Concept
Split L3 at the core band: the south half (2 units, 86 m² each, with south + side windows) becomes street-facing commercial space. The north half stays as a 16-desk office. A fire-rated partition at the core band separates the two uses. Each commercial unit has its own stair access (W stair for unit A, E stair for unit B) so customers don't pass through the office zone. This continues the kent7/kent8 strategy of stacking commercial on the street-facing front of each floor.
L3 hybrid plan
15 × 30 m · south commercial + north office · north up
Layout details
- Unit A (SW)
- 86 m² · 7.5 × 11.5 m · W + S windows · accessed via W stair from L1
- Unit B (SE)
- 86 m² · 7.5 × 11.5 m · E + S windows · accessed via E stair from L1
- Office (north)
- ~170 m² · 16 desks in 4 pods · elevator + core corridor access
- Separation
- Fire-rated partition at core band · commercial tenants never enter the office zone
- Ceiling height
- 4.5 m industrial clear — a feature for both restaurant ambiance and studio/retail aesthetics
- WCs
- Core-band WCs serve the office. Each commercial unit gets its own WC (new build, on the spine wet wall)
Why L3 front works for commercial
- South windows are 3 floors up — still visible from across the street, especially at night with lit signage
- In kent7+kent8, L1 and L2 already have commercial frontage. L3 commercial completes a 3-floor retail stack on the south face
- Each unit has direct stair access — a customer walks in the L1 stair door, climbs 2 flights, and arrives at the L3 commercial door. No elevator needed, no passing residential or office doors
- 86 m² is large enough for a restaurant with kitchen, a training center, a dance/yoga studio, or a full professional office
The question: restaurant or office/retail?
An 86 m² L3 unit with a 4.5 m ceiling and south-facing windows could go either way. Here's the honest comparison.
| Factor | Restaurant (Unit A) | Office / retail (Unit B) |
|---|---|---|
| Fit-out cost | ¥180,000–250,000 Kitchen hood + exhaust duct to roof (¥60–80k alone), grease trap, fire suppression, waterproof kitchen floor, commercial plumbing |
¥60,000–90,000 Basic partitions, power, lighting, WC. Tenant covers FF&E and branding |
| Rent / m² | ¥4–7/m²/day on L3 Lower than L1/L2 — customers must climb 3 flights. Zhongshan L3 restaurant rents are discounted 30–50% vs ground |
¥6–10/m²/day on L3 Office/retail tenants care less about floor level — appointment-based traffic, not walk-in |
| Annual NOI | ¥110,000–170,000 At ¥5/m²/day, 10% opex |
¥170,000–280,000 At ¥8/m²/day, 10% opex |
| Payback | 1.3–2.3 years on fit-out Good if it works, but... |
0.3–0.5 years on fit-out Trivial — minimal landlord investment |
| Kitchen exhaust | Must run duct from L3 to roof (2 floors up) through existing shaft or external wall. ¥60–80k just for the duct + hood. Requires structural penetration at L4, L5, and roof slab | Not needed |
| Grease / fire | Grease trap mandatory (¥8k). Ansul fire suppression hood (¥15–20k). Higher insurance. Annual fire inspection required | Standard sprinkler + extinguisher (already in building scope) |
| Water / sewer | Restaurant needs 3× the water flow of an office. May require upgrading the riser branch to 40 mm. Grease-laden wastewater needs interceptor before joining the building sewer | Standard office WC + pantry sink |
| Noise / odor | Kitchen exhaust on the south face → cooking odors drift to L4/L5 residential windows. Wok cooking generates noise at peak hours (17:00–21:00) | Negligible impact on other floors |
| Tenant risk | Restaurants fail at 60% rate in year 1 in China. High-turnover business. Landlord stuck with specialized kitchen fit-out that next tenant may not want | Office/retail tenants have lower failure rate. Generic fit-out re-lets easily |
| Ambiance | 4.5 m ceiling + industrial aesthetic + south light = excellent dining atmosphere. "Hidden gem on the 3rd floor" concept can work if food is good | Same industrial aesthetic works for yoga studio, design office, photography studio |
| Synergy with L1/L2 | Mixed — a restaurant on L3 competes with the L1 café for food traffic. But different price point (sit-down vs grab-and-go) could be complementary | Complements L2 massage/beauty — different tenant types, no competition. Creates a "services tower" effect |
Recommendation: office/retail for both units
Office/retail wins on every financial metric. A restaurant on L3 is romantic but impractical: the kitchen exhaust alone costs more than the entire office/retail fit-out, the rent-per-m² is lower because diners don't want to climb 3 flights, and the landlord is left with a bespoke kitchen if the tenant fails.
- Both units as office/retail: ¥150k total fit-out → ¥340k+/yr NOI → payback in 5 months
- One restaurant + one retail: ¥280k fit-out → ¥280k/yr NOI → payback in 1 year, plus exhaust risk
- If a restaurant tenant really wants L3, let them fund the kitchen fit-out. Landlord provides the shell + standard MEP only. Tenant takes the risk
Ideal L3 tenants (86 m² each, appointment/destination traffic)
Unit A (SW, 86 m²)
- Dance / yoga / martial arts studio — open floor, mirrors, 4.5 m ceiling is perfect. High repeat visits, evening peak doesn't conflict with office hours
- Training center (培训) — 2–3 classrooms of 8–12 students. Parents value L3 security. Tutoring for K-12 or professional certification
- Co-working / shared desks — 12–16 hot desks at ¥800–1,200/mo each. Complements the 16-desk office on the north half
Unit B (SE, 86 m²)
- Photography / video studio — south light for portraits, blackout option for studio lighting, 4.5 m ceiling for backdrops. High-value creative tenant
- Design / architecture office — boutique firm of 6–10 people. Industrial aesthetic is a feature. South-facing windows for drafting light
- Medical / therapy clinic — TCM (中医), physiotherapy, psychology. Privacy of L3 is a positive. 86 m² fits 3 consultation rooms + waiting
Pro forma — kent9 L3 hybrid
| Zone | Use | Area | Rate | Gross/yr | Opex | NOI/yr |
|---|---|---|---|---|---|---|
| Unit A (SW) | Commercial | 86 m² | ¥8/m²/day | ¥251,100 | 10% | ¥226,000 |
| Unit B (SE) | Commercial | 86 m² | ¥8/m²/day | ¥251,100 | 10% | ¥226,000 |
| Office (north) | 16-desk office | ~170 m² | ¥55/m²/mo | ¥112,200 | 20% | ¥89,800 |
| L3 TOTAL | ~342 m² | ¥614,400 | ¥541,800 |
vs. kent5 (full office floor)
| Kent5 (32-desk office) | Kent9 (2 commercial + 16-desk office) | Delta | |
|---|---|---|---|
| L3 fit-out | ¥1,400,000 | ¥850,000 | −¥550,000 |
| L3 NOI | ¥132,000 | ¥541,800 | +¥409,800 (+310%) |
| L3 cap rate | 9.4% | 63.7% | +54 pts |
The pattern holds from kent8: small-format commercial on the street-facing front massively outperforms full-floor office. L3 NOI jumps 4× while fit-out drops 40%. The 16-desk north office still provides a stable base tenant on a long lease.
Full building — kent7 + kent8 + kent9 stack
| Floor | Use | Fit-out | NOI/yr |
|---|---|---|---|
| L1 (kent7) | 2 shops + 10-space parking | ¥283,000 | ¥180,000 |
| L2 (kent8) | 2 front commercial + 6 residential | ¥1,920,000 | ¥434,700 |
| L3 (kent9) | 2 front commercial + 16-desk office | ¥850,000 | ¥541,800 |
| L4 (kent5) | 8 long-stay residential | ¥1,750,000 | ¥153,000 |
| L5 (kent5) | 8 boutique short-stay | ¥2,400,000 | ¥286,000 |
| BUILDING | ¥7,203,000 | ¥1,595,500 |
| Metric | Kent5 baseline | Kent7+8+9 | Delta |
|---|---|---|---|
| Total fit-out | ¥8,533,000 | ¥7,203,000 | −¥1,330,000 |
| Total NOI | ¥990,000 | ¥1,595,500 | +¥605,500 (+61%) |
| Building cap rate | 11.6% | 22.1% | +10.5 pts |
| Simple payback | 8.6 yr | 4.5 yr | −4.1 yr |
| 10-yr cumulative NOI (3% growth) | ¥11.4M | ¥18.3M | +¥6.9M |
The "retail stack" thesis: converting the south-facing front of L1, L2, and L3 to small commercial while keeping the rear/upper floors as office and residential lifts building NOI by 61% — from ¥990k to ¥1.6M — while cutting total fit-out by ¥1.3M. The south face of the building becomes a 3-story retail/services facade (6 tenants) that draws foot traffic, while the north half and upper floors operate quietly on long leases.
L3 commercial fit-out (landlord scope)
| Item | Per unit |
|---|---|
| Fire-rated partition (core band) | ¥20,000 |
| Party wall between A and B | ¥12,000 |
| WC per unit (new, on wet wall) | ¥14,000 |
| Electrical (sub-meter, points, lighting) | ¥12,000 |
| HVAC (split system, 1 per unit) | ¥8,000 |
| Floor (polished concrete) | ¥7,000 |
| Signage conduit + window treatment | ¥5,000 |
| Per unit | ¥78,000 |
| Both units | ¥156,000 |
North office fit-out: ~¥694,000 (16 desks, 1 meeting, shared WC — roughly half of kent5's ¥1.4M)
What about the restaurant?
If a restaurateur insists on L3, here's how to structure the deal to protect the landlord:
- Tenant-funded kitchen: landlord provides shell + standard MEP. Tenant pays for kitchen hood, exhaust duct to roof (¥80k+), grease trap, fire suppression. Lease specifies tenant must restore to shell on exit
- Higher deposit: ¥80–100k deposit (vs ¥30–50k for office) to cover restoration risk
- Exhaust routing: external duct on the west wall of unit A, rising to above the roofline. Must clear L4 and L5 residential windows — route to the west (away from south face) and terminate 1.5 m above the parapet
- Hours restriction: kitchen closes by 22:00 to limit odor/noise impact on L4 residents directly above
- Rent premium: restaurant should pay ¥6–8/m²/day minimum (not the ¥4–5 they'll try to negotiate). The 4.5 m ceiling and south light are genuine differentiators — the space is worth it
Bottom line: a restaurant can work on L3, but only if the tenant funds the kitchen and the landlord doesn't subsidize the MEP. Under those terms, the landlord's risk profile is identical to office/retail — you're just leasing a shell at ¥6+/m²/day.
The 3-floor retail stack — south facade overview
Kent7 + kent8 + kent9 together create a 6-tenant commercial facade on the south face of the building:
| Floor | Unit | Size | Example tenant | Access |
|---|---|---|---|---|
| L3 | Unit A (SW) | 86 m² | Dance / yoga studio | W stair (3 flights) |
| L3 | Unit B (SE) | 86 m² | Design office / photo studio | E stair (3 flights) |
| L2 | S2 (SW) | 45 m² | Massage / spa | W stair (2 flights) |
| L2 | S4 (SE) | 36 m² | Beauty salon / nail bar | E stair (2 flights) |
| L1 | Shop A (west) | 55 m² | Milk tea / bakery | Street level |
| L1 | Shop B (east) | 55 m² | Phone repair / convenience | Street level |
| Total commercial frontage | 363 m² | 6 tenants | ||
The west stair serves L1 Shop A → L2 massage → L3 yoga. The east stair serves L1 Shop B → L2 beauty → L3 office. Each stair becomes a vertical retail corridor — customers discover businesses on adjacent floors. The L1 shops generate foot traffic that feeds L2 and L3 above.
Open questions
- Is there demand for 6 commercial tenants in this specific Zhongshan industrial zone? The building is essentially becoming a small mixed-use commercial center. Survey the area — how many competing buildings offer similar multi-floor retail?
- Wayfinding: with 6 commercial tenants on 3 floors, a shared directory board at street level (both stair entrances) becomes essential. Budget ¥3k for illuminated directories
- Could the elevator be reprogrammed to stop at L2 and L3 for commercial access? Currently only L1 → L3 → L5. Adding L2 + L3 stops would improve accessibility for all commercial tenants, especially if a tenant has mobility-impaired customers
- Shared marketing: the 6 commercial tenants could collectively brand the south face — "Kent Building Services Center" or similar — with coordinated signage across all 3 floors. The building becomes a destination, not just a collection of random shops
- Should L4 stay residential? If the retail stack is working, converting L4's south-facing units to commercial too would add another ¥300k+ NOI. But L4 residential provides defensive cash flow — probably worth keeping as a hedge