Thursday, November 27, 2014   




Reach for the sky

Friday, December 09, 2005

`Vertical' is a good option for developers looking to maximize retail floor space, writes Danny Chung

The trend towards "vertical centers" - shopping malls similar to APM in Kwun Tong and Langham Place in Mong Kok - is set to continue, according to property consultants DTZ Debenham Tie Leung.

Director of retail Lawrence Heung said developers are looking for ways to make the "best use" of their land, and as such, buildings that can squeeze out as much retail floor space as possible are good options.

"Shopping centers [in general] are very difficult to build because traditional shopping centers need plenty of land," Heung said. This was especially so in core urban areas of Hong Kong where finding 80,000 to 100,000 square feet is very difficult.

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For a small site, the developer might also like to take a chunk out for serviced apartments or offices.

Sun Hung Kai Properties' APM and Great Eagle's Langham Place showed the vertical center concept could work, although Heung preferred to be cautious on their prospects. "There is a question mark as to whether it will be successful. With two large investments done already, it is yet to be seen," Heung said.

Still one advantage that shopping centers had was that "if they are done well, they are sustainable." This was because there were fewer fluctuations for shopping centers compared with the overall property market.

Heung pointed to IFC in Central where office rents rose from HK$20 to HK$80 per square foot in a few years.

In addition, medium-term returns on shopping centers were better than other property types, Heung said.

According to his estimates, APM and Langham Place have floor plates of about 50,000 sq ft and 60,000 sq ft, respectively.

Langham Place, with total floor space of 600,000 sq ft, maintains the floor plate area from basement to third floor, and from the fourth floor upwards the floor area is 40,000 sq ft. APM has a slightly bigger total floor space of 630,000 sq ft.

Four other vertical centers on the way include Tung Ying Building and I-Square in Tsim Sha Tsui, according to DTZ.

Strictly speaking, vertical centers have characteristics of a small floor plate of about 40,000 to 50,000 sq ft and a vertical shopping mall.

Heung said if other characteristics were used to assess vertical buildings then "the first vertical shopping center in Hong Kong is not Langham Place but Times Square."

To overcome the natural tendency of shoppers to move horizontally and not upwards, vertical centers used express escalators to reduce the time for shoppers going from floor to floor. "It is in people's nature to be lazy and not want to walk too much," he said.

Another measure to get that upward flow of visitors was to have a "big draw" on the top floor such as cinemas or restaurants. Architectural features like the Digital Sky on level 13 covering the dining area of Langham Place also helped to attract visitors.

Special events are also used to draw visitors, although Heung said they are used in any case by all shopping centers. But he said APM differed from others with events featuring young pop stars, which appealed to a tight age segment from about 15 to 35 years of age, unlike a shopping center like Harbour City.

Other Asian cities also have vertical- center-like malls - like Shanghai with its Superbrand Mall and Taipei's Capitol Centre, but the floor plates are bigger.

Buildings in the Ginza shopping area of Tokyo are also similar, however the floor plates are smaller than Hong Kong's with lifts being used instead of escalators, Heung said.

It is not clear just who came up with the idea for vertical centers.

For Heung, it was simply the case of a person "doing the numbers" on how best to use a plot of land.

Other developers are starting to to think about doing their own APM and have approached DTZ for an opinion, said Heung, declining to give names.

Being in the right location helps a lot, he added. "Undoubtedly, vertical centers at Mong Kok, Kwun Tong and Tsim Sha Tsui have a bigger scope for survival than at Kowloon Tong as the people flow is more there," Heung said.


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