Bert de Muynck
Commercial Real Estate #4 April/May 2007. Republished with permission.
The creative industries, which comprise of the arts, media, and design, are among the fastest growing economic sectors globally. The global market value of the creative cluster was estimated at more than 1 trillion U.S. dollars last year. Since Richard Florida published “The Rise of the Creative Class” (2002) it became a must-implement for civic policymakers, city planners, developers, artists, arts administrators and public officials. Recently the Chinese government decided to invest more in the Creative Industries and its effect can be felt. Besides being a concept, the creative industries need a dynamic and stimulating urban and artistic environment from and in where they can operate. While the internationally renowned art district 798, Dazhanzi area, is being transformed from a living art community into a economy driven displaying art district, thereby giving frictions between the artists and the owners of the area, the Seven Star Group, the Boloni Group – a Chinese-Italian consortium producing kitchens and furniture and headed by well known personality Cai Ming, the CEO of China’s number one total design company, Kebao &Boloni Kitchen & Bathroom Furniture – recently presented their plansfor the development of a new art area. Called Gaobeidian Art District, it is located Beijing’s central Chang’An Avenue eastward beyond the fifth ring road. Bert de Muynck gives an overview of therise and fall of the Creative Business District 798 and gives a first row overview of the ambitions brewing in the Gaobeidian area.
Between the third and fourth ring road in northeast Beijing, on the way to the airport, sits Factory 798, China’s biggest and internationally acclaimed art district. 50 years ago, Factory 798 was set up as an electronic production site, far away from the city center, where some of the key components of China’s first atomic bomb and man-made satellite where manufactured. All this labor was roofed under grandiose East German factory architecture. 798’s total ground surface is 360,000 sq meters. In 2004 the area’s real estate was valued at an estimate of more than RMB1 billion, but at the same time the presence of galleries and institutions related with selling art more than doubled. The current value of 798 is unknown. At the end of the 1980s the factory faced reality; production slowed down, and at the end of the 1990s a large number of buildings were left vacant.
This situation facilitated the Central Academy of Fine Arts housing their sculpture department in some of the empty buildings; they were an inexpensive and spacious temporary option. Soon after, the sculptors were joined by a group of independent artists who moved in after failing to create an artists’ village elsewhere, because of restrictions from Communist authorities. The communist leadership finally left them alone, but in the mean time their presence turned the area into a successful art district. This led to bitter relations between the artists and the landowners, who through a series of events (no more leasing of space to artists and no renewals of their rent contracts) managed to move out the founders and opened the door for business-driven (both Chinese as international) galleries, foundations and corporations. Now, Hang Rui, 798’s leading artist, has teamed up with Cai Ming to develop their dream of a Chinese artist community near Beijing’s Central Business District called the Gaobeidian Art District, while plans for 798 during the last year have swung between demolition, the creation of China’s Silicon Valley and recently, with government support, to preserve it a ‘cultural zone’.
Factory 798’s recent history is a struggle between the desires of the artist community and the realpolitik of the landlords, SSGC. This started in 2002 when artists and cultural organizations began to divide, rent out, and re-make the factory spaces, gradually developing them into galleries, art centers, artists’ studios, design companies, restaurants, and bars. “798” became a cultural concept, influential on concepts of artists’ communities, urban culture and living space. At the same time, to make ends meet, buildings were rent of for business activities for Dior, Shell, Toyota and Omega. Bérenice Angremy, part of the team involved in developing the Gaobeidian Area and director of Thinking Hands Co.,LTD, working for five years in 798, explains the evolution: “We can see three different phases. In the first phase, 2002-2005, we moved into a largely empty factory and organically turned it into an art district. The first galleries entering here, had a mission; to fill the gap in Beijing’s creative society. 798 was from the start a space open to the public, realizing that one day it would be demolished. After the three year contract finished, we renewed it year by year with SSGC, our landlord. They did not recognize 798 as an art district. In the second phase, after 2005, SSGC stopped renting to foreigners and artists; this explains the big amount of second-hand rents. At that time the international art world recognized 798, giving it fame. The third phase, summer 2006, starts when the Chaoyang District decided to preserve 798; making it into one of the ten pools of creativity for Beijing. They made a deal with Seven Stars Group off which we are not aware.” 798’s acclaimed transformation made SSGC eager to maximize the rental income paid by artists, galleries and other facilities. At the same time officials in Chaoyang District (where 798 is located) and some of Beijing’s vice mayors preserved the area as a “cultural zone” in harmony with plans for the 2008 Olympics. A nonbinding resolution to that effect was passed in the National People’s Congress.
From living art community to display art community
The transformation from an experimental art community into a guided art business district, supported by foreign investment, is not necessarily bad, explains Dutch architect Neville Mars, part of the team involved in developing the Gaobeidian Area and chairman of the Dynamic City Foundation: “The 798 process is pretty standard, not only in China. Worldwide, art districts, when successful, move towards expensive rents and quick changes in tenants. The question how that process occurs is another matter, if it becomes a vibrant essential part of the city, like SOHO in NY and London than it is positive. In 798 there is a weird contradiction between management and no-management. In the current situation the market and government try to be the guiding force to make it successful, dealing with something they have no idea about, while the people in the field feel it takes undesirable directions. When I moved into 798, we were part of a community. Today there is nobody left. There are no more art producers around, only art sellers.”
The preservation of 798 is questioned by both Neville Mars and Bérenice Angrémy on its capacity to keep the identity of the area, its raison-d’etre of being internationally acclaimed. Neville Mars expresses his doubts: “The so-called international status, which people say it already has, is being regarded differently by municipality and the Seven Stars Group whenever it convenes them, they want to push it forward as an international Olympic attraction, not acknowledging the original qualities the foreigners came here for. It is being developed so much it looses its quality. For me, the most interesting question is, what is the program in area like this and what role does it play in the city?” Bérenice Angrémy formulates the question how to safeguard artistic quality as follows: “To have business, like cafes, is not a bad thing, we wanted this. I question the quality. If you open the door for resourceful galleries that are not competitive in terms of quality, that is a problem, that is business for business. Now it is obvious our landlord wants to split the district in one art and one commercial section. There will be clothing stores here, but we don’t need that. If you allow the clothing market, you are dead, it is not an art district.”
The Gaobeidian Art District
With 798 under pressure, the East part of Beijing is taking the lead in becoming Beijing’s cultural hotspot, for which I propose the a new slant on the acronym CBD, this time as Creative Business District. Plans and investments are on the table to create Gaobeidian Art District, developed by Cai Ming and 798/Dashanzi figurehead Huang Rui. Cai Ming leased for 50 years a 22-hectacre site with old factories surrounded by green.
International vision for total solution design
Cai Ming is a leading Chinese businessman in the field of high-end kitchen equipment and collaborated with Italy Boloni to found the Boloni Kitchen & Bathroom Furniture (Beijing) Co., Ltd. In 2005 Cai Ming introduced the integrated home equipment décor and design solution as a basic component of modern lifestyle. Cai Ming works with 70 designers in China, 19 in Italy and made RMB700 million in sales last year. Three years ago he bought a furniture factory in the Gaobeidian area, hoping to establish his own factory district. Soon after, the area was incorporated into the CBD (Central Business District) and factory development was forbidden. This turned Cai Ming almost overnight into a developer: “At that time I had no experience as a developer. Boloni is a life-style brand, interested in fashion, architecture, interior design,… from all over the world. We study how a luxury brand relates to life-style – in different countries and cultures. When the government changed the area’s function all this got intertwined, and I decided to develop this area for art, culture and creative industries.” Cai Ming is during the interview I conducted very clear about the potential of the location, the support from the local government (who praises him, tells he, for his international vision) and his confidence in the growth of Chinese culture: “I think our location is very important, it is not downtown, but on the fifth ring in the East. In the next years, all the real estate investment will come to this area. By cooperating with the government we can keep the price low, which is important in the art and creative industry, they can’t pay high rents. In the first 5 to 10 years we plan low-cost so to let galleries, artists and design companies enter; after this we will invest in high value commercial projects.” One third of the site is old factories, to be renovated under the supervision of Huang Rui, two thirds will be planned from scratch, by Neville Mars. For the long term vision Cai Ming is advised by Bérenice Angremy. The first phase will turn the old factories into an artist village; the trigger to develop the other parts of the area.
The plan for GBD Art District involves six blocks on 450,000sq meters of land and includes: the Industrial Renewal Art District; the Flagship Store Street (international top brand stores); the New Scene of Qingming Shanghe Street (traditional culture); the Peach Blossom Island (bars and clubs); the Creative Land (avant garde art) and the Business District (high class hotel and conference center). This six block area is slated for completion in 2010.
Integrated development of art and market
Cai Ming counters his inexperience as a developer by focusing on the uniqueness of the project and the opportunity to bring Boloni, by the end of 2008, to the stock market: “It is very difficult and nobody knows how to manage a residential, commercial, art area; there is no experience in the world. We are the company, along with experts, that is the most suitable to do this.” In the first two year he will invest 10 million euro, predicting an overall investment of 100 million euro. The initial investment is low; due to low renovation costs, providing artists low renting costs. The return on investment will come on longer terms, when the commercial and residential project in the GDB south area kick in: “I think the profit will be very high, because the cost for the place is not high, that is very important. But if we do the normal things like others, than there will be no profit. We want to be unique in the world; the only art and culture consuming area. There will be 20 million foreign visitors in Beijing and five times more Chinese visitors; with this mind we will be the only place to show the real China, the culture; from history to future. We will show its content; from within. If we have this, our business value will grow in another five years, this is also possible because our site is big enough.”
To make this project happen, Cai Ming works together with foreign experts like Neville Mars and Bérenice Angremy who see the potentiality of the new art district by intertwining the Chinese culture climate with the development of the Creative Industries in Beijing and the eastward expansion, beyond the CBD area, of the Beijing Metropolitan Area. As such GBD can become a pivotal point in Beijing’s urban, artistic and cultural expansion. Neville Mars explains the challenge as follows: “We are building from scratch, which is almost against the nature of the art districts, where planners have very little influence. Our plan will have a buildable footprint of 60,000 square meters and the built floor area is 6 times this, with a FAR (floor area ratio) of 2 – creating semi-high density.”
Bérenice was contacted for her involvement in the re-orientation of 798-area, she formulates her long-term vision as follows: “Give priority to the art district, not only displaying art, but also living with art; that comes from our experience here. 798 was completely organic. Thinking about people that are around and not only the art that is displayed. Another key thing is the green land. We can give a quality of life to Beijing, coming from the art atmosphere, but also from the services you give.” Equally important as setting up the program for the area, she sees the involvement and commitment of the Cai Ming, the developer, to move the project forward, without loosing the understanding of the business side of it: “We are very clear which part is business and which not, in 798 we are under the pressure of only money. They just want to grab what they can grab, here we have a person that came to us, I have this idea, this is a huge land, green and beautiful. That brings Beijing a new quality of life that involves art.”
The rapid speed of urban development characterizing the Chinese cities lead to considerable questions about the quality of life that is being created. In a society changing its culture at rapid pace and seeing the emergence of the Creative Industries, landowners and real-estate developers are faced with the question how to provide these groups with affordable spaces, understanding its potentiality to make profit on long terms and its need to create a sustainable environment where creativity and profit are not competing, but reinforcing and supporting each other; combining the best of both worlds. These two case-studies from Beijing, 798 as a struggle between ambitions, GDB as one expressing the ambition to find a harmonious development, could be seen as a model for what could happen in other Chinese cities; whether in art districts in Shanghai, Guangzhou or Chongqing. Incorporating the programs for the Creative Industries in the larger context of urban development, like happens in the GBD area, poses new challenges for the relation between developers, clients, market, audience and artists. Possessing a great market value, being very vocal, having the ability to draw international attention and possessing a keen eye to develop from the bottom up successful urban environments, the creative industries seem to be ready, as illustrated in the case of GBD, to invest their talent in collaborating with real estate development in order to create profitable, livable, attractive and sustainable urban environments.
2007. Bert de Muynck
Published in Commercial Real Estate #4 April/May 2007.