (APA Hotel Fukui-Katamachi 247 rooms, 9STAY Fukui Ekimae 17 rooms, Dormy Inn PREMIUM Fukui 189 rooms, Onyado Nono Fukui 152 rooms, Asuwagawa Litoart asunowa 7 rooms, Comfort Inn Fukui 96 rooms) were all observed with zero rooms remaining. Within 1km, APA Hotel Fukui-Katamachi had 0/247 rooms remaining at LT26 and Onyado Nono Fukui 0/152 at LT20. Expanding to all segments, Hotel Econo Fukui Ekimae (138 rooms) and Fukui Plaza Hotel (30 rooms) were observed as sold out from 45 or more days before the stay date. This is an observation of a single date with N=6 properties, so it alone cannot establish room for rate increases; but the existence of two-tier demand at the station — holiday Saturdays filling early and weekdays filling late with business demand — is a premise for designing the sales strategy of a 204-room limited-service hotel.

Site Conditions — Commercial Zone, 600% FAR, Land Prices +18.5% in 3 Years, Asuwa River Assumed Inundation of 0.5–3m

Checking the area around the project site in the MLIT Real Estate Information Library shows that the south side of Densha-dori in Chuo 1-chome is a commercial zone with a designated floor area ratio of 600% and a building coverage ratio of 80%. Land prices continue to rise in the commercial areas in front of the station. The official land price benchmark site closest to the project, “Fukui 5-3” (Chuo 1-chome 1824 and others, 200m from the station), rose from ¥383,000/㎡ in 2023 to ¥454,000/㎡ in 2026, +18.5% in three years (+5.1% YoY in 2026); “Fukui 5-1” (Ote 2-chome 2002, 180m from the station) rose from ¥340,000/㎡ in 2021 to ¥408,000/㎡ in 2026, +20.0% in five years; and “Fukui 5-2” (Chuo 1-chome 119) rose +15.9% over the same five years from ¥371,000 to ¥430,000. In the 2025 prefectural land price survey, Chuo 1-chome 1707-1 was also ¥417,000/㎡ (+6.4% YoY), so commercial land in front of the station is in a phase of 4–7% annual increases. Considering the share of land cost in total investment, the August 2025 ownership transfer that secured the land first effectively locked in costs before further land price increases.

The flood inundation assumptions should be read as design conditions for equipment placement. At the project site, the maximum assumed inundation depth falls in the 0.5 to under 3.0m category for both the Asuwa and Kuzuryu rivers, while east of Fukui Station the Kuzuryu River category is 3.0 to under 5.0m. Whether to place the power receiving/transforming equipment, emergency generators and boilers on the second floor or above — or, if on the ground floor, to install flood barriers and waterproof compartments — is a point that should be considered in the sectional plan of the 9-story steel-frame building. The cost of extending emergency power is estimated per 100 rooms in a separate article.

As support for demand, we also look at the surrounding working and resident population. Based on the Ministry of Internal Affairs and Communications / Ministry of Economy, Trade and Industry “Economic Census for Business Activity” (2021), there are 22,578 workers within 1km of Fukui Station (2,676 establishments, 26.6% office-type share), and weekday demand from this business district — where the prefectural office, city hall and financial institutions are concentrated — will be the foundation for this project. On the other hand, according to MLIT’s National Land Numerical Information 250m-mesh future population estimates, the resident population within 1.5km of the station will fall from 30,399 in 2025 to 26,128 in 2040 (−14.0%), and the share of elderly residents was 35.7% in 2025. Resident population is a census-based figure, not visiting or transit population, but it shows a structure in which lodging demand at the station depends on visitors and business travelers rather than residents.

Investment Takeaways — Three Points for Those Considering a Limited-Service Hotel in Front of the Station

We also check sensitivity. If ADR is 10% lower than assumed, the occupancy required for a 6% yield rises from 80% to about 89%; if occupancy is 5 points lower at 75%, the required ADR rises to ¥9,288. If both occur at once, the required ADR is about ¥10,300, roughly ¥1,400 above Fukui City’s market median, so brand-level demand generation becomes the condition for maintaining the yield. Conversely, the track record of city rates continuing to rise even as the upper bands within 1km thickened from 2024 onward currently reduces concerns that adding 204 rooms will push rates down.

Finally, a note on the link with listed hotel REITs. Of the portfolio lists disclosed by seven REITs — Ichigo Hotel REIT (いちごホテルリート投資法人, 3463), Invincible Investment Corporation (インヴィンシブル投資法人, 8963), Nippon Hotel & Residential Investment Corporation (日本ホテル＆レジデンシャル投資法人, 3472), Japan Hotel REIT Investment Corporation (ジャパン・ホテル・リート投資法人, 8985), Hoshino Resorts REIT (星野リゾート・リート投資法人, 3287), Mori Trust REIT (森トラストリート投資法人, 8961) and Kasumigaseki Hotel REIT (霞ヶ関ホテルリート投資法人, 401A) — as of October 11, 2026 (N=300 domestic properties), only two properties are in Fukui Prefecture: a hot-spring lodging facility in Awara Onsen (95 rooms) owned by Nippon Hotel & Residential Investment Corporation, and a business hotel in Fukui City (97 rooms, about 4km from Fukui Station) owned by Hoshino Resorts REIT. No property within 1km of Fukui Station is included. A 204-room limited-service hotel in front of the station is a typical size for listed REIT acquisitions, and depending on its operating results after opening, it could become a candidate for the first REIT-owned property in front of Fukui Station.

Summary

Back-calculating from the published figures of a ¥3.89 billion total project cost and ¥19.07 million per room, the 204-room hotel on the former department store annex site in front of Fukui Station has a cost structure that works at a required ADR of about ¥8,700 at a 6% yield and 80% annual occupancy — almost the same level as Fukui City’s median estimated settled ADR (¥8,922, N=36–38 properties). Selling at the brand’s existing Hokuriku estimated settled ADR of ¥12,800–14,000 would lift the yield to 8.8–9.6%. Of the 2,796 existing rooms within 1km of the station, 47.3% are concentrated in the ¥8,000–10,000 band, while the ¥10,000–16,000 band the 204 rooms will enter is thin at 761 rooms; since 2024, 404 rooms have been added to the ¥16,000+ band above it, yet city rates have kept rising. The site turned into a hotel five and a half years after the store closed, via a change of buyer and the prefectural/city fund subsidy (up to ¥200 million), and can serve as a reference model for how large-store sites in regional prefectural capitals are converted to lodging. The deciding factor for profitability is at what rate the hotel goes after the two-tier demand at the station — holiday Saturdays 80% full by LT45 and weekdays filling at the last minute.

Related Articles