Henderson can deliver value after winning New Central Harbourfront Commercial Site 3. Here’s how

Site 3 offers a large, unique floor plate, something that is relatively limited in other office buildings in Hong Kong
Site 3 also needs to be an expression of Hong Kong and the people who live here as it will be Central’s front of house to the Greater Bay Area

Nigel Smith

Published: 12:00pm, 14 Dec 2021

Why you can trust SCMP

The government has confirmed Henderson Land Development has paid the full HK$50.8 billion (US$6.5 billion) lump-sum premium for New Central Harbourfront Commercial Site 3. As we know, six tenders passed the design part of the two-envelope approach requirements, but only two met the government’s reserve price.

Regardless of the winner and price, there is a responsibility to deliver value from this sale. Henderson can do this by creating new opportunities, and is likely to plug the site into its existing portfolio in the wider Central area.

To unpack Site 3’s possibilities, Colliers recently held an event titled “Site 3: A city on the cusp”. It brought together some of the market’s key thought leaders to examine Site 3’s opportunities against core themes: commercial viability, smart principles, connectivity and liveability.

Commercial viability

Site 3 isn’t game-changing in terms of new office stock. Once completed, it will add 660,000 sq ft to the wider central business district’s (CBD) 18.8 million sq ft net floor area of grade A office space. But, it does offer a large, unique floor plate – something that is relatively limited in other office buildings in Hong Kong. Large companies can lease a single floor in a low-rise building, consolidating all their staff in one area, in the most prime location. There is also potential to develop a more tailored workspace, not defined by the traditional Hong Kong CBD floor plate. We have already seen interest in the space. Don’t be surprised if a large chunk or all of it is snapped up by a significant local or multinational occupier.

It’s important to note that the development complements Henderson’s other assets in Central – International Finance Centre I and II and the Four Seasons Hotel – making it strategically important to the firm.

The New Central Harbourfront Commercial Site 3A is in the vicinity of the city’s General Post Office, Jardine House and the International Finance Centre. Photo: Martin Chan

Henderson’s plan puts the retail portion of Site 3 close to one million sq ft, some 58 per cent of the total gross floor area. Together with IFC Mall and Landmark’s retail portfolio, Central could surpass Harbour City in Tsim Sha Tsui as Hong Kong’s most extensive high-end shopping area – a key component of its commercial viability.

Smart principles

Hong Kong has a clear vision – to embrace innovation and technology to build a world-class smart city – as outlined in the Smart City Blueprint 2.0. While there seems to be a lag in smart building development – which Site 3 could pioneer – it appears to be more about change management and people becoming used to the idea of interacting with buildings.

The developer can use data from its existing portfolio to inform its future tenant mix and optimise management services. Using this data to inform smart design will also enhance tenants’ productivity by maintaining the best possible working environment for their staff.

New development at iconic Hong Kong harbourfront to be a welcome sight

As Site 3’s retail area will be vast, it highlights the need to monitor consumer flow and engagement to optimise the site’s layout and positioning for maximum footfall.

Connectivity

Site 3 will become a hub for all forms of transport on Hong Kong Island, and linking these modes over such a large area will require complex management, good signage and easy-to-follow directions. This will act as a flywheel of success for each of the pillars discussed: driving footfall for the commercial element of the site, creating a flow of people for the retail component, becoming a place of leisure for the general public, enhancing the city’s liveability, and leading the way in terms of sustainable best practice.

Site 3 also needs to be an expression of Hong Kong and the people who live here. It will be Central’s front of house to the Greater Bay Area, and the image Hong Kong projects to the rest of the world to cement its standing as a tier-1 city.

Public spaces will transform Victoria Harbour plot, designers say

This is an opportunity to enhance the image of this part of Central, from its current skyscraper block development visage to a more public-oriented town vibe, with a big focus on green space, walkability and free pedestrian movement.

Liveability

The majority of experts I’ve spoken to believe Site 3 must be for everyone to enjoy. It impacts so many aspects of the city in a holistic, sweeping manner that brings stability, wellness, culture, environmental improvements, economic value and education to the forefront.

There is a need in Hong Kong to service the public with free space that can be accessed 24/7 at no charge and that appeals to all ages. On the government’s essentials list are public open spaces, only 5 per cent of which can be used for commercial features, such as alfresco dining. Hong Kong lacks random free space, where the public can do as they please, and hopes are high that Site 3 will deliver some.

Central harbourfront site: Henderson bid US$1.75b more than runner up

Sustainability is a significant factor in liveability, and construction and lighting are the biggest drivers of Hong Kong’s carbon emissions, so if the site’s construction and operations can take a proactive approach to minimising its carbon footprint, it should be an easy win.

The project itself is a huge opportunity, and Henderson’s plans serve the government and its people’s objectives. I have great expectations from this development and look forward to it living up to its promise, as Site 3 really is a city on the cusp of delivering real value.

Nigel Smith is managing director of Colliers in Hong Kong

Post