From second tier city to a financial metropolis at the heart of the Chinese economy, Shanghai has changed beyond recognition over two decades and JLL’s Anthony Couse has lived in China long enough to witness the growth firsthand. Viewed from two vantage points – first in Hong Kong and later Shanghai itself – Couse shares the city’s growth story through his professional lens as Managing Director, East China at JLL.
How has the market changed since you arrived in China?
A fundamental change is the sheer volume of real estate being built. Shanghai, for example, is much more of an international city today. We’ve seen total office stock double twice in my time here, which is just incredible. And the total stock of office space will double again in the next five to six years with over 80 office towers being built. You will not find a city anywhere else in the world like it. Real estate practices are maturing very quickly as the city works hard to realize its ambition to be a global financial centre.
Twenty years ago, there was no clearly defined CBD in Shanghai. The real business focus was in Hongqiao, which is now considered more fringe. Today the CBD has matured and you now see one of the most iconic syklines in the world; pretty much all built in fifteen years. Most of the land is accounted for in the core and we now see the emergence of a decentralized market in districts that six or seven years ago, it was unthinkable to develop offices or retail in these areas.
Historically, foreign companies–the big multi-nationals–took up the majority of grade A office space, but in the last four years many Chinese companies have entered the market. Much of today’s demand is domestic and this is a fundamental shift in the market dynamics. It means JLL has had to develop strategies to capture this trend.
In many respects, we have played a pioneering role and I have seen how JLL has influenced the market, from an occupier and investor standpoint as well as driven improvement in service standards. We’ve grown from 80 to 400 staff in Shanghai during my nine years here.
We’ve also been involved in a number of landmark projects such as IFC (International Financial Center) in Pudong, Jing An Kerry Centre, and more recently the new Shanghai Tower – these are iconic buildings and they seal the firm’s reputation here.
How else has the city changed?
When I arrived in Shanghai there were only two metro lines. Today there are over fifteen with another 200 kilometres of track being built. Shanghai now boasts the largest metro network in the world – this is a truly amazing infrastructural improvement in such a short period of time. Our first office in Shanghai was at Central Place in Huangpu district. Some of our staff had to commute up to two hours to work, many cycling. Today that journey takes less than 40 minutes by subway, including time to pick up a Starbucks coffee – ranked the most expensive in the world!
The subway has put the suburban districts on the map. There are many mixed-use developments coming up in these areas, with restaurants, big box retail, cinemas, offices, all built on top of subway stations. The rise of these sub-districts is a sign of a more mature market, offering businesses cost effective real estate solutions and bringing retail to the suburban catchment areas of millions of people.
Which businesses are moving away from the city centre?
Pretty much all industries. Take the Pharma industry as a good example. 15 years ago a company would have started with 500 square meters and today expanded to 25,000 square metre in a prime downtown Grade A building. Clearly it is not cost effective to be downtown so they are moving away. In another example Nike, which used to be in a core location on Nanjing Road and has recently relocated to a purpose built, 60,000 square metre campus in the fringe areas of Shanghai. This is typical of Nike in the US.
What’s driving the transformation?
Demand from tenants for international quality buildings and cost effective real estate has pushed development. Local Governments are playing their part too by offering preferential tax inducements to secure companies into their district.
What are some of the challenges you faced changed over time?
People: It’s a challenge to attract and retain talent. It is not like mature markets in the world where 10-year plus real estate veterans are easy to come by. Real estate is a relatively new industry and hence we have a limited talent pool. We have to treasure our existing talent and nurture them through training and career growth.
Of course it’s more competitive today. In the past there was a reliance on foreign clients and it’s now shifting more to the domestic sector and to some extent that needs a different skillset. Over the last four to five years, we have seen an improvement in efficiency and productivity of our staff and we continue to develop our local leaders. I’m very proud of the diversity we have in the Shanghai office.