Discussion keeps the world turning.
This is Roundtable.
You're listening to Roundtable with myself, He Young.
I'm joined by Steve Hatherly and Gao Junya in the studio.
Coming up, hybrid work and changing business needs have left office buildings in some of the world's busiest economic hubs half empty.
Now, Shanghai is stepping up, leading the way to renovate, repurpose, and rethink what office space means for the city.
Today, we'll explore how these changes could ripple through daily life, reshape business ecosystems, and even redefine urban identity.
And live's best moments from the soundtrack of your heart to little things that make you smile.
Join us at Roundtable's happy place.
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Now let's move on to the next topic discussion today.
Shanghai holds the global title for the most office space square footage, and yet vacancy rates are high.
So why is one of the world's busiest cities pushing to renovate hundreds of office buildings?
From old elevator systems to shifting urban priorities, this move prompts a fresh rethink of what office space means in the post -pandemic world.
Shanghai has tackled housing and residential upgrades before and now the spotlight has turned to office towers.
What has Shanghai announced in terms of office building renovations?
How extensive are these changes?
Yeah, so they published an action plan on the renovation of office buildings from 2024 to 2027 and it planned to significantly improve the commercial building functions and they want to do that by optimizing their spatial pattern, their functional structure, the building ecology, and just the overall environment, along with the core functions and the economic support role too.
So the city chose 10 pilot commercial units to implement renovation projects first. Also, there was an announcement from the Shanghai Municipal Bureau of Planning and Natural Resources.
Resources they announced that the renovation would happen for office buildings in six major business units from July 3rd to 5th in 2025.
The total area of the six major units is about 20 square kilometers and the total number of commercial buildings projects to exceed 200.
So the renovation plans for office buildings and the remaining four pilot commercial units those will be published soon they haven't put that out just yet but the ultimate goal it's the same isn't it?
They want to create this kind of closed loop of work and life and leisure within that area so that people can enjoy their lives.
They can feel more comfortable and they can feel that the space is more convenient.
The skyline in the city may look very impressive, but the numbers reveal a more complex picture.
Supply far outpaced demand.
Why has Shanghai chosen this moment to launch a major office renovation push.
Yeah, there was a report.
This came from the Shanghai Observer in October of 2024.
I didn't realize this, but Shanghai is the largest office building market in the world.
I guess it's not really a surprise when you look at that skyline, that beautiful skyline, right?
And the third quarter of 2024, the city had grade A office buildings.
I'm going to talk about what that means in just a sec.
Grade A office buildings of 17 million square meters.
There was another article published that talked about Shanghai and the fact that it has as many as 10 ,000 high -rise office buildings.
Wow. 10 ,000 in the city.
Let me, if you could go over those grades for just a sec, because that's probably confusing, right?
This comes from the classification, national classification and evaluation standards for commercial office buildings in China.
So they get put into three different groups.
One is A, one is B, and one is C.
So grade A, those refer to the high -end office buildings, and they need to meet the highest standards in building structure and interior decoration and facility.
So those will be your nicest buildings, right?
These are typically used by top tier enterprises.
Then you've got the grade B buildings, and those refer to to mid -range office buildings.
Their requirements in building structure and interior decoration and equipment, those are slightly below grade A, but they still require good location and accessibility and management.
These types of buildings, the grade B buildings, they say that those are suitable for kind of general business purposes, like, I don't know, like office work or product display or sales companies or things like that.
And then last one, grade C buildings, those are your basic office buildings.
And they do have lower standards in terms of decoration and facilities and things like that.
And those are suitable, more suitable for smaller businesses or startups or individual entrepreneurs who may not be in need of these larger office spaces.
Those grades story, just final point, if you're wondering how do they come up with those grades?
Well, they're evaluated by the relevant authorities and the standards might vary depending on the region or the industry, but the authorities assign those grades.
And thank you for providing that explanation Because it is closely connected to what we want to talk about later.
That is about, you know, for these different grades of office buildings, there are different tactics and measures to make them better or at least have them to have a long term serving purpose in the city of Shanghai.
high. And Junya, what do you see as maybe the biggest problems that the office buildings, the office space are kind of suffering in that huge cosmopolitan right now?
I think it's high vacancy rate is definitely the problem.
Because like, I think Steve just mentioned a little bit on that.
For example, the vacancy rate for grade A office buildings buildings in Shanghai has already exceeded 20 % in 2023.
And, you know, even office buildings in old corn areas, they have experienced varying degrees of rental decline and vacancy since 2023.
So the vacancy rate of those three pilot units have exceeded 30%.
That's, you know, that's why actions have been taken just to change the situation.
And yes, I think I don't know for you guys.
I think for Western countries, especially in European or the US, I think it's a common practice for them to renovate those old buildings, right?
When we just walk on their street, just saw those fresh new buildings and apartments and they're telling me maybe it's over 100 years old and 200 years old.
And I think Shanghai, because most of its office buildings has been 30 to 40 years old.
So this is a time to renovate, to have more functions, to adjust to our new lifestyle transformation, I guess, as well.
Well, some people would argue that 40 years, that's not like that long, but - Gen Z would say that's super old.
Yeah, that's like before their lifetime.
But yeah, you kind of need to look at the situation situation and come up with a plan.
And for some of these buildings, despite not being super old, but they need to be renovated or repurposed.
Yeah, because they have some outdated designs, or they have some aging equipment, or they have some insufficient parking spaces, right?
Just problems, I guess, that have emerged.
And then China's regulations, they may change as well.
They said that the maximum use period for commercial land is 40 years and 50 years.
and there are no relevant regulations on how to renew it after expiration.
So that's an issue as well.
So the remaining land tenure for those older buildings is generally less than 15 years.
So the pressure for renewal is approaching, and they're facing a situation of outdated functions and declining valuation and difficult renovation, too.
Yeah, these are some of the real problems that these old buildings could be facing.
And also, I wonder if they're going to be all that attractive in finding new tenants as well.
If you know this building's land tenure is coming up in 15 years or less, well, that's going to be something that folks involved will need to think about.
And also within some of these office buildings, scattered property rights is a big issue.
And that means sometimes this building's property rights has been sold to a number of different entities.
Yeah, multiple property owners within the same building.
And that would be difficult for them to agree with, let's say, renovating the building or repurposing it.
and that's something pretty practical.
And sometimes those property owners are big companies and then within the same space, you might have multiple small property owners as well.
So it's difficult to get large property owners to pay and small property owners, they can't pass a relevant plan if they want.
So that makes these types of things, getting them passed, a real challenge getting everybody on board. Indeed.
And not every office building needs the same treatment.
Some just need a facelift. others need a whole new life.
And Shanghai is getting strategic, customizing its approach by building grade, district function, and market demand.
And Steve, you gave us that really detailed categorization of grade A, B, C, and how are these buildings being treated differently?
Yeah, so grade A buildings, they're going to need to strengthen their core functions.
They're going going to have to actively introduce leading enterprises in the industrial chain and complete a batch of high -level project decoration and renovation and upgrading.
Those are going to be really pretty when they're finished, aren't they?
Those are the grade A's.
The grade B's, they emphasized their overall planning to promote the integration of business and commerce and culture and education and healthcare and residential and hotel and other functions too.
They also want to, with the grade B buildings, they want to improve the level of productive service industry and overall property management.
And then finally, the grade C buildings, they play more of a supporting role.
They'll serve the needs of the startups, like I said before, maybe scientific and technological innovation.
Those are going to be less expensive.
They're going to be reasonably controlling the rent levels in those grade C buildings and just improving the basic functions.
But controlling the rent levels is a really important thing for the grade C buildings, because when you've got smaller enterprises coming in there that don't have as much money in their pockets, this is a good place for them to start.
Yes, and Junya, do you see some good examples of how these service providers, these office building organizers, you know, what they're doing right to make this space better and fitting for the tenants' needs?
Yes, actually, there are already some good examples being implemented.
For example, in the Lujiazui commercial unit, Yu 'an Building spent money on the replacement of its elevator system.
Although the cost exceeded 2 million yuan, it significantly saved electricity costs, increased elevator capacity, and improved the building's operational efficiency.
And also another example is the nearby Bao 'an Building plans to update its chiller system in the second half of this year.
And also, Jinshui Building adopted digital design methods to comprehensively upgrade its structure, curtain walls, interior finishes, intelligence systems, utilities, and fire protection.
That's quite important because some old buildings, they do have certain setbacks.
For example, they don't have that barrier -free facilities and also including fire passages as well.
yeah well in what ways might these renovations improve daily life and work in shanghai well it's going to make your work day a whole lot better oh right you're going to have a better work environment when you have upgraded buildings there because you're going to have new elevators and outdated infrastructure all updated um which is better for your whole life overall right new renovation plans they're going to integrate business with community and culture and lifestyle style.
So they'll have a lot of updated zones that will include night markets and shopping and dining and childcare and eldercare.
You're also going to have a lot more job opportunities and economic vitality because those statistics you were talking about before, where they don't have companies in that office space right now, hopefully those will get filled up and you'll need people to work in those places once they're filled up.
Yes, and Shanghai is merely one big big city, along with New York City, Singapore and so many other places around the world who are trying to find a new purpose for the vacant office buildings.
And this is maybe just a sign of the future of work for us.
Coming up next, welcome to the happiest corners on the airwaves, Roundtable's happy place.
Delivery, delivery, delivery.
What is it? Happiness from round table.
Junya, what is your happy place?
I had this opportunity to cover the World Youth Conference Conference for Peace on July the 29th.
It was held at the prestigious Peking University, and it brought together more than 3 ,000 young delegates from over 130 countries across five continents.
Yes, I can't remember the last time I attended an event like this, so big.
And actually, because this event came as this year we marked the 80th anniversary of the world, the end of World War II.
So the young people, they gathered here just for one common goal, that is to discuss peace.
What impressed me is that many of the delegates, they are talking about empowering youth, because peace is not only about stopping wars or violence, it's also about bringing opportunities and creating opportunities for young people so that they will enjoy the on social development and technological benefits and they can be the peace builders in our world and that's such a relevant theme right now that was pretty cool yeah uh did you get a chance to meet some people and hear their thoughts on the event yes yes i i did met some uh you know they're basically from every country in from the u .s from canada and from australia and they they
They showed us some local music and dance.
And I think one of the common concern of African young people is just what I mentioned is the high unemployment rate because Africa has a population of 1 .4 billion, almost the same here as in China.
But guess what? Over 60 % of that population, they are under 25.
That means it's a young continent.
Yeah, it is. But they, you know, they have a very high unemployment rate.
For example, that rate in South Africa is 45 percent.
And in Kenya, it could be 67 percent.
So it could be a very big social problem for those countries.
Yes, indeed. And it's really great that you mentioned that it's such a young continent.
Yeah, because sometimes, you know, when we're talking about the issues here in China and also some English speaking countries, we tend to always assume that, oh, it's an aging aging population, blah, blah, blah.
And which is a really alarming issue for these relevant countries.
But in Africa, they're facing a different reality.
And that is, you know, when you've got such a huge young population, and how can folks find jobs, a good living and lead a happy life?
Yeah. Were the Canadians nice that you met?
this gentleman he's very humorous he actually gave a he actually gave a you know speech at the event he was trying to woke up the to wake up the audience because after several speeches maybe people are kind of tired but this gentleman is very energetic and he shared his stories and here in china representing canada very well good to hear very good to hear yeah i know how these international conventions can be from time to time but it's so great to hear that you've got some wonderful takeaways and observations that you bring back to us, Junya.
Thank you so much, Steve and Junya for joining the discussion.
You can always find us on Apple podcast at Roundtable China.
And that's it for today's show.
I'm He Yang. We'll see you next time.
