Xujiahui, a commercial hub in downtown Shanghai that has lost its luster since the 1990s, could win back some of its shine as the local government renovates aging retail centres and Hong Kong developer Sun Hung Kai brings its biggest mainland real estate project to the southwest corner of central Shanghai.
City authorities are looking to upgrade the aging cluster of office towers and shopping malls at the intersection of three metro lines — a roughly 15-minute drive southwest from the high-end commercial street of Nanjing West Road. Malls will be renovated and repositioned, struggling electronics businesses will be shuttered to make way for new fashion and cultural venues, and a network of elevated walkways will be completed to give pedestrians easier access to new and existing commercial buildings.
Sun Hung Kai Project Could Shift Spotlight to Xujiahui
The biggest agent of change will be Sun Hung Kai’s Xujiahui Centre project being built on a sprawling 100,000 square metre site to the north and west of Hang Lung Properties’ Grand Gateway commercial complex. Expectations are high for the mixed use project following the Hong Kong-based developer’s success with the IFC complex in Pudong and the ICC on Huahai Road.
To be completed in phases, the Xujiahui Centre will ultimately offer 706,063 square metres of grade A office, high-end retail and luxury hotel space, including a 370-metre office tower which will be the tallest skyscraper west of Shanghai’s Huangpu River. Sun Hung Kai bought the land in 2013 for RMB 21.8 billion (US$3.5 billion).
“Currently Xujiahui is a collection of autonomous and somewhat dated projects so the government’s efforts to update and hopefully better integrate the projects will create a more contiguous and harmonious destination,” comments Andrew Swain, a British real estate investor associated with the investment management arm of Shenzhen-listed World Union Properties Consultancy. “Arguably the biggest factor in the renaissance will be the delivery of the Xujiahui Center. The mall promises to be one the leading malls in Shanghai and with the addition of much needed quality office space, Puxi’s tallest tower and a five-star hotel we will see an increase in interest in the area.”
Electronics Jungle to Give Way to Live Theatre
According to local media, the government of Xuhui district (home to Xujiahui) recently announced that the landmark Metro City shopping mall will clear out all its low-end electronics shops by October, replacing them with fashion and cultural elements. The mall has already undergone significant repositioning, closing a jumble of kiosks selling cheap electronics and bringing in mid-range eateries and international names such as London’s New Look fashion brand. A 720-seat live theater on the top floor is expected to open by the end of the year.
The adjacent Pacific Digital City, also occupied by computer and accessories shops, will be demolished to make way for a leisure and entertainment complex that will open by 2018. Across the road, the Grand Gateway shopping mall will be renovated, with more elevators being added indoors while the large stairway leading up to the mall will be torn down to create more outdoor public space.
A building frenzy which has multiplied the amount of high-end commercial space in Shanghai over the past decade has stolen the spotlight from Xujiahui, which 15 or 20 years ago was viewed as a retail mecca. Surging e-commerce sales (growing by 33.3% year-on-year in 2015) are said to be punishing the area’s dated shopping malls and department stores. The Xujiahui office market has fared better, led by the distinctive twin towers of Grand Gateway 66 as well as the Gensler-designed CURA International Center along Hongqiao Road which launched in 2014.
More Office Space on the Way in Southwestern Shanghai
“Xujiahui has and continues to be one of the most important sub-markets in Shanghai,” notes Swain. “It serves a different office market to the Nanjing West Road and Hua Hai Road markets and as a result boasts one of the lowest vacancy rates in the city. The re-positioning and upgrades of existing malls will undoubtedly help improve the impression the market has of XuJiaHui.”
The first phase of the Sun Hung Kai mega-project, consisting of about 16,723 square metres of office accommodation on Huashan Road, will be handed over to tenants in the first half of 2017, according to the developer in a February statement. A premium shopping mall covering 30,658 square metres is scheduled to launch in 2018. No visible progress has been made on the supertall tower, which Sun Hung Kai says will be completed no earlier than 2020.
In addition to Xujiahui Centre, sustainable office building T20 is under construction next to Metro City. Created by French design shop Jacques Ferrier Architectures, the 13-storey, 20,000 square metre office block is expected to be completed this year.