Dispatch from Sendai: Boom and Bust After Japan’s Tsunami

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Greg Baker / AP

The foundations of houses destroyed by the March 11 tsunami are seen beside undamaged houses, near Sendai, northeast Japan, Friday, Nov. 18, 2011.

The first time I drove into Sendai, Japan, I thought I had arrived in a small town. It was March 13, two days after last year’s earthquake and tsunami killed up to 20,000 people and destroyed hundreds of miles of coastline in northeast Japan. Only a handful of buildings were lit up the night I drove in; the otherwise dark streets were devoid of people and cars. When the late winter sun weakly rose the next day, it didn’t bring the heartbeat of a major regional city with it, but the dull pulse of a lonely outpost on life support.

The streets of Sendai today bear no resemblance to the lanes I drove along that night last year. On a Thursday evening, the city’s outdoor malls were flush with a trench-coated, post-work crowd and restaurant touts trying to lure them into their eateries. Kokubuncho, the city’s entertainment district of bars, cabarets and izakaya, was aflame in artificial light, catering to the flood of construction workers who have come from all over Japan to get in on the rebuilding that – 10 months after the disaster – is just getting started. Businesses from watch shops to hostess bars to real estate developers are says sales are up 200% over this time last year.

It’s a welcome change. Sendai has long been the financial and industrial hub of Tohoku, an agricultural region where the national dilemmas of rural flight and an aging population loom especially large. In the 1980s, things here were booming along with the rest of Japan. But after the economic bubble burst in 1991, the local economy — along with the rest of the country — began a painful contraction that lasted for the next twenty years. “Even if the world economy recovered, we weren’t going to,” says Masahiro Kawai, the president of the Sendai Construction Association. “Our whole industry was fading.”

Now suddenly, less than a year after the worst natural disaster in centuries, the city almost has the feeling of a frontier town. Sendai has become the de facto reconstruction hub for a large swath of the northeast coast, where billions of yen in federal funds have been allocated to help rebuild the coast. Until this month, that rebuilding has meant clearing millions of tons of debris – a process that local and national construction companies are just finishing up. Major public infrastructure projects in Sendai city, like building new roads and a new city hospital damaged in the quake, are only now getting started.

“We are about to have a boom that we have never experienced before,” says Tsutomu Fukamatsu, who heads a local construction firm, looking slightly more alarmed than elated. His concern is in no small part because his job for the next decade will be to keep building, and nobody is sure that the government funds to pay for it will keep coming. Indeed, for the last year, his company and others have been dipping into their own pockets to take on the long months of debris clearing, waiting for the federal money promised to them to arrive as the cost of labor and materials rises. “Everyone is running on loans,” says Kawai. “My main job these days is to go to the bank to ask them to lend money to [the Association’s] member companies.”

Even small developers are having trouble keeping up with the construction demand. Despite the fact that most people have not received compensation for their destroyed or damaged homes, just building new homes for the wealthy few who can afford to pay out of pocket is more than the local market can handle. Inside a sleek, McMansion-inspired model home in a Sendai suburb, Takeyuki Mochizuki, a sales manager for Hokushu Housing, says the wait for a home like this is about a year – “if you’re really lucky.” Hokushu’s sales are up 250% percent over last year, and the company is scrambling to find workers who can build as fast as they sell. “Our market was so small before,” Mochizuki says. “We’re having trouble catching up.”

Of course, it’s not all bad. Some see the imminent influx of federal cash — however tardy — as an opportunity not just to rebuild but to create new industry in a region that has been anemic for years. The Sendai Association of Corporate Executives has submitted an elaborate plan for a kind of special economic zone along the city’s devastated coast, which would include ventures from a geriatric care facility and university to a high-tech vegetable factory. “Whether or not the boom continues depends on how we use this money,” says Takeshi Kaneda, the association’s secretary general. “If we only fix things, then it will stop there. If we can create something new, the economy will continue to get better.”

In the meantime, some small business owners are just relieved to have some respite from the long, hard haul of the post-bubble years. Kentaro Mihara is the fourth generation owner of a luxury watch shop on one of Sendai’s main shopping streets. The elegant store has a hushed, old-world feel to it, but watches that cost more than most people in Sendai make in a month went out of fashion when the economy soured. For years, business has been bleak, Mihara says. “The week after the quake, I thought, ‘This is it. I’m closing.’” But ten months later, his sales are also up 200% over last year. Now his problem is that he’s scared it’s going to stop. “If things keep up like this,” he says, “sushi is on me.”

Krista Mahr is a correspondent at TIME. Find her on Twitter at @kristamahr. You can also continue the discussion on TIME’s Facebook page and on Twitter at @TIME.