Sunshine Real Estate Introduces Sharing Studio Renovation of Baoheng Commercial Center in Sheung Wan
After the renovation of Sunshine Real Estate (00435)’s Baoheng Commercial Center in Shanghuan, it will be renamed Strand 50 in September, and announced at the end of last month that it will cooperate with the local shared studio operator theDesk to open an area of 2.9 on the lower floors of the site. A 10,000-square-foot shared workspace with a private office, fixed desk, mobile desk and event space is expected to open in late December. Huang Zhiming, director of Sunshine Real Estate Asset Management, said that renting to a shared studio operator would result in higher rents than the average tenant. I believe that the rental return of the entire property will definitely rise.
Partial floor rent to theDesk
Huang Zhiming revealed that the lease period of theDesk is more than 5 years, and the rent will be reviewed in the middle of the contract period. Strand 50 is 28 stories high. It will be refurbished underground to the 7th floor with an investment of 50 million yuan. The target rate of return is about 13% to 15%. It will return to the current period for about 6 years and will cooperate with theDesk to open up some space and facilities. Other tenants are using it. It is hoped that the synergies generated will drive rental growth and rental demand above the 8th floor. The tenants of the 135 Business Centre at Wyndham East Street, 235 Commercial Centre at Wing Lok Street and Yun Shan Building can also benefit from the extra Value-added services.
Introduce each other to customers
Talking about the difference between managing shared workspace tenants and ordinary office tenants, Huang Zhiming said that when renting to general tenants, there is no need to take special care, and the cooperation with theDesk makes the relationship closer, when there are customers to find the office. If appropriate, it will be introduced to theDesk; on the contrary, if theDesk is not accepted by customers who need a large and stable office, it will also be introduced to Sunshine Real Estate.
The total number of shared workplaces in Hong Kong is about 2 million square feet, accounting for less than 3% of the overall office floor. Huang Zhiming believes that although the supply of shared workplaces is increasing, there is no shortage of market demand. However, if the shared workplace is only rented out to a startup with unstable business conditions, it will be a “big thing”. Therefore, the operators also attract large corporate customers; There is a lot of demand for renting a shared workshop to the project team, and it is also safer for operators. He also pointed out that there are currently about 100 shared studio operators in Hong Kong, and there are mixed areas. I believe that there will be industry consolidation.
Taking into account Strand 50, theDesk opened five in Hong Kong and one shared workspace in Shanghai. Huang Zhiming revealed that the tenants who originally sought to share the studio operators had negotiated with several operators including Hong Kong and the Mainland, and finally selected theDesk with similar concepts. If the two parties cooperate successfully, they hope to copy the same business model to other properties. I believe that the rental service can be improved, not out of touch with the times, and the new cooperation model can be used to achieve business that traditional leases cannot receive.
Four uncles retired without hindering business direction
Henderson Land (00012) founder Li Zhaoji (four uncles) has retired from the fire line, Huang Zhiming said that the major shareholder has always been not involved in the operation of Sunshine Real Estate, Sunshine Real Estate has an independent board of directors, do not think there will be four uncles after the stick Changes and influences its target direction, but it is expected that the two co-chairs of Hengdi, Li Jiajie and Li Jiacheng, will bring innovation.