Standing in front of Gangtai Plaza at 700 Yan'an East Road, one finds a gleaming new facade and an open public plaza welcoming pedestrians, making it hard to imagine this is a 27-year-old commercial office building.

In September of this year, Gangtai Plaza completed renovations of its facade, lobby, public plaza, and elevators, covering all core common areas.

What makes this project truly remarkable is not simply that an old commercial building has been renewed, but that it represents Shanghai's first demonstration project for a commercial building with dispersed ownership and multiple owners self-funding a large-scale renovation.

Led by the property management company, 64 owners in the building agreed through consultation to raise property management fees, with the additional funds earmarked specifically for installment payments toward the total renovation cost of 8 million yuan and to inject working capital for future upgrades.

Shanghai's central urban area contains a batch of commercial buildings constructed between the 1990s and early 2000s that adopted a split-sales model during development, and these buildings with dispersed ownership have become a tough nut to crack for Shanghai's commercial building renewal efforts.

In recent years, the "Implementation Opinions on Promoting Commercial Building Renewal and Upgrading in Shanghai" was introduced, specifically focusing on such existing buildings with split ownership and encouraging exploration of diverse paths including owner-initiated renewal and consolidation of operating rights. However, in practice, due to the lack of owners' committees and divergent owner demands, the implementation path for renewing such commercial buildings has remained a persistent challenge.

How did Gangtai Plaza achieve a successful renewal?

Old Building Stuck Between Two Barriers: People and Money

Built in 1999, Gangtai Plaza is located in the People's Square area and is one of Shanghai's earlier commercial buildings.

After more than two decades, signs of aging began to emerge. In earlier years, minor patchwork repairs kept things going, but in the past two years safety hazards appeared: the building's facade developed hollow spots with a risk of falling off, making renovation mandatory.

Due to excessively outdated hardware, Gangtai Plaza's leasing competitiveness was also severely lacking. Before the renovation, rent per square meter was only half of its peak level, and the occupancy rate had plummeted from a peak of 95% to 78%.

For an old commercial building to undergo renewal, two core problems must first be solved: "people" and "money" — who will take the lead in driving the renovation, and where will the renovation funds come from.

Among Shanghai's currently successful old commercial building renewal projects, the lead parties and funding sources are mostly developers or major building owners. For example, "Zhongganghui Huangpu" on Dapu Road, built nearly 20 years ago, was renovated at a cost of 200 million yuan funded by major owner Hong Kong Shanghai-Hong Kong United Holding Group. To facilitate consensus among all parties and ensure smooth progress, Hong Kong Shanghai-Hong Kong United Holding Group bore the entire renovation cost without requiring small owners to contribute. After renovation, the office space leasing rate at "Zhongganghui Huangpu" soared from 14% before renovation to 85%.

But the problems facing Gangtai Plaza were far more thorny. Gangtai Plaza has no major owner; instead, it is held by 64 small owners. Having many small owners means reaching consensus is difficult.

According to industry estimates, existing buildings with dispersed ownership account for about 30% of Shanghai's stock. Moreover, since the proportion of such commercial buildings establishing owners' committees is relatively low, renovation cannot be led by an owners' committee either. Gangtai Plaza also had not established an owners' committee.

An industry insider told reporters that some major owners in the market had attempted to acquire dispersed ownership to carry out building renewal, but the results were poor. "After the major owner acquired the property rights of two small owners, it could not push forward. Because expectations had been set, other owners raised their acquisition prices one after another."

Property Management Leads the Way to Build a Renewal Fund Reservoir Before Renovation

On one side, the building urgently needed renewal; on the other, there was no driving entity or funding. At the critical moment, Gangtai Plaza's property management company — China Enterprise Property Management Co., Ltd. — stepped forward. "Our company wants to take on this leading role," said Yan Binxian, General Manager of China Enterprise Property Management, telling reporters that the company made this decision out of its own urgent development needs.

As a veteran commercial building property services enterprise, China Enterprise Property Management manages many commercial buildings in the central urban area built around the year 2000, most of which face situations similar to Gangtai Plaza. The company realized early on that old commercial buildings must undergo renewal to find a "second growth curve."

China Enterprise Property Management invited a professional team to evaluate the building and proposed four major renovations urgently needed: first, facade renovation to eliminate the risk of the original exterior wall decorations falling off; second, renewal of the outdoor public plaza to enhance the building's external image; third, lobby renovation to provide clients with a high-quality first impression upon entry; and fourth, replacement of overdue elevators to improve the building's vertical transportation capacity.

Beyond completing these renovations, consideration also had to be given to potential maintenance and renewal of air conditioning systems, fire protection systems, and electrical systems in the coming years of building operations. Ultimately, the estimated cost for this building renewal was approximately 8 million yuan.

According to the Civil Code, if two-thirds of owners in a commercial building participate in voting and more than half of those agree, maintenance funds can be used for renovation. Before the renovation, Gangtai Plaza had approximately 4 million yuan available from maintenance funds and surplus public revenue, leaving a renovation funding gap of about 4 million yuan.

Where would the money come from? "If the 4 million yuan funding gap were raised from 64 owners in a lump sum, feasibility would be low," Yan Binxian told reporters. Among the 64 owners, small and medium-sized owners accounted for 60%, and asking them to come up with tens of thousands or even over a hundred thousand yuan at once would be quite difficult. Moreover, owners had different ideas — some hoped to hold long-term, while others might want to sell in the short term. Owners not planning to hold long-term were unwilling to participate in a one-time fundraising.

What to do? China Enterprise Property Management studied and drew on office building renewal models from Singapore and Hong Kong. In Singapore's strata-titled building management system, it is a legal requirement to establish a long-term maintenance reserve fund (a fund reservoir), with regular annual contributions used for major repairs such as exterior walls and mechanical and electrical systems, avoiding large one-time levies. Hong Kong buildings similarly require the establishment of maintenance reserve funds, with continuous rolling investment in building upkeep, which is an important institutional design that allows many old office buildings there to maintain quality over the long term.

After comprehensive consideration, China Enterprise Property Management proposed a solution: owners would pay a monthly property fee increase of 1.8 yuan per square meter, with the additional fees serving as a dedicated building renewal fund. This way, approximately 1.08 million yuan could be raised annually. The 4 million yuan renovation funding gap needed to start the project would be advanced by China Enterprise Property Management. In the future, through the continuous collection of increased property fees, the company's advance could be repaid while also accumulating renovation funds for subsequent building renewals.

Multi-Party Coordination Completes Renewal Without Business Interruption

"Compared to a one-time fundraising, the installment-based approach does not require owners to pay a lump sum, making it more acceptable," Yan Binxian said. Several years ago, China Enterprise Property Management piloted this approach in other buildings it manages. In 2021, it raised the property fee by 1 yuan per square meter at Jing'an Zhonghua Building, collecting 360,000 yuan annually, which enabled the replacement of air conditioning heat pump units; in 2022, it increased property fees at Changchunteng Yuntong Building, collecting 180,000 yuan annually, and renovated the lobby environment at a cost of 350,000 yuan.

However, the renovation funding amounts in those two building cases were far smaller than Gangtai Plaza's and the duration far shorter. "Our company's senior management held repeated internal discussions. After all, advancing 4 million yuan is a significant investment for a company; but we felt that promoting the renewal of buildings with dispersed ownership is a mandatory question that China Enterprise Property Management must answer. We hope to explore a viable renewal path at Gangtai Plaza," Yan Binxian said.

The solution proposed by China Enterprise Property Management received support from the local subdistrict — Nanjing East Road Subdistrict in Huangpu District. Relying on the "Building Happy Home" governance platform, the subdistrict took the lead in convening building communication symposiums, inviting functional departments including the District Development and Reform Commission, District Urban Renewal Promotion Office, District Construction Management Commission, District Housing Management Bureau, and District Investment Promotion Office to hold on-site meetings, conduct policy interpretation and business training, and provide policy guidance and service support for project advancement.

At the same time, China Enterprise Property Management communicated with all 64 owners one by one, explaining the necessity of building renovation, how much funding was needed, and the fundraising plan. "Many owners are in other cities or even overseas. We communicated with them through face-to-face meetings, WeChat, phone calls, and various other means to help everyone fully understand and accept the plan," Yan Binxian said. Thanks to the good communication foundation built with owners over time, the discussions were not difficult. Many owners expressed support for the building renovation and showed relatively high acceptance of this "steady trickle" fundraising approach.

In March of last year, under the guidance of Nanjing East Road Subdistrict, Gangtai Plaza's building renewal and fundraising plan launched owner consultation voting. At the vote-counting meeting, the subdistrict sent personnel to participate and witness the entire process, supervising the voting, counting, and announcement to ensure the consultation was conducted properly. Ultimately, the voting participation rate reached 95%, and the owner approval rate reached 85.2%. The renovation plan passed smoothly with high support.

Even more pleasantly surprising was that in the property fee payment stage, all 64 owners paid proactively, achieving a 100% payment rate.

With the fundraising challenge resolved, China Enterprise Property Management promptly launched the renovation of Gangtai Plaza. Under the platform established by Nanjing East Road Subdistrict, multiple functional departments of Huangpu District provided guidance throughout the project. Since the renovation adopted a method that did not require businesses to vacate, China Enterprise Property Management actively communicated with owners and building tenants, making thorough arrangements and providing services to ensure normal office operations for businesses in the building as much as possible.

In September of this year, after all renovation work at Gangtai Plaza was completed, the building's overall image and quality were greatly enhanced. "Our building looks like a new one from the outside, and the customer experience is excellent," one owner happily told reporters.

China Enterprise Property Management also renovated the road on the side of Gangtai Plaza near Yunnan Middle Road, planning to introduce coffee shops, bakeries, and other street-level businesses, and to expand outdoor seating. Previously, this side street had many shared bicycles parked there; the subdistrict coordinated with the urban management department to relocate the non-motor vehicle parking area elsewhere, creating conditions for improving the surrounding environment of Gangtai Plaza.

After Renewal, the "Second Half" Must Also Be Done Well

Currently, China Enterprise Property Management is discussing with subdistrict business development officials how to do a good job on the "second half" of the building renewal. "Commercial buildings with dispersed ownership are prone to problems of being 'small, scattered, and chaotic.' We conducted a survey of the surrounding area and found that single-owner buildings command rents one-third higher than multi-owner buildings, and the tax revenue from tenant companies is several times higher. This shows that buildings with dispersed ownership can only find a way out by 'joining forces,'" Yan Binxian said.

The 50,000-square-meter Gangtai Plaza has owners with spaces as small as only 250 square meters of office space. "When office space is too small, you cannot attract strong tenants. So many buildings with dispersed ownership engage in extreme internal competition and fierce price wars. As a result, the building's economic density and quality only decline further."

As early as several years ago, China Enterprise Property Management began encouraging some owners to entrust their building assets to the property management company for unified leasing and management. "The assets of several owners might combine to form an entire floor, making leasing more competitive and giving stronger bargaining power on rent."

"On one hand, we guide the property management company to do a good job in unified asset management and operations. When multiple small owners on the same floor entrust the property company with unified operations, it can consolidate large-floor spaces to attract major and strong tenants. On the other hand, we research the surrounding industrial clusters to help Gangtai Plaza build a more competitive 'vertical industry building,'" said Xiong Jing, Deputy Director of Nanjing East Road Subdistrict.

After the renovation, noticeably more clients have come to inspect Gangtai Plaza. Yan Binxian said, "Before the renovation, even with low rents, we struggled to increase occupancy. But after the renovation, more and more companies are expressing interest in moving in. We are very confident about leasing!"

Reporter's Notes: The Key to Replication Lies in Improving Supporting Mechanisms

Gangtai Plaza's exploration opens up a brand-new approach for Shanghai's numerous old commercial buildings with dispersed ownership: there is no need to wait for a major owner or developer to acquire property rights. By relying on small owners banding together to entrust management, property management leading implementation, and steady trickle fundraising, buildings with dispersed ownership can also complete self-renewal.

In the reporter's view, three key pillars supported Gangtai Plaza's successful renewal: institutional innovation, grassroots government empowerment, and a trustworthy property management company.

First is funding system innovation. The Gangtai Plaza project innovatively established a building renewal "fund reservoir," through modest property fee increases and a dedicated renewal account, continuously raising renovation funds. This avoided the threshold of requiring small owners to make large one-time contributions, breaking down the one-time renovation pressure into long-term stable investment.

Second is grassroots governance empowerment. Throughout the entire building renovation process, the subdistrict and district functional departments were always present. Especially in the full process of owner consultation and voting, the local subdistrict participated in supervision throughout, standardizing each step of consultation, voting, and vote counting, using government credibility to safeguard procedural fairness, dissolving disagreements among small owners, and promoting multi-party consensus.

The foundation for all progress lies in the long-term accumulation of trust in the property management company. Yan Binxian, General Manager of China Enterprise Property Management, recalled that 10 years ago the company attempted a similar renovation in another commercial building. Although the plan initially gained owner consent, owners ultimately collectively reneged due to concerns about fund usage transparency. This lesson led China Enterprise Property Management to establish a "sunshine property management" approach: publicizing public revenue every six months, fully consulting owners before using funds, entrusting third-party institutions for project cost audits, and maintaining full-process transparency. Long-term transparent operations meant that during this Gangtai Plaza renovation consultation, owners focused their discussions on the engineering plan itself rather than questioning the property company's credibility.

In dispersed-ownership building renewal, the property management company is no longer merely a cleaning and maintenance provider, but an important market organizing entity that connects dozens of dispersed small owners.

However, this model cannot be simply replicated, and there are still many bottlenecks to overcome.

First, more "trustworthy property management companies" need to be cultivated. Multiple paths can be explored: for example, relying on owners' committees with property management leading coordination of renewal; or introducing independent third-party trustworthy property managers as neutral entities to lead project advancement. "The core of the property management company's role is to continuously maintain transparency in finance and the entire engineering process, establish a regular information disclosure mechanism, resolve owner concerns in advance, and pave the way for owner voting," Yan Binxian said.

Second, at the funding level, more financing and risk-sharing tools need to be put in place. For example, establishing dedicated account supervision to ensure that increased property fees can only be used for building renewal, protecting owner fund security while also sharing the pressure of the property company's upfront advances, reducing the risk of property company participation in renovation, and attracting more market participants.

Finally, building renewal cannot stop at hardware renovation — long-term operations are the "second half" of renewal. Qian Feng, Deputy Director of the Huangpu District Urban Renewal Promotion Office, said that with multi-party efforts, renovation should be accompanied by simultaneous planning of the building's industrial positioning and unified operational plans, revitalizing building value through quality improvement so that renewal investment can form a virtuous cycle.