Demand for design-conscious shops is growing as Shanghai retailers look outside traditional locations to stand out from the crowd, says a recent industry survey.

"Demand for retail spaces in places like the Bund and Xintiandi, both imbued with the historic and cultural legacies of the city, has been strong while options are few," said Kenny Ho, head of research at Jones Lang LaSalle Shanghai. "With a sharp increase in the number of retailers operating in the Shanghai market over the past several years, finding a point of differentiation has become essential."

At the moment, 1933, an abattoir turned high-end retail destination in Hongkou District, is the latest redevelopment of utilitarian buildings to be converted into design-conscious shops.

The project on Shajing Road has already received quite positive feedback from the market, according to its sales and marketing agent, which started leasing three weeks ago.

As scheduled, the five-level development, a historically preserved building designated by the Shanghai government in 2005, will open in stages by the Chinese Lunar New Year, with rentals ranging from 60 US cents to US$4 per square meter per day.

"I really enjoy wandering in design-conscious places during my lunch break," said Rainbow Yu, who works for a US consulting firm near Xintiandi. "The relaxing experience conveys a concept of innovation and is very different from what I can get in traditional shopping malls."

Meanwhile, a tight supply of spaces in traditional prime shopping areas might also account for the trend, industry people said.

For instance, landlords on Nanjing Road W. are looking for ways to maximize revenues by making the most of every square meter as retail vacancies fell to their lowest point.

Plaza 66 will open a watch store later this month in a basement formerly occupied by a staff canteen, and the nearby Shanghai Center is also planning to create more shops by using its basement.

Vacancy rates in prime shops on Nanjing Road W. dropped to one percent in the third quarter, compared to 3.2 percent in the first quarter.

(Shanghai Daily October 18, 2007)