Concept
Convert the two south-facing corner units on L2 — S2 (SW, 45 m²) and S4 (SE, 36 m²) — from residential into street-facing commercial offices. These are the only L2 units with south windows directly above the roll-up doors, giving them signage visibility from street level. Ideal for second-floor retail that draws foot traffic from L1 shops below: massage/spa, beauty salon, tutoring center, photography studio, small medical clinic. The remaining 6 units stay residential (4 Airbnb corners + 2 monthly in kent2's hybrid model, or 2 Airbnb + 4 monthly in this more conservative mix).
L2 hybrid plan
15 × 30 m · 6 residential + 2 commercial · north up
Why S2 + S4?
- Street visibility
- South-facing windows sit directly above the L1 roll-up doors — signage, lit window displays, and awning banners are visible to anyone approaching the building
- Corner daylight
- SW2 gets W + S light (compact), SE2 gets E + S (spacious) — the brightest units on the floor, ideal for retail/spa ambiance
- Stair access
- S2 is steps from the W stair; S4 is steps from the E stair — customers reach them without walking the full spine past residential doors
- Plumbing
- Both units back onto the spine wet wall — massage/spa WC + shower drain into the same riser as the residential wet walls
- Noise buffer
- S1 and S3 (the mid units directly north) act as a buffer between the commercial front and the quiet residential north block
What doesn't change
- North block (N1–N4) stays residential — no street visibility, no reason to convert
- S1 and S3 stay residential — single-aspect mid units, not suited for commercial
- All cores, spine, and circulation unchanged from kent2
Ideal tenant types for L2 commercial
Second-floor retail works when the business doesn't depend on impulse walk-in traffic — customers come by appointment or referral, and the L2 location actually adds privacy and ambiance over a noisy ground-floor bay.
High-value tenants (¥12–18/m²/day)
- Massage / spa (推拿/SPA) — 45 m² fits 2 treatment rooms + reception + WC/shower. Appointment-based, values quiet and privacy
- Beauty salon / nail bar — south window light is a feature, not a problem. High repeat visits
- Medical / dental clinic (诊所) — 36–45 m² fits a consultation room + treatment + waiting. L2 privacy preferred
- Photography / headshot studio — 4.5 m ceiling height allows studio lighting rigs. South windows can be blacked out
Moderate tenants (¥8–12/m²/day)
- Tutoring center (培训) — 45 m² fits 2 classrooms of 6 students each. Parents value L2 security over L1 exposure
- Yoga / pilates studio — open floor, mirrors on north wall, south light. High-ceiling industrial aesthetic
- Real estate / insurance office — low-traffic, appointment-based, needs a professional front
- Accounting / legal office — small professional services with 2–4 staff
- Tattoo / piercing studio — appointment-only, privacy-first, industrial aesthetic fits
S2 layout — massage / spa example (45 m²)
| Zone | Area | Notes |
|---|---|---|
| Treatment room 1 | ~12 m² | Massage table, cabinet, curtain/door — west window for natural light |
| Treatment room 2 | ~12 m² | Same spec — can double as a couples room with door open between them |
| Reception / waiting | ~10 m² | South-facing, visible from street, bench seating for 4, cashier counter |
| WC + shower | ~5 m² | Tiled wet room with shower for post-treatment — uses spine wet wall |
| Storage | ~4 m² | Linen, oils, supplies — tucked behind reception |
| Circulation | ~2 m² | Internal corridor from door to rooms |
S4 layout — generic office / retail (36 m²)
| Zone | Area | Notes |
|---|---|---|
| Open work / retail area | ~20 m² | Main room — south + east windows, high ceiling. Desks, display, or treatment chairs depending on tenant |
| Counter / reception desk | ~6 m² | Near entrance door, customer-facing |
| WC | ~3 m² | Compact but code-compliant — on spine wet wall |
| Storage / break | ~5 m² | Staff area, mini-fridge, supplies |
| Circulation | ~2 m² | Door swing + entry |
Revenue — L2 commercial vs. residential
In Zhongshan industrial zones, second-floor commercial rents ¥8–18/m²/day depending on tenant type, substantially higher than residential monthly rent for the same space.
| Unit | Use | Rate | Annual gross | Opex | NOI |
|---|---|---|---|---|---|
| SW2 (24 m²) | Residential (kent2) | ¥2,000/mo | ¥24,000 | 15% | ¥20,400 |
| SW2 (24 m²) | Commercial (kent8) | ¥12/m²/day | ¥197,100 | 10% | ¥177,400 |
| SE2 (47 m²) | Residential (kent2) | ¥1,600/mo | ¥19,200 | 15% | ¥16,320 |
| SE2 (47 m²) | Commercial (kent8) | ¥10/m²/day | ¥131,400 | 10% | ¥118,300 |
Uplift: S2 commercial NOI is 8.7× the residential NOI for the same space. S4 is 7.2×. Even at a conservative ¥8/m²/day, commercial still yields 4–5× residential. The delta comes from the massive rent-per-m² gap between small-format L2 commercial and industrial-zone residential leases.
Full L2 pro forma — kent8 hybrid
| Unit | m² | Use | Rate | Gross/yr | NOI/yr |
|---|---|---|---|---|---|
| N1 (NW) | 49 | Airbnb | ¥260 · 55% | ¥52,200 | ¥33,900 |
| N3 (NE) | 39 | Airbnb | ¥220 · 55% | ¥44,200 | ¥28,700 |
| N2 (mid-W) | 49 | Monthly | ¥2,200/mo | ¥26,400 | ¥22,400 |
| N4 (mid-E) | 39 | Monthly | ¥1,700/mo | ¥20,400 | ¥17,300 |
| S1 (mid-W) | 45 | Monthly | ¥2,000/mo | ¥24,000 | ¥20,400 |
| S3 (mid-E) | 36 | Monthly | ¥1,600/mo | ¥19,200 | ¥16,300 |
| S2 (SW) | 45 | Commercial | ¥12/m²/day | ¥197,100 | ¥177,400 |
| S4 (SE) | 36 | Commercial | ¥10/m²/day | ¥131,400 | ¥118,300 |
| L2 TOTAL | 338 | ¥514,900 | ¥434,700 |
vs. kent2 (all residential)
| Kent2 (all residential) | Kent8 (6 res + 2 commercial) | Delta | |
|---|---|---|---|
| L2 NOI | ¥190,200 | ¥434,700 | +¥244,500 (+129%) |
| L2 fit-out | ¥1,983,000 | ¥1,920,000 | −¥63,000 (shops lighter fit-out) |
| Cap rate | 9.6% | 22.6% | +13 pts |
| Simple payback | 10.4 yr | 4.4 yr | −6.0 yr |
The math is stark: converting just 2 of 8 units from residential to commercial more than doubles L2 NOI. The commercial rent-per-m² in small-format L2 retail dwarfs what the same space produces as a residential studio. This is the single highest-impact change in the building's pro forma.
Fit-out — commercial units
| Item | SW2 (24 m²) | SE2 (47 m²) |
|---|---|---|
| Interior partitions | ¥18,000 | ¥10,000 |
| Plumbing (WC + shower in S2, WC in S4) | ¥22,000 | ¥12,000 |
| Electrical (lighting, points, sub-meter) | ¥14,000 | ¥10,000 |
| HVAC (split system) | ¥9,000 | ¥7,000 |
| Floor (polished concrete or vinyl) | ¥8,000 | ¥6,000 |
| Signage conduit + window treatment | ¥5,000 | ¥5,000 |
| Subtotal (landlord scope) | ¥76,000 | ¥50,000 |
Total commercial fit-out: ¥126,000. Tenant covers their own furniture, equipment, and branding. Compare: the same 2 units as residential would cost ¥124,000 in FF&E + kitchenettes alone — commercial is cheaper to fit out.
Signage & street presence
The south-facing windows of S2 and S4 sit ~4 m above ground level, directly over the L1 roll-up doors. This gives commercial tenants three visibility channels:
- Window signage: backlit signs or vinyl graphics on the south-facing glass — visible to pedestrians and vehicles approaching the building
- Awning / banner: projecting sign or fabric banner mounted below the L2 window sill — reads at eye level from across the street
- L1 directory board: shared tenant directory near the stair entrance at ground level — "2F: [business name]" with arrow to stair
- Night lighting: L2 south windows lit at night act as a billboard — massage/spa warm lighting draws attention after dark
In kent7 (L1 shops + parking), the L1 shops generate foot traffic right at the building entrance. That traffic naturally sees the L2 signage — L1 shops feed L2 commercial.
Combined building impact — kent7 + kent8
Kent7 (L1: 2 shops + parking) and kent8 (L2: 2 front offices + 6 residential) stack naturally. The two designs are independent but reinforce each other.
| Floor | Use | NOI/yr |
|---|---|---|
| L1 | 2 shops (¥180k) + 10 parking (amenity) | ¥180,000 |
| L2 | 2 commercial (¥295k) + 6 residential (¥139k) | ¥434,700 |
| L3 | Office (32 desks, from kent5) | ¥132,000 |
| L4 | Long-stay residential (8 monthly, from kent5) | ¥153,000 |
| L5 | Boutique short-stay (8 Airbnb, from kent5) | ¥286,000 |
| BUILDING TOTAL | ¥1,185,700 |
| Metric | Kent5 baseline | Kent7+8 upgrade | Delta |
|---|---|---|---|
| Total NOI | ¥990,000 | ¥1,185,700 | +¥195,700 (+20%) |
| L1+L2 fit-out | ¥2,983,000 | ¥2,203,000 | −¥780,000 |
| Building cap rate | 11.6% | 15.5% | +3.9 pts |
Summary: by converting 2 L1 bays to small shops (kent7) and 2 L2 corner units to commercial offices (kent8), the building gains ¥196k/yr NOI while spending ¥780k less on fit-out. The commercial tenants at L1 and L2 create a ground-level "retail cluster" that draws foot traffic and lifts the entire building's perception — benefiting L3 office leasing and L5 Airbnb reviews.
Sensitivity — what if commercial rents are lower?
| Scenario | S2 rate | S4 rate | Commercial NOI | L2 total NOI | vs. kent2 |
|---|---|---|---|---|---|
| Pessimistic | ¥6/m²/day | ¥6/m²/day | ¥160,000 | ¥298,700 | +57% |
| Conservative | ¥8/m²/day | ¥8/m²/day | ¥213,400 | ¥352,100 | +85% |
| Base case | ¥12/m²/day | ¥10/m²/day | ¥295,700 | ¥434,700 | +129% |
| Upside (spa) | ¥16/m²/day | ¥14/m²/day | ¥421,500 | ¥560,500 | +195% |
Even at ¥6/m²/day (the pessimistic floor), commercial S2+S4 still produces 57% more L2 NOI than all-residential. The conversion makes economic sense across every realistic rent scenario.
Operational notes
- Separate entrance signage: customers for L2 businesses enter via the W or E stair from L1. Post wayfinding at both stair doors: "2F → Massage / Office". Keep the spine clear so commercial foot traffic doesn't feel like intruding on residential.
- Hours: commercial tenants will want to operate evenings (massage/spa peaks 18:00–22:00). Sound insulation between S2↔S1 and S4↔S3 partition walls is critical — specify 45 dB STC minimum.
- S2 plumbing: massage/spa needs higher water demand than a residential unit (shower between clients). Verify the existing riser can handle the additional flow — may need a 32 mm supply branch instead of 20 mm.
- Lease structure: commercial leases should include a 3–5% annual escalation clause and a ¥30–50k deposit (higher than residential) to protect against tenant flight.
- Mixed-use fire code: commercial and residential on the same floor requires 1-hour fire-rated partitions between the two uses. The spine corridor acts as the separation zone — just verify the partition walls meet spec.
Open questions
- Could S1 and S3 also convert to commercial? They lack south windows (no street visibility) but could function as offices. Adding them would make the south block fully commercial — a "retail floor" stacked on top of L1 shops.
- Is there demand for L2 commercial in this specific Zhongshan industrial zone? Drive the area and count second-floor retail tenants in comparable buildings — if there are existing massage/beauty businesses on L2 nearby, the market is proven.
- Elevator access: commercial customers currently must take the stairs. If the freight elevator gets a L2 stop, it could serve as a passenger elevator for L2 commercial + L3 office. Check if the existing elevator can be reprogrammed to stop at L2.
- Business license: L2 commercial tenants need individual 营业执照 (business license). Verify the building's zoning allows commercial use on L2 — industrial mixed-use zones in Guangdong usually permit this, but confirm with local 工商局.