Why is the success of urban renewal increasingly determined by capabilities beyond investment promotion?
Over the past few decades, the core competency of commercial real estate has almost always been summarized as "tenant recruitment capability". The party that owns more brand resources, and can secure more first stores, flagship stores and exclusive brands, can more easily create project differentiation. This logic was highly effective during the rapid expansion stage of shopping malls, because at that time, the basic unit of commercial competition was essentially still "brand portfolio".
But today, this set of capabilities is hitting new boundaries. As leading brands can enter more and more cities, and site selection models, store formats and merchandise systems become increasingly mature, it has become increasingly difficult to create differentiation solely by relying on the brand list. Many projects seem to have everything when they open: coffee, catering, street fashion, parent-child experiences, sports, first stores, independent brand operators, but from the perspective of consumers, it is very difficult to answer a simple question: Why do I have to come here specifically?
This does not mean that tenant recruitment is no longer important, but that profound changes are taking place in commercial competition. In the past, the main competition was about who could obtain more high-quality resources, while today the more difficult problem is who can organize originally unrelated resources into a relationship that others cannot easily replicate.
If we broaden our perspective to the history of urban development, we will also find a thought-provoking phenomenon: commerce originally grew out of urban life, but modern commercial real estate has, for a quite long period, extracted commercial activities from cities and reorganized them into a single building. Nowadays, urban renewal is driving commerce to re-establish connections with cities, and what lies behind this is the transformation of the way commercial value is created.
Why is the next round of commercial differentiation increasingly difficult to create through tenant recruitment?
Looking back at commercial development, no matter the market squares in ancient Greece or the street markets in traditional Chinese towns, commerce was never an isolated activity. Transactions were intertwined with transportation, residence, social interaction, culture and public life. People gathered for different purposes, and commerce thus obtained the conditions for prosperity.
Modern shopping malls have changed this organizational approach. In the mid-20th century, modern enclosed shopping malls represented by Southdale Center in the United States centralized scattered retail activities into buildings under unified management, and greatly improved the efficiency of commercial organization through anchor stores, brand portfolios, consumer circulation lines and standardized operations.
An important reason why this model can expand rapidly is that commercial resources are highly replicable. Brands can operate across cities, store formats can be standardized, consumer demand can be classified and studied, and mature empirical models have gradually taken shape for business type portfolios. The rapid development of Chinese shopping malls also benefits from this continuously improved professional system.
However, while standardization creates efficiency, it also reduces the scarcity of differentiation. In the past, the entry of an international brand into a certain city could itself become news; today, it may enter multiple cities in a short period of time. In the past, a cutting-edge brand, an internet-famous restaurant or a fashion collection store could bring distinct recognition to a project; today, once verified by the market, they will soon be replicated in more projects.
Even many so-called "non-standard commercial" projects have eventually fallen into another kind of standardization: red bricks, coffee, markets, art installations, independent brand operators, pets, night economy. They seem to have their own characteristics, but are becoming more and more similar when combined. The problem is not that these contents have lost their value, but that they are increasingly like "standard parts" in the commercial world. When all projects can procure similar parts, it is difficult to build a lasting competitive barrier solely by the parts themselves.
In 1961, urban thinker Jane Jacobs proposed in The Death and Life of Great American Cities that urban vitality comes from the complex relationships between different uses, street connections, building ages and crowd activities. What she focused on is not whether a certain facility is advanced enough, but whether different activities can meet and support each other in the city.
This understanding is consistent with the "emergence" phenomenon in modern complex system theory: the whole system may exhibit characteristics that a single component does not have, and its value depends not only on which elements it has, but also on how these elements interact.
A square, a bookstore, a school and a group of residents are all ordinary urban resources when viewed separately. But when they form connections at the right space and time, they can generate rich life activities and breed new commercial content. Such urban vitality is difficult to obtain by replicating a certain brand or a certain architectural form.
There are actually two different value creation methods here: standardization improves efficiency by replicating mature elements, while urban vitality generates value more through the interaction between heterogeneous elements. Modern shopping malls are particularly good at the former, while urban renewal must master the latter at the same time.
Therefore, the dilemma encountered by many commercial projects today is not the lack of resources, but that as resources become richer, projects are becoming more and more similar. Tenant recruitment completion rate, number of first stores and brand level are still important, but they are no longer sufficient to independently explain why a place has lasting attractiveness.
In the past, commercial real estate created efficiency by concentrating commerce; today, urban renewal needs to create differentiation by re-integrating commerce into urban life. The tenant recruitment capability has not failed, it just needs to be embedded into a larger system.
Urban renewal needs "non-recruitable resources" more
Some attractive commercial projects today are showing a noteworthy feature: the content that determines the temperament of the project and the reason for visiting is increasingly coming from outside the traditional brand system.
An urban music festival is not a tenant, a public lawn is not a tenant, a historic building is not a tenant, a community organization is not a tenant, a river, an old tree, and a piece of urban memory are even less of a tenant. But these elements may determine more profoundly than a first store why a place is worth visiting, why people are willing to stay, and why they are willing to come back again and again.
This shows that the resource structure faced by commercial real estate is changing. In the past, we mainly combined "recruitable resources", while today we increasingly need to combine "non-recruitable resources".
Traditional recruitable resources can enter the project through relatively standardized business relationships. Brands, merchants, shop spaces, rents and operating periods can all establish clear rights and obligations through contracts. However, cultural institutions, residential communities, public spaces, historic buildings, local industries and local living habits do not naturally conform to the relationship of "lease contract - rent - turnover". They may belong to different subjects, but together they affect the commercial value of a region.
The so-called "non-recruitable" does not mean that these resources cannot cooperate, cannot be traded or cannot generate revenue, but that their core value is difficult to obtain directly through traditional tenant recruitment. A historic building can be leased, but the accumulated urban memory it carries cannot be obtained through leasing; a public square can host activities, but people's sense of belonging to it cannot be established through purchase; an old store can replicate its appearance and products, but the decades-old neighborhood relationship cannot be relocated along with the store.
The competitive advantage of brands can often be expanded through capital and management systems; but some unique values of a city can only be formed by relying on specific locations and a long period of time. This kind of differentiation is precisely the competitive resource that urban renewal has not yet fully recognized.
From the perspective of system theory, we can also find a phenomenon contrary to the intuition of traditional commercial operation: the higher the direct income of a space, the greater its value contribution to the whole project does not mean.
Commercial real estate has long been accustomed to evaluating spaces through floor area efficiency, rent, turnover and occupancy rate, as if all areas with commercial value should be converted into leasable areas as much as possible. But in the interdependent urban system, the value of some spaces is precisely reflected in helping other spaces generate revenue.
A lawn generates no rent, but it may bring customer flow to surrounding catering businesses; an open street cannot be operated in the way of a shop, but it may improve the accessibility of the whole project; an old store with limited rent contribution may retain the irreplicable life atmosphere for the block, thus supporting the operation of other merchants.
This is a problem of local optimum and system optimum. When every shop pursues the maximization of its own income, the whole project may not necessarily achieve the best result. If public spaces are compressed, low-income content and original life traces are removed in order to increase short-term rent, the improvement of local operating efficiency may come at the cost of the decline of overall attractiveness.
Of course, not all resources that cannot directly generate rent are worth retaining. They must provide real use value and produce verifiable contributions to regional operation, otherwise they may only be expensive decorations. Urban renewal cannot only calculate how much income a resource can create on its own, but also need to judge how much value it can help other resources create.
This transformation from individual revenue to system value also brings new operational challenges. When the customer flow created by the square flows to different merchants, and the reputation brought by cultural activities benefits the whole block, who should bear the investment, who is responsible for long-term maintenance, and how should the income be distributed? The complexity of urban renewal starts exactly from here.
Combination capability is becoming the core capability of commercial innovation
As resources increasingly cross the boundaries of property rights, industries and organizations, a new capability becomes particularly important. We can call it "combination right".
The combination right here is not the ownership in the legal sense, nor is it just about how many people you know and how many social relationships you have. More accurately, it is a capability to mobilize, connect and organize heterogeneous resources: even if you do not fully own these resources, you can make them play a role around common goals through cooperation mechanisms.
This is different from the resource control logic familiar to traditional commercial real estate. Ownership mainly answers "what do I own": land, buildings, properties and contractual relationships; combination right further answers "what relationships can I make happen". A project does not have to own cultural institutions, but can create cultural content through long-term cooperation; it does not have to own communities, but can become a stable activity venue for communities; it does not have to monopolize public spaces, but can make public life and commercial operation promote each other through joint operation.
Traditional shopping malls usually have strong unified management capabilities, and can coordinate tenants through leases and operating rules. But urban renewal faces property owners, government departments, communities, cultural institutions and different operating entities, and no party can make other subjects obey through internal management orders.
Elinor Ostrom's research on public resource governance, the Nobel laureate in economics, provides an important inspiration: resources used jointly by multiple subjects do not necessarily need to be fully controlled by a single subject. Under appropriate conditions, participants can form long-term cooperation through mutually recognized rules, responsibility sharing and supervision mechanisms. This theory cannot be simply equated with commercial project operation, but it reveals a universally significant rule: when resources cannot be fully controlled by one subject, the capability to establish a cooperation order may be more important than owning the resources themselves.
Therefore, the combination right includes at least three levels. The first is value identification: the capability to discover resources that have not yet entered the commercial evaluation system but have potential value, and understand why they are important and what they can complement with. The second is relationship organization: to make different resources not just exist at the same time, but support each other in space, time, customer group and content. For example, cultural activities drive the use of public spaces, public spaces support social activities, social activities generate commercial demand, and commercial revenue in turn provides conditions for new content production. The deeper level is institutional coordination. Who invests, who operates, who benefits, how to share costs and risks, and how to prevent short-term interests from eroding long-term value, all require the establishment of cooperation rules that can be implemented for a long time.
Many commercial projects today seem to be rich in resources, with coffee, markets, performances, art, lawns, independent brand operators and night economy all available, but they still cannot form unique competitiveness. The reason is that all kinds of resources are only placed together, lacking stable value connections with each other. Putting things together is not called combination; making different things generate new value for each other is called combination.
Excellent combination capability can even form a positive cycle: public spaces attract crowds, crowd gathering supports commerce, commercial operation provides investment conditions, and better public content further enhances regional attractiveness. But this cycle will not happen automatically, and whether it can be maintained for a long time depends on whether actual demand, operation efficiency and the interests of all parties can be coordinated.
There is an easily overlooked contradiction here: value creation and value recovery may occur between different subjects. An art activity improves the attractiveness of the whole area, but the organizer may not obtain revenue; a public square improves the regional environment, but it is the surrounding properties that appreciate in value. This involves the externality problem in economics. If the party that undertakes the investment cannot get reasonable returns, no matter how valuable the activity is, it may be interrupted due to insufficient funds.
Therefore, the higher level of combination right is not only to establish resource connections, but also to design a sustainable interest mechanism, so that the subjects that create value have the capability to continue creating value. This also explains why excellent urban renewal projects are more difficult to replicate than they appear on the surface. Architecture can be learned, brand portfolio can be approximated, but the organizational structure formed by property right coordination, cooperation trust, content production and benefit distribution is difficult to copy.
The apparent difference of commercial projects comes from resources, the deep difference comes from relationships, and the long-term barrier often comes from the systems and capabilities that maintain these relationships. However, the combination right is not the more resources the better. The combination makes sense only when all parties have real needs, can complement each other, and the cooperation cost and return can be balanced in the long run. Especially for public spaces and historical and cultural resources, commercial operation cannot simply privatize public interests in the name of combination. Vital cooperation must respect property right boundaries, public use rights and the reasonable interests of all parties at the same time.
Urban renewal is becoming a concentrated test field for "combination right"
If we say that new shopping malls can organize land, buildings, brands and circulation lines on a relatively blank white paper, then the situation faced by urban renewal is completely different. Buildings, streets, residents and merchants already exist, and property right relationships, historical memories and lifestyles have long been formed. Newly built commerce solves the problem of "from scratch", while urban renewal faces the problem of "from existing to new".
The difference here is not only the engineering difficulty and cost structure, but also the different starting point of value creation. Newly built commerce mainly creates value through new spatial organization, while urban renewal also needs to understand the connections between existing resources. Which should be retained, which needs to be changed, and which originally separated contents can be reconnected, all need to be judged before renewal.
This is also why urban renewal easily falls into a misunderstanding: understanding "new" as replacement. Old buildings are replaced with new facades, old merchants are replaced with new brands, old blocks are added with coffee, markets, art and independent brand operators, and then matched with a new visual system, which looks brand new, but may fall into homogenization again soon after opening. Because what it changes is the surface of the space and operating elements, not the relationships that support local vitality.
What is more worthy of vigilance is that once some urban resources are removed, it is difficult to reproduce. An old store that has been operating for decades can be replaced quickly, but the accumulated neighborhood trust and local recognition cannot be regained through a single renovation; an old street can have a unified facade, but the long-formed usage habits and spatial memories may disappear as a result.
This reveals an easily overlooked rule in urban renewal: some resources can be produced rapidly with capital, while some resources can only be accumulated slowly over time. The former is easy to replicate, while once the latter disappears, the recovery cost may be much higher than the cost of retaining it in the first place.
Coal Drops Yard at King's Cross in London is worth discussing, not just because it transformed industrial heritage into commerce. The historic buildings that originally served railway coal transportation are retained and new connections are established with retail, catering and public activities. More importantly, it is not an isolated shopping place, but part of the overall renewal of King's Cross. The surrounding Central Saint Martins, office spaces, residences, transportation facilities and public squares jointly provide urban activities at different times and for different purposes. The infrastructure that once served urban production has become a place to carry consumption and public life today, and the historical features of the buildings are also continued in the new usage relationships.
King's Cross has its special development conditions, property right structure and market environment, and cannot be simply replicated. But it provides a referable idea: the value of old resources is not limited to their original uses, and re-establishing connections with contemporary life can open up new possibilities for historical spaces.
Valuable urban renewal needs to first admit that the old world itself is a resource. Historic buildings are not necessarily just development costs, they may become unique spatial content; original merchants are not necessarily just inefficient supply, they may also be the source of local culture; a square that generates no rent may be an important crowd organization space in the region; a seemingly unrealizable piece of urban memory may also become the reason why consumers make a special trip to visit.
Therefore, urban renewal is not only the reallocation of spatial resources, but also a revaluation of historical accumulation. Of course, retention is not inherently more correct than change. Old buildings that lack usage demand and operating methods that cannot adapt to modern life also need adjustment. Renewal is not to preserve the past intact, but to identify which accumulations still have value and let them enter the new life order.
For China's urban renewal, the difficulty also comes from the reality of the coexistence of multiple subjects. Different property owners, original merchants, community residents, public facility managers and market operating institutions have different interest demands and undertake different responsibilities. A single commercial enterprise cannot directly control the whole area like managing a traditional shopping mall.
The Opinions on Continuously Promoting Urban Renewal Action announced in 2025