Tishman Speyer JV Pays $800M for Commercial Site in Shanghai’s Changning District

Tishman Speyer is once again making moves in its favourite Asian megacity, with the US developer today announcing that it had successfully led a RMB 5.09 billion ($800 million) purchase of a plot in Shanghai’s Changning district for a future commercial project, the land auction having concluded on Wednesday, according to government records.

Through a joint venture with an investment company controlled by the Changning district government, the Manhattan-based developer joined with an investment firm led by a movie star couple and the mainland unit of Hong Kong logistics provider Easyman Express to win the 35,588 square metre (383,066 square foot) site, which Tishman now plans to transform into a landmark development featuring Class A offices and upscale retail offerings.

Scheduled for completion by 2025, the as-yet-unnamed project at the junction of Tianshan and Gubei roads will sit atop Loushanguan Road metro station in the Gubei area at the western edge of Shanghai’s urban core. The development’s 163,400 square metres of floor area will include a minimum of 15,000 square metres set aside for retail space, with the remainder dedicated to office, according to planning documents.

“Our project, expected to be a world-class, green and sustainable mixed-use, will make a significant impact on Changning’s urban development and keep activating the area by attracting leading international and local TMT companies to relocate (their) headquarters as well as serving the well-being of the people,” said Wilson Chen, senior managing director and China CEO at Tishman Speyer.

Global Developer Leads Local Consortium

Tishman’s joint venture with New Changning Group, a state firm belonging to the State-owned Assets Supervision and Administration Commission (SASAC) of Changning district, has taken a 53.8 percent stake in the project, with New Changning holding a majority share of the cooperative venture.

A Shenzhen-registered unit of Hong Kong’s Easyman Express has a 30.3 percent slice of the project company, and a firm controlled by Shanghai Daerwei Trading — the holding firm belonging to actress Zhang Ting and her husband, Lin Ruiyang — has the remaining 15.9 percent stake in the project.

Daerwei Trading is the parent company of Zhang Ting’s TST, an online seller of cosmetics and beauty products that last year purchased a 26,305 square metre office block in Tishman Speyer’s Crystal Plaza project in Pudong for $248 million.

Also known as Tin’s Secret, TST was the biggest taxpayer in Shanghai’s Qingpu district as of 2018, with Taiwan-born Zhang leveraging the fame gained from starring in films such as 1993’s Justice Pao and 2014’s The Empress of China to sell beauty creams, masks and other items through online streaming platforms, WeChat and other channels.

New Changning’s main business is developing commercial buildings in its namesake district, and the state-owned company had total assets of RMB 30.39 billion as of 2017.

Going With Gubei

Tishman Speyer’s new Gubei site is close to Exit 5 of Loushanguan Road station (formerly Tianshan Road station), an interchange for metro lines 2 and 15 in Hongqiao subdistrict, roughly 20 minutes’ drive from central Shanghai.

The property’s holding requirements obligate the owners to maintain their title to at least 60 percent of the office portion, and to the entirety of the retail portion, for a minimum of 20 years. The plot was due to be transferred to its new ownership on Wednesday.

Nearby attractions include the Hongqiao Culture and Art Centre, Changning Library and Soho Tianshan Plaza, a large-scale office, retail and hotel development of Beijing-based Soho China, with analysts pointing to potential demand for the project, even amid a Shanghai office market flush with new space.

“Decentralised locations continue to challenge traditional business centres for tenants from high-growth industries,” said James Macdonald, head of research for Savills China. “Nevertheless, as overall demand levels continue to surpass supply, occupancy rates remain high for the time being.”

Office vacancy rates in Shanghai fell to 13.1 percent in the third quarter of 2021 from 14.5 percent in the prior three-month period, according to a Savills market update. Domestic firms, especially tech-driven companies, accounted for 84 percent of the city’s office leasing transactions in the first nine months of the year, up from 51 percent in 2020.

Expanding the China Portfolio

Tishman’s latest venture continues a series of large mixed-use complexes built by the firm in mainland China’s financial capital, including Crystal Plaza, a 305,000 square metre commercial project in Pudong’s Qiantan area. The company’s other Shanghai megaproject is The Springs, where TikTok maker ByteDance acquired a combined 236,903 square metres of office and retail space in mid-2021.

“This illustrates Tishman Speyer’s continuing commitment to Shanghai, following the exciting progress we made in Yangpu and Pudong,” Chen said. “We are confident this project will become a thriving and attractive urban centre, home to many fast-growing corporations and creative cultural and retail brands, witnessing an era of dynamic growth in Changning.”

Beyond Shanghai, Tishman Speyer also has projects in Suzhou and Chengdu.

Engaged With Asia

The Shanghai win comes at a busy time for Tishman Speyer, which only last week revealed that it was joining forces with South Korea’s NPS to create a $1.5 billion separately managed account focused on investments in real estate innovation and high-demand asset classes in major US markets. The NPS-Tishman Speyer Thematic Platform will pursue opportunities in emerging sectors with an emphasis on life sciences real estate.

The tie-up with the country’s largest pension fund came just over a month after the developer joined forces with another bigfoot Korean investor, Hana Financial Group, to set up a $500 million fund for co-investing in the developer’s real estate projects in the US, Europe and Asia.

Founded in 1978, privately held Tishman Speyer has acquired, developed and operated 484 properties with a combined value in excess of $121 billion, including New York’s Rockefeller Center, where the firm is headquartered.