In Shanghai, almost one in eight business offices are unoccupied, according to a recent report by Savills, a global property advisor agency. Office vacancy rate hit a 10-year record high of 13.2% in the third quarter of 2019. Regarded as mainland’s finance powerhouse, this city faces overbearing property development and yet developers are hungry for more space.
Finding a New Lease on Life
Ma Yuanxiu, an 84-year-old antique dealer, is taking an afternoon nap in a bamboo chair in front of his 8 square-meter store that is humbly stocked with small-sized antique items ranging from traditional daily appliances to artistic craftsmanship. As a German family passes by his store, Ma wakes up and calls out in his hoarse voice, “Hello, hello. Look, look.”
“This is the first foreigners I’ve seen in the past half month,” Ma shares his excitement. “I wish that they could walk into my store to take a look.”
On October 15th, Ma awaits customers at his antiques shop.
Located on the corner of this four-floor commodity mansion, the Fumin Building, Ma’s store is at the edge of Shanghai’s most popular tourist attraction, YuYuan Garden. On the same floor are more than 200 antiques stores in stall shops with identical glass doors and windows. While a steady flow of tourists take a quick glance at these stores, few of them visit or become customers.
“I used to meet foreigners every day on Dongtai Road,” Ma recalls. “Making antique deals with them was quite fun.”
Demolished in 2015, Dongtai Road was a fixture in Shanghai for antique dealing and weekend flea markets and was a must-see attraction for tourists, Chinese and foreign. It forged its fame when Shanghai began attracting tourism and business starting in the early 1980s. This 586-meter-long street was once lined with hundreds of four-square-meter stalls and so crowded that no cars could pass. The markets became so popular that they expanded along the cross streets.
“Even though these old streets and stores looked obscure and humble, they had strong connection with the neighborhood around them,” says Dr. Yanbo Li, an associate professor of College of Architecture and Urban Planning in Tongji University. “By making small business with the neighbors around them, a high-trust social network was formed.”
On October 15th, this is the four-floor commodity building where Ma’s store is located.
The antique dealers on Dongtai Road were forced to move out due to a new urban development plan. Despite receiving compensation, many dealers, like Ma, who spent decades on Dongtai Road, were displaced and had to seek other solutions for their life-long businesses. Mr Yang, Ma’s best friend, was also a Dongtai Road vendor. He moved his store into a Chinese tea mall while another former Dongtai Road occupant, 86-year-old Mr Lu, handed over his business to his daughter who now sells antiques on Xianyu, an e-commerce platform for second-hand items.
“I often used to have friends and regular customers visit me at my old store,” says Ma. “It’s rare now for them to come to this new location.”
Since leaving Dongtai Road, he has moved his store twice. He says that his rental has doubled while his income has dropped four-fold from what was at Dongtai Road.
Gone with the Wind
The place where Ma’s antique business once stood, on Dongtai Road, is now enclosed by tall white fences, marked with the logos of property developers like Shui On Land, China Xintiandi, Yongye Group and China Pacific Insurance. An anonymous source close to the matter indicates that the area, which is close to the sprawling upscale Xintiandi complex, will become a similar development with a mixed community including 70% office properties, 20% commercial area and 10% residential space.
“These small-scale shops are driven away by capital investments and are being replaced with high-rise buildings,” says Li. “This is typical gentrification, which forces citizens to update their consumption-style.”
Li says people used to have diverse choices for consumption with myriad small vendors to meet their unique tastes. Now, he says, the people are kidnapped by consumption and have grand-sized shops but limited choices.
On October 15th, the demolished Dongtai Road is enclosed by fences displaying patriotic slogans like “For peoples’ happiness and China’s national revival.”
With the decline of Shanghai’s old streets and new development continuing, more empty office and retail space is added to the market. It is estimated that in the fourth quarter of 2019, about 1.1 million square meters of office space, including central and non-central business districts, will be added within the Shanghai market.
“The issue that supply is far more than demand deals with the lack of forecasting estimates at the early planning stage,” says Dr. Danyin Zhang from College of Art and Design in University of Shanghai for Science and Technology. “It is the result of blind expansion.”
The projects Zhang has been working with her students in Shanghai in recent years mainly focus on updating and innovation for small-scale constructions to meet people’s demand.
On October 20th, a crane is cleaning up the trash during the demolition of Dongtai Road.
The e-commerce trend, high property rental and the Sino-U.S. trade war have all placed pressure on property development and management. Additionally, the government has been taking steps to adapt strategies for sustainable development.
The government report, 2015 Shanghai Updating Implementing Measures, first defined the need for property development to transform from expansion-focus to quality-focus. Meanwhile, the government has actively applied the policy of deleveraging many business sectors including property, which has decreased the rate of property expansion.
The recent five years of Shanghai urban construction development has been mainly based on Shanghai Master Plan from 1999 to 2020 and Shanghai Master Plan from 2017 to 2035, says Hui Ding, a registered urban planner of Yangpu Planning and Natural sources in Shanghai.
Compared to the property expansion model, the quality enhancement model for property management becomes significant and more challenging. One of the key issues is the high-efficiency allocation of resources and how to make good use of the built spaces. Ding adds that high-rises are an efficient use of land area.
Located in Hongqiao Lingkong Economy Park, the ultra-modern architectural style of Lingkong SOHO comprises 12 buildings connected by 16 bridges in a web configuration. It was established in 2014 on 86,000 square meters of land with 350,000 square meters of construction space. The complex houses more than 800 corporate head offices.
Bird's-eye view if Lingkong, found from internet.
“New technology like artificial intelligence has been included in the process of design and construction.” Ding says. “This helps make the complex more environmentally friendly.”
Approved by LEED, Leadership in Energy and Environmental Design by U.S Green Building Council, Lingkong SOHO has an air circulation system that filters 90% of PM 2.5 particles from the air. It is also equipped with an advanced water filtration system based on those designed for the space program. It also has intelligent energy-saving management systems.
The city landscape is rapidly changing. It is hard to see the past displaced and few old neighborhoods remain. The new challenge is to better use the space that has already been developed. Newly constructed buildings made to high standards could provide benefits for more efficient commerce.
