From Back Street to Shopping Mall: Four Kinds of Commerce on One 700-Meter Street | Shanghai's Nanjing West Road as a Specimen ①

What these 700 meters have been through over the decades, and what they mean.

Shanghai no longer sets much store by the old title "ten-mile foreign quarter." One sign of that: hardly anyone still mentions the most traditional "ten-mile foreign quarter" day trip — People's Square, the Nanjing Road pedestrian street, the Bund's rows of old buildings, then across the river to the Oriental Pearl Tower and Jin Mao Tower in Little Lujiazui.

After decades of demolition and rebuilding, of unplanned growth, tug-of-war and compromise, the city has new calling cards to offer. There is Xintiandi and Tianzifang, which draw locals and foreigners alike. There is "Ju-Fu-Chang" — Julu, Fumin and Changle roads — lined with small distinctive shops and made for aimless walking. And there are the top-tier malls that cover everything from luxury goods and lifestyle to specialty restaurants, yet most days feel big and empty.

The character of these commercial districts, and the way they grew, decides not only what kind of national business center Shanghai becomes now; they will also serve as templates, shaping directly how many lower-tier cities get built in the years ahead.

A planner — or just a curious visitor — who wants a quicker look at how these four kinds of opportunity took root no longer has to spend several days in Shanghai touring them one by one.

All they have to do is walk one famous shopping street, Nanjing West Road: start at Jing'an Villas, across from Westgate Mall, and finish at HKRI Taikoo Hui, near Shanghai TV Station, which is about to open.

This patch of ground — a little over 700 meters across from east to west, less than 400,000 square meters in all — is a static exhibit, a testing ground, and a place where crowds gather, both now and by design.

1025 Lane, Nanjing West Road — Jing'an Villas: the "next Tianzifang" that never happened

Because the city prizes multinational-corporate culture and few big internet companies are based here, the line that "Shanghai is no place to start a business" was for a while widely accepted. Yet the white-collar workers who once sat nine to five in CBD cubicles may have been the first to find a little commercial inspiration in their boredom and their urge to rebel.

Cafés, galleries, celadon shops, craft studios, clothing stores, even youth hostels — the quiet, old shikumen lanes near downtown office towers became the vessel for those small-shop dreams, and gave rise directly to unplanned commercial communities like Tianzifang.

Residents were of two minds at first. They eyed the fast-rising rents; they also protested the noise the crowds brought, by throwing water and cutting the power. But things settled down over time, and the lane turned into a tourist attraction that satisfied visitors' appetite for the exotic.

In 2011, when the Chabrol Café opened inside Jing'an Villas, a residential lane on Nanjing West Road, Qian Xiaokun and several partners felt what many of the young people drifting through felt: this could become the next Tianzifang, and a classier one.

Today Chabrol is one of the few shops left inside Jing'an Villas. It has had to keep its head down.

The café has no visible sign; every event has to be booked by phone; a first-time visitor must hunt for the door number among the nearly 200 households of Jing'an Villas. The screenings held almost every evening still go on, but to get in you pass an iron gate left nearly shut, a parking barrier that leaves only a slim gap, and a guard's faintly suspicious look. Shared bikes cannot come in at all — you park them over on Weihai Road or Maoming North Road.

Jing'an Villas was once a "through lane." It is a classic Shanghai new-style lilong, its rows laid out clean and straight. The north end of the lane opens onto the "Mei-Tai-Heng" cluster — Westgate Mall, CITIC Square and Plaza 66 — at the heart of the Nanjing West Road shopping district; the south end leads to the quieter Weihai Road. Shaanxi North Road and Maoming North Road, on either side, are one-way streets, yet cars can pass both ways inside the lane itself.

Large stretches of intact new-style lilong are rarer in Shanghai every year. Jing'an Villas was designated a historic conservation district on that basis, and once the illegal add-ons were torn out it was as bright and open as it had been in the 1930s. That is when the arty young people decided to spend their savings here on a shop of their own.

Most of them were braced to lose money for the sake of style, trying to hold off the "coarsening" that commerce always brings. Once Chabrol was running steadily, Qian Xiaokun took over another single room of thirty-odd square meters and turned his dream of a private salon into the "2666 Library." A 2012 visit from Göran Malmqvist, a permanent member of the Nobel Prize committee, briefly made it famous in literary circles.

The rest of the time, this private library — two or three thousand books, free to sit in and read — did thin business. Spending more than you took in was the normal condition inside Jing'an Villas. Some owners began thinking seriously about costs and margins, or, less romantically, about foot traffic, and the "coarsening" picked up speed.

What set it off was probably the "silk-stocking milk tea" shop, the one said to pull its tea by hand with Carnation evaporated milk and Taikoo sugar. As with every internet-famous shop today, the queue for milk tea coiled through the lane, and residents turned against it. A snap municipal inspection found that of the 87 shops trading in Jing'an Villas at the peak, almost none had a license.

That led to a joint enforcement sweep in 2013 involving several hundred people. Driven out along with the cafés and Western restaurants was Qiaojiao Wontons, which had been feeding the residents themselves for far longer. The silk-stocking milk tea did not go far: it moved a few hundred meters east into a small storefront on Maoming North Road, gradually became a brand, and opened many branches.

But milk-tea fashions have turned over several times in the years since, and that storefront was recently taken by a specialty coffee chain.

A short walk south, meanwhile, a new commercial block called Fengshengli was entering its last stage before opening.

255 Maoming North Road — Fengshengli: who is copying Xintiandi?

From 2002 on, more and more Shanghai locals took it on themselves to sell visiting out-of-town relatives on a place called Xintiandi. The pitch ran roughly like this: classic shikumen lanes, the site of the Communist Party's First National Congress, Western restaurants and brand stores you could not find anywhere else, and foreigners everywhere.

Having produced this textbook case of commercial property development, Shui On — a Hong Kong developer once unknown on the mainland — now sells its "restore the old as it was" method in most first- and second-tier cities: in renovation, keep only the facades of the old buildings; once it is built, bring in a mass of restaurants and boutique retailers that will pull crowds and still return something. Call it an act of revival and renewal.

Not many people have worked out whether the Xintiandi model actually makes money, or which part of it earns the crowds and which part earns the cash. But plenty of planners and officials are still willing to hand over a patch of old city inside a prime shopping district and let someone try.

The latest to join them is the Jing'an district government. Right next to Jing'an Villas, directly above the Metro Line 12 platform, Jing'an Metro Investment Group paid a reserve price of nearly 54,000 yuan per square meter — the highest price ever fetched at auction in the old Jing'an district — and turned the parcel into 10 finely made low-rise buildings: today's Fengshengli.

Fengshengli opened to the public for a trial run on April 21. Some of the street-facing shops — bars, restaurants, soup shops, a bakery — had started even earlier. The retro exterior is striking, but every shop may hang only one small sign on its outer wall; unless you walk right along the curb, you might not notice the place is open.

Goose Island Brewhouse is one of them. Unlike the Hard Rock bar next door, it did not advertise loudly at the busier Line 2 Nanjing West Road station nearby. Hard Rock is a casual bar and casino group with outlets in major tourist cities worldwide, and plenty of foreigners who like a night out know the name. Word of Goose Island's opening spread at first only among craft-beer devotees and people in the trade.

Wei Ran does not usually drink beer. Had she not needed to see for herself how the tenants were doing, she probably would have skipped the party on the first day of the trial run. But she thought the beer was good, and she liked a room full of foreign customers — exactly what she had pictured for the restaurants on this side of Fengshengli.

At JLL, Wei Ran is director of retail property for Shanghai. Beyond ordinary retail leasing, she now leads a team of more than 20 people whose sole job is to find the right restaurant brands for commercial property projects. By the figures she gave QDaily earlier, 90% of Fengshengli's units had tenants; for each of the few best-placed units still open, two or three brands were waiting on the decision.

When the leasing strategy was drawn up, the landlord asked for "something like the Xintiandi effect," and the share of food and drink was pushed above 90%. But the tenants had to be "foreign brands from a higher tier that also want into the Chinese market."

In the end, the sight of foreign restaurants like Goose Island and Hard Rock packed with foreign customers came as a happy surprise to Wei Ran. For the local young people who come for a proper craft beer or a good live rock set, though, this enclave-like experience may be another small awkwardness the Xintiandi model produces.

Goose Island's menu does show some effort to meet the neighborhood halfway. At dinner it pours two special house brews: one called Line 12 Wit, the other Wujiang Road Porter.

Wujiang Road: why hasn't the charm of the "back street" worked here?

Fifth Avenue in New York, Oxford Street in London, Ginza in Tokyo — almost no world-class shopping street thrives on its own few hundred or thousand meters alone. It is the back streets, each with its own character, that really mark out how far a district's pull reaches.

In the Nanjing West Road district, between Jing'an Temple and the North–South Elevated Road, as many as 16 side streets run into or alongside the main street. The first to develop was Wujiang Road, which had been collecting private restaurants and food stalls since the 1980s. Over the past dozen-odd years, its fame and its crowds have also made it an ideal testing ground, drawing wave after wave of property packagers and developers eager to build a template for the "back street" idea.

By the official account, Wujiang Road's rise began in the autumn of 1999, with the "Jing'an Urban Style Week" staged there to coincide with the trial run of Metro Line 2. The newly spruced-up street was given a role as a "food and leisure street," and snack and fast-food names such as Yang's Fry-Dumpling, Red Ruby and Tianmimi got their chance to move indoors.

Then Line 2's Nanjing West Road station opened, and everything changed. The station's four exits are now spread evenly along the north and south sides of Wujiang Road. Metro passenger counts from 2010 showed the station bringing an average of 76,000 trips a day — a third of the traffic on Nanjing East Road, the country's largest shopping street.

Land values rose with it. In 2005, two developers, one from Singapore and one from Hong Kong, each took an interest in a small parcel on the south side of Wujiang Road, planning high-end housing at more than 30,000 yuan per square meter — a rare price at the time — for the executives working on Nanjing West Road. Wujiang Road itself was thereby cut in two at Taixing Road, into the podiums of two projects: Sijifang and Huangpuhui.

The Yingshi China team that set Sijifang's commercial positioning made no secret of its ambition: a high-quality back street offering something slightly different from the top-tier Nanjing West Road, built around distinctive fashion and designer labels. To hit a target of 500 to 1,000 yuan per customer, the boutiques then just surfacing on Changle Road and Julu Road became leasing targets too.

Yingshi China is now applying the same "high-spend back street" thinking to Tongren Road, another small street crossing Nanjing West Road. But judged by what actually happened at Sijifang, the idea failed badly: a year after opening, 24 clothing shops decided to clear out because the rents were too high and the takings would not cover them, emptying 20% of a Wujiang Road that had been close to fully let. The Huangpuhui half, which had moved the old Wujiang Road shops indoors into a mall, did well by contrast, carried by veteran names like Yang's Fry-Dumpling and Red Ruby cakes.

With the back street's charm gone, Sijifang was soon sold on by its original developer, Singapore's Frasers Centrepoint. The price, 480 million yuan, found a buyer in the Hong Kong commercial property firm CSI Properties. After raising the share of restaurants and leisure retail, the street-facing shops finally did much better. But the ground-floor inner arcade and the second-floor units, once billed as the way to expand Wujiang Road's commercial capacity, never took off.

CSI is now betting Wujiang Road's chance at reinvention on the mixed-use complex one street away, HKRI Taikoo Hui. Since 2013 the company has said so fairly plainly in nearly every major financial report. Its most recent interim report, for 2016, put it this way:

"With the imminent unveiling of HKRI Taikoo Hui, the Swire Properties development, we expect the project (note: i.e. the Sijifang project on Wujiang Road) to generate significant value enhancement through upgrading the tenant mix and raising rents."

Nanjing West Road at Shimen Road No. 1 — HKRI Taikoo Hui: the mall that breaks the district open. Can it tell a neighborhood story?

Metro Line 2 opening, "Mei-Tai-Heng" forming the Puxi CBD, the remaking of Wujiang Road, the bustle inside Jing'an Villas, the trial opening of Fengshengli — for nearly 15 years, the vast construction site at Nanjing West Road and Shimen Road No. 1 missed almost every change around it.

In that time Shanghai added 7.9 million permanent residents, and urban residents' annual per-capita disposable income rose by a cumulative 276%. Old houses like Jing'an Villas, and mid-range leisure streets like Wujiang Road, could no longer meet their needs for living and spending, and could not keep up with fads and concepts that changed by the day.

The new gathering places are malls: finely designed, stocked with every category, piping perfume out of the fresh-air system. In places where commerce has developed more slowly, a big-box mall of real size, once it is running smoothly, can mean an entirely new city center taking shape.

Chengdu after Wharf's IFS and Sino-Ocean Taikoo Li is a good example. Over the past two years, the two complexes have gradually drawn crowds away from Chunxi Road, the traditional shopping street to the west, and begun to release local spending power. According to Swire Properties' 2016 annual report, retail sales at the project rose 78.3% for the year while occupancy rose only 4% — meaning that, averaged across every shop, sales were up more than 50%.

For Swire Properties, which is good at planning and running commercial property, Chengdu is hardly the mainland's easiest place to do business, but it suited a further test of the "community" thinking the company had worked out in its Sanlitun project in Beijing: low-density, open shop layouts that give high-end flagship stores the sense of occasion they demand while keeping the city's existing streets and courtyard grain; anyone can walk freely between the stores, and even between the city's old and new commercial centers. A mall that is no longer sealed off becomes a more valuable junction.

This product line, later named Taikoo Li, was a fairly advanced way to build a mixed-use complex. It could not be carried any further in the company's Shanghai project — the one it joined first and unveiled last.

Rewriting the luxury housing plan drawn up when HKR International bought the land, then spending nearly five years actually building, pushed total investment, bank loans included, to 16 billion yuan. The arithmetic became more pressing than innovation.

In the end HKRI Taikoo Hui went with a relatively closed layout, much like the one in Guangzhou. Shoppers follow an internal S-shaped loop from the far north end to the far south, a walk of more than 500 meters. That puts it in direct competition with mega-complexes that have run for years, such as Jing An Kerry Centre and Shanghai IFC, and with ones still to come, such as Xujiahui Center ITC.

The ideas about fitting closely into the surrounding neighborhood survive in details that are easy to miss. The passage along the mall's north side, running east to west across the block, is in fact the eastern stretch of old Wujiang Road. The shikumen building still being restored on the south side is the auditorium of Minli Middle School, moved whole from its original spot at the center of the site. For its public slogan, HKRI Taikoo Hui chose the Shanghainese word "dia." And on the white hard hats that kept appearing on site, some workers had written in marker the pinyin for "Dazhongli" — before it was the HKRI Taikoo Hui construction site, Dazhongli was the largest expanse of new-style lilong in Shanghai, dating back to 1925, the fastest stretch of the city's modernization.

In Hong Kong's booming 1970s, Swire Properties built Taikoo Shing on Hong Kong Island, the city's first true mixed-use complex; the tight fit between a good residential community and its shops is still held up as a model. In Shanghai, though, not many people will ask what became of the Dazhongli that HKRI Taikoo Hui erased, or of the many other residential blocks that have turned into malls.

This has become, in the end, a commercial property project that has to care about money and efficiency.

As the May 4 trial opening approaches, the question drawing curious shoppers and the whole retail trade is what new brands and new ideas about consumption this big mall will bring to the district.

A senior member of HKRI Taikoo Hui's operations team told QDaily earlier that in the retail portion they would blend in as many different formats and brands as they could, to serve the daily needs of the district's nearly 200,000 office workers.

The street-facing shops along Nanjing West Road and Shimen Road No. 1 can already hardly wait: their names are up on the hoardings — Dyson, Longines, Nike, Adidas, Puma, Kenzo, McQ, EXI.T, Tesla.

The rest of the mid-sized shops, and the space specially held back for pop-ups, sit inside. Cosmetics stores from Wujiang Road, the foreign restaurants and boutique retailers Fengshengli attracted, even the bookshops and start-up brands that first sprouted inside Jing'an Villas — all of them, it seems, have a shot at being brought into this mall of more than 100,000 square meters.

So many commercial opportunities have appeared along these 700-odd meters of Nanjing West Road. Will they end up fused together in this form?

Graphics by Feng Xiuxia

Cover image from HKRI Taikoo Hui and Wenhui Bihui