Ties That Bind - Bay Area Council Economic Institute

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Ties That Bind
square-foot mixed-use development in Pudong (Shanghai); the headquarters for the Development
Bank of China; and the China World Trade Center–Phase 3 in Beijing, which will be the
tallest tower in the capital city.
SB Architects (Sandy Babcock), which specializes in residential and leisure/hospitality projects,
entered the China market in 2002, after the 1997 economic crisis cut into its Indonesia business
and September 11 curtailed global air travel and hotel/resort development. Since then, rural migration
to China’s cities, an emerging affluent business class in southern China and a growing
expatriate community have spurred demand for housing and planned developments.
China accounted for 10–15% of 2005 revenues ($17.5 million) for SB, which serves China primarily
through its San Francisco office. It works frequently with Chinese developer Vanke Foshan
Real Estate, which hired SB for its Western design expertise—most notably the Fisher Island
planned community in Florida. SB has completed three of four phases of Vanke’s Ban Xue
Gang project outside Shenzhen, that will eventually include 3,000 residential units ranging from
low-rise townhomes to 20-story apartment buildings, plus shopping, schools and civic buildings.
SB has also finished two phases of the 341-acre Clifford Estates master planned community in
the Guangzhou Urban District for developer Panyu Ltd. (5,743 housing units plus office, retail,
schools and civic buildings), and is working on conceptual designs for the Song Shan Lake
planned community outside Shanghai, with 2,500 residences, 250,000 square feet of retail,
schools and day care facilities. It is in discussions for residential and hotel development at Mission
Hills, an existing complex of ten 18-hole golf courses in Guangdong Province.
HOK operates a network of country offices across Asia, through its Hong Kong-based HOK
Asia Pacific International unit. The network also includes offices in Beijing and Shanghai. HOK
has taken a cautious approach in Asia, a market known for middlemen offering government or
developer connections to large projects in exchange for a finder’s fee, and deals that can suddenly
evaporate. HOK therefore insists on 25% of the project fee in advance and will stop work
when payments are past due 30 days.
Asia accounts for a relatively small part of HOK’s annual revenues worldwide, but it is the fastest
growing. Asia business has doubled in the past two years and is likely to double again by
2009. China represents 10–15% of HOK’s San Francisco office business, which averages $1–2
million annually.
HOK has designed a campus for Motorola that is now under construction in Beijing’s Economic
and Technological Development Zone, including a 20-story office tower and a 65,000-square
meter shared service center. A mixed-use residential/retail project in Suzhou broke ground in
July 2006. Also in the works: a beachfront corporate housing/conference center complex in
Hainan. Past projects include the 25-story China Resources Building near Tiananmen Square; the
32-story Embassy House luxury townhome project for Hines in Beijing; four hotels in Shanghai,
the master plan for Hong Kong’s Kai Tak Airport, several master plans in Chongqing (Sichuan
Province), and interiors for the Hong Kong offices of Henderson Land Corp., Lehman Brothers
and Bloomberg News.