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Site 3: A city on the cusp | Part 3 smart cities

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The pros and pros for a smart Site 3

In the final instalment of our three-part series Site 3: A city on the cusp, which covers the application of liveability, connectivity and smart cities in Site 3, Nigel Smith spoke to Dr Alex Katsanos of Arcadis, to discuss what he would like to see from Site 3 to maximise its smart design.

The invitation to deliver smart design throughout a new build in Hong Kong’s CBD is a rare opportunity, given the limited space. Most developments and buildings rely heavily on retrofitting and upgrades. So, to have an entire plot of land in the heart of the city that can have intelligent principles embedded throughout the whole project’s life-cycle is an exciting prospect. 

Hong Kong has a clear vision to embrace innovation and technology to build a world-class smart city characterised by a strong economy and high quality of living, as outlined in the Smart City Blueprint 2.0. And when aligned with the unique nature of Site 3, Hong Kong finds itself on the cusp of an opportunity to showcase its intelligent design and bolster its position among Tier-1 cities as a technological leader.

"The Government gave bidders the latitude to innovate, asking them to use the core principles from the Blueprint"

In the Conditions of Sale, the Government gave bidders the latitude to innovate, asking them to use the core principles from the Blueprint, explicitly referring to smart mobility, living and business. As we know, Henderson Land won the bid and has promised to ensure the site lives up to expectations. With limited information on the table, what could this look like? 

What we can expect from Site 3 in terms of smart design

We generally understand smart design to mean using technology to find solutions to significant challenges. In the context of Hong Kong and Site 3, it’s about the best way to connect the design, construction, operation, and even its decommissioning to its surrounding environment and citizens. In a broader context, this would be about how smart principles can, among other things, enhance public engagement, improve connectivity, or reduce carbon emissions. In a more focused context, it would be about lowering building management costs.

Hong Kong is also working towards a larger plan of socialising data to make life easier for the public and the private sector by, for example, preventing traffic congestion or reducing the time it takes to file the paperwork for construction projects.

“It’s apparent from the Blueprint that the Government hopes Hong Kong will eventually have a series of physical and non-physical assets, all of which contribute to a database that is open access and makes everyone’s life easier,” Alex says. 

Designing smart connections for commuters and the general public

The Condition of Sale stipulated that smart mobility be part of this site. This has a clear cross-over with connectivity – how best to get people to the site, and once there, how best to engage them and help them navigate it. The parameters also directly referenced smart travel information, encouraging green transport and having clear walkability. 

The smart element is how data will be collected, analysed and then used to optimise that public engagement through design, perhaps in the tenant mix, or to maintain commuter flow through the area.  With its extensive asset portfolio, Henderson might already be using such data to inform Site 3’s design.

"The application of smart principles to connectivity will be one of the biggest value-adds"

The design will build on how Central is an international transport hub, bringing in Hongkongers by ferries, trains, buses and taxis, and visitors via the Airport Express. The application of smart principles to connectivity will be one of the biggest value-adds for the developer. Henderson has an additional opportunity for connectivity, given its nearby assets, International Finance Centre I and II, the Four Seasons hotel, and the upcoming The Henderson on the old Murray Road car park. 

The smart groundscraper that can offer its tenants innovative ideas

The office portion of this project would add around 660,000 sq. ft. It will likely attract banks and financial services given its position on Hong Kong’s skyline, its easy connections with the GBA and Central’s prestigious reputation. The developer will be able to use data collected from its asset portfolio to inform its tenant mix and optimise management services. Its smart design will also enhance productivity by maintaining the best possible working environment for tenants and their staff.

"The retail portion of Site 3 is close to 1 million sq. ft. – that’s 58% of the total GFA"

The retail portion of Site 3 is close to 1 million sq. ft. – that’s 58% of the total GFA, which demonstrates that the expected footfall needs to be sustained. When merged with the IFC mall and the Landmark, the overall retail portfolio will become the largest high-end shopping area in Hong Kong, underscoring Henderson's strong confidence in Central. It also highlights the need to monitor footfall patterns and engagement rates to optimise the site’s layout and positioning for maximum footfall. 

Smart design also covers leveraging relationships to add value for clients, perhaps by increasing mobility options or offering retailers more experiential opportunities to adjust to shoppers’ “new normal”  habits. Alex gives the example of sports apparel brand shops where customers visit the premises to use a treadmill – that reads what shoe best suits them – and customise and order their trainers on site. 

Scepticism over the cost of building smart is melting

Traditionally, developers have been somewhat reluctant to adopt smart building technology because of the financial outlay and the belief that it does not directly give tenants a competitive edge, but that attitude is changing. While Henderson has not yet revealed specific details, many companies and possible core tenants require specific ESG or carbon targets, which persuades developers to consider these criteria. 

Colliers believes this aspect will be a critical turning point as occupiers devise long-term plans around their business goals while keeping talent at the forefront.

"Investing in tech and ESG will cost Henderson now, but those costs are easy to recover"

Investing in tech and ESG will cost Henderson now, but those costs are easy to recover, Alex says, “and given their willingness to outlay for the best outcomes, I’m positive they will have given this much thought.”

Sceptics sometimes feel that developing a smart building is a never-ending cycle of outlay to manage the latest upgrades in hardware and software to remain competitive. Alex calms this anxiety by noting that hardware does not change as often as the software does. Many hardware providers tend to have leasing arrangements with their customers, ensuring the latest equipment is available 

On the other hand, smart buildings can be the gift that keeps on giving when it comes to saving money. Naturally, optimising power usage will directly affect profits. Smart buildings also make management more productive, alerting landlords to needed repairs or upcoming replacements, allowing them to standardise provider contracts and take advantage of the economies of scale when ordering spare parts and running maintenance checks - offering savings of up to 25% on maintenance.

All of this directly translates into value for all concerned.

"Besides being prototypical of Hong Kong’s harbourfront vision, it also needs to promote the city as a beacon of technological"

On the wish list – mindful use of space

Expectations are high for Site 3 to be a smart-development showstopper. Besides being prototypical of Hong Kong’s harbourfront vision, it also needs to promote the city as a beacon of technological  development to cement its status in the Greater Bay Area powerhouse.

All the hardware and software in smart design can be significantly enhanced by mindful use for the space it serves, and this is top of Alex’s wish list for Site 3. “Can this space be shared in an intelligent way that meets the needs of the demographic it will serve?” he asks.

Tech-forward places like the Hong Kong Science and Technology Park allow tenants to test applications in its space, offering a living laboratory for, say, social or real estate applications to map out the future of mobility. Site 3 renders itself to that kind of idea.

We’re looking at a development that will essentially be Central’s front of house – the first thing visitors experience when entering the financial heart of Hong Kong. Its concept and assets will need to synergise with those in the Greater Bay Area on a larger scale and with Hong Kong’s urban environment on a more local scale.

The GBA is hyper-focused on science and technology, so Alex raises the idea of incubator laboratories, a good way of getting corporates involved with start-ups and academia and bringing innovative solutions to the market faster by shortening the “inception to commercialisation” cycle.

With Henderson Land’s track record in developments like The Henderson, Site 3 is likely to be teched to the decks, maximising environmental friendliness and liveability. We expect it will go further, leveraging data from its office, retail and hospitality space portfolio to inform decisions on Site 3 to maximise its potential in the tenant mix and its use of space. In addition, we expect Site 3 to save landlords’ costs and add value to tenants by opening new revenue channels.

Artist rendering of Henderson Land’s design for Site 3. Source: Hong Kong Government

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Nigel Smith

Senior Consultant

Managing Director's Office | Hong Kong

Hong Kong

Nigel Smith is a Senior Consultant at Colliers based in Hong Kong and is responsible for managing key client accounts and mandates. With over 30 years working and living in Hong Kong, he has a wide knowledge of real estate covering development, transactions and advisory.  Nigel has worked on many large mixed use projects and super tall office towers accross Asia and is an expert in development design, branding, marketing and leasing. 

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