There’s A Bleak Outlook For Artists And Businesses In Industrial buildings

By Paulus Choy

HONG KONG- When tourists step into the concrete jungle of Hong Kong, their sights are usually occupied by the cliched high-rises, shopping malls and night-life of this international city.

Unbeknownst to them, the robust and often run-down industrial areas here also offer entertainment.

Walk into some of the industrial buildings here, and you may find little boutiques, art galleries or restaurants. These establishments although raw on the edges, showcase unfiltered passion and creativity, that you can’t get while walking in air-conditioned shopping malls.

However, artists and entrepreneurs alike are scared for their future in Hong Kong, due to recent industrial building evictions in the city, amid public safety concerns for these buildings after accidents occurred in them.

Hong Kong’s industrial past

As one of the “four little dragons”, Hong Kong relied upon its industrial and manufacturing market to make her mark since the 60s. As the owners started to shift to the mainland to lessen costs, more of these buildings were abandoned.

Our economy shifted towards a seemingly diversified economy, whilst exclusively fostering growth in the service and finance industry.

Nowadays the manufacturing industry is almost non-existent, with industrial production dropping yearly, according to the Census and Statistics Bureau.

We have award winning restaurants, tourist attractions and of course, high rent prices; For the sixth year in the row, Hong Kong have been crowned with the most unaffordable housing market, by the International Housing affordability survey Demographia.

Our expensive commercial rent prices forced many start-ups to scavenge for deals, where many stumble into cheaper industrial spaces.

Now, you can find pretty much everything in these industrial spaces: according to the Planning Department, non-industrial uses include art showrooms, shops and restaurants, with about 21% of these being for shops and services in 2014.

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Wary of this trend, the HKSAR government decided to set up Industrial building revitalisation scheme in 2009’s policy address.

Hong Kong’s chief executive announced a set of tools to support revitalisation, yet until now many building tenants still opt to operate without the government’s permission.

Half of the applications this year got approved according to the Development Bureau, meaning some of the tenants have to tread carefully and operate without proper land lease conversions.

Government crackdown on “illegal” industrial buildings

Secretary for Development Chan Mo-po announced that buildings in violation of land leases, that attracted crowds and had premises inside with licenses to handle Dangerous material, shall be ordered to restore the space to its original state within 30 days, or else the government will repo the whole building.

Amongst the 11 buildings inspected, 73 cases were found to have match the considerations.

The checks were initiated after two big fires that occurred with these industrial complex. one fire started in a storage facility, that eventually cost the lives of two firefighters, sparking public outcry to beef up regulations on these buildings.

Photo Credit: Andrew Colin/ Flickr (CC By 2.0)

Photo Credit: Andrew Colin/ Flickr (CC By 2.0)

The recent evictions forced many of the artists and small businesses to move out; According to the Lands Department, 19 of the 73 cases have ceased operating, these include band rooms, gyms and restaurants.

The government has not provided any support after their eviction, many are left to lookout for themselves.

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Many tenants are worried of these evictions; Factory Artist’s concern group issued a public letter to the government, expressing their concern on the recent evictions on cultural activities in industrial spaces, urging officials to loosen up regulations for cultural/artistic activities, and provide support to evicted tenants.

Culprit of the accidents

These evictions were to raise safety standards of the buildings, according to the Lands Department, saying these evictees attracted crowds, with buildings at risk of developing accidents.

According to local newspaper SCMP reports, there has yet to be an identified cause to the fires. Are tenants the sole culprit of these accidents?

Certain industrial complex do lack in fire safety precautions: According to a territory-wide survey done by the Fire and Services Department, there are over 300 buildings without proper sprinkler systems.

But to Paco Wong, who owns a few units in an industrial building here, management companies in these buildings are also responsible for fire safety standards.

He said tenants are responsible for fire fighting equipment within their units, but management companies are responsible for areas outside of the rented units.

He said a lot of the management companies don’t do a lot, as doing less and spending less money from collected management fees, means more profits for the management companies. The office- owner said many management bodies would tighten controls only when government checks begin.

Complex land lease conversions

Evictees were accused not only for safety standards, but also for conflicting land leases.

Many of these abandoned buildings were stipulated for industrial use in its land lease, so for people who want to set up businesses or workshops, they would have to convert the land lease in order to legitimise their operations in the complex, which will involve wholesale conversions. according to the government’s announcement in Legco.

Most of the buildings have leases falling into the “Industrial use” or “other uses(business)” as shown in the area assessment, done by the Planning Department.

If individual tenants of the complex want to convert their lease, they would have to obtain consent from every tenant in the building, initiating certain structural changes to the area, which doesn’t help when over 60% of these buildings have multiple owners.

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These modifications range from fire safety precautions, to parking lot additions, these projects take time and money, which were sorely lacking in a lot of the applications, even though government has announced financial aids including waivers and lowering application threshold.

Photo Credit: green_intruder/ Flickr (CC By 2.0)

Photo Credit: green_intruder/ Flickr (CC By 2.0)

Those who could afford conversions, are usually big corporations with the resources to sustain the changes. This raises doubts on whether the scheme can also help the middle/small-sized enterprises here, who can’t entertain the soaring commercial property prices.

Mr. Wong said few of the tenants attempted to do conversions, many of them were paying rent whilst waiting for the conversion approval. By the time they got approved, the tenants had to move out as they could not bear the costs any more. He also said the conversions require land premiums, which would raise rents.

He said the only ones who could have complete a conversion are people with a lot of money, or big corporations.

This could explain why there were subsequent withdrawals, after initial applications have been accepted by the government, according to data provided by the Secretary of Development.

Moving forward

Different government departments are involved when dealing with industrial buildings, which not only clogs down the operations, but it is often confusing to shop owners applying for spaces in industrial areas.

Right now, an application have to go through several departments at the same time, including the Planning Department, Lands Department, Fire and safety department etc.

One single department should be set up dedicated to these areas, with uniform and refined laws regulating the shop space, given there has been genuine demand for industrial spaces amongst artists and entrepreneurs.

This should be coupled with more government financial support, especially during the conversion period. This could encourage tenants to operate their businesses legally, instead of fearing for government checks every second.

Some of these buildings are at risk of developing accidents, but instead of fidgeting and closing down everything, government should examine and tackle the situation systematically.

They should identify businesses that could be in-risk of developing accidents; those that are not at risk of developing accidents, attracting small amount of people at the same time, should be allowed to continue.

Of course the details of the standards should be hashed out and be accessible to the public for reference.

Moreover management companies should also be held accountable, the government should also examine the performance of these companies, conducting regular checks on these management bodies.

With individual conversions and a dedicated guideline around it, tenants can operate their businesses legally, and improve safety standards at the same time, so that they can continue enriching Hong Kong.

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Cover photo credit: www.pyz.It/Flikr (CC by–SA 2.0)

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