Watching firsthand how a "hot place (an emerging commercial district)" takes shape, there are three necessary conditions. First, transportation (accessibility); second, long-accumulated heritage; and third, a large residential and workplace population in the hinterland.
Shin Ji-hye, an executive director at STS Development, explained the three conditions that turn an alley into a brand this way. STS Development is a developer specializing in commercial facilities. Having worked in the commercial real estate development market for more than 20 years, Shin is a widely recognized master of spatial planning and an expert on hot places. Shin also leads dozens of groups and has a wide network. After interviewing F&B (food and beverage) operators, content planners, and developers, Shin recently published a book titled The players who make hot places.
Shin graduated from the geography department at Seoul National University and the urban planning program at the same university's Graduate School of Environmental Studies. Shin then worked at the Seoul Development Institute (now the Seoul Institute) and the sales-commercial facility operator JB Investment before joining STS Development. Since 2006, STS Development, where Shin has worked, has led the BTS (Build to Suit) development model, which identifies demand from tenants or buyers early in the process and develops real estate in the direction they want.
At STS Development, Shin has watched hot places evolve over the past 20 years. On the 12th at the STS Development office on Teheran-ro in Gangnam-gu, Seoul, we asked Shin how "hot places" like Dosan Park and Sindang-dong take shape, gain a foothold, and build the next ecosystem. The following is a Q&A with Shin.
—We hear the main drivers of hot-place development have shifted from project operators and construction firms to "players" like F&B planners and local creators.
"Players are not just owners who run shops. They are people who design a worldview through space. The purpose of commercial districts or retail development used to be to "fill the leasable area." Commercial facilities were calculated around rent per pyeong and returns, and tenants were simply bodies to be filled.
But today's players are different. They read the alley's past, interpret the neighborhood's sentiment, and express consumer needs in space. Because of this, the structure of hot places has shifted from land capital and location-based districts to story-based, content capital. In other words, the center of a commercial district has moved from buildings to content."
—What are the common "design principles" of hot places that turn alleys into brands?
"There has to be heritage that draws people, like the hanok of Ikseon-dong, Jungang Market and the tteokbokki alley of Sindang-dong, or the Rodeo Street around Dosan Park. Then, a "first mover" who knows and loves the area creates an anchor store that spreads by word of mouth, and "fast followers" enter, forming the district.
And for such hot places to grow into a capital phase that raises land prices, they must also have favorable topography and versatile land use. A representative example that has all these elements is Seongsu-dong. Seongsu-dong has evolved from a factory zone into a hot place and, more recently, into a central commercial area of Seoul significant enough to be called the SBD (Seongsu Business District)."
—What do first movers, who plant the flag in hot places first, have in common?
"First movers enter based on story, not location. They also choose interiors and business types that fit the street's context. Above all, because they choose places they know well or have a connection to, they have deep affection for the area. So rather than short-term revenue, they often think about "what to leave here." In other words, instead of opening a store to intentionally turn a specific area into a hot place, they read the area's context and, based on affection, created attractive spaces. This anchor store becomes the starter that attracts other capable players."
—But once a place gets hot, rents go up and original residents leave, and the problem of "gentrification" often follows.
"A commercial district is a "relationship industry." It is not something a player, tenant, or building owner can create or activate alone. Even watching the gentrification of Apgujeong Rodeo or Garosu-gil in the past, building owners cannot help but be swayed by immediate rents. When attractive content cannot withstand high rents and leaves, the area becomes a common street filled with so-so domestic brands and global brands you see everywhere. Then it turns into a vicious cycle that leads back to vacancies. In that sense, it is concerning that some of the stores that built today's Dosan Park are being replaced by fashion shops under rent pressure.
A realistic solution lies in structural design. A case worth noting is the master lease structure of Kuum Partners CEO Kim Jong-seok. It means a planner leases a building long term for 10 years, remodels it, manages tenants, and shares revenue with the building owner. Through strategies such as funding for remodeling costs in consultation with the owner and securing rent competitiveness through a 10-year master lease, a sustainable street can be maintained where distinctive tenants do not leave. In a structure that swaps out the players who built the district like consumables, it is difficult to produce sustainable hot places."
—Then what should a street do to survive as a sustainable hot place?
"For a hot place to take root as a "commercial district," it must clear three hurdles. First, to secure repeat visits, it must expand beyond fads to everyday consumption. Second, to secure new demand, outside visitors and local consumption must coexist. Finally, to secure a foundation for growth into a core district, the topography must be favorable and the use versatile.
Hilly areas or narrow alleys can face limits in scalability and sustainability. If a place relies only on social media (SNS) traffic and fails to secure day-to-day local consumption, it is difficult to maintain steady demand. Attempts to "turn this area into a hot place" through strategy and capital input actually have low odds of success."
—Among the players you met, was there a hot-place design strategy that stood out most?
"It's the Gaehang-ro Project led by CEO Lee Chang-gil. After studying in the United Kingdom, where Lee developed an interest in architecture and the local, Lee returned to the hometown of Incheon and launched the so-called Gaehang-ro Project to revive Gaehang-ro, once an affluent area, and, more broadly, Incheon. Like-minded people formed a company and, by purchasing rather than leasing, secured a foundation for a diverse business mix and stable operations.
Instead of entirely new content, they leveraged attractive content already present in the area through collaborations with long-standing shops via the Gaehang-ro Neighbor Project, a noodle factory, a local beer brewery, and a traditional sign maker. These newly presented results became symbols of Gaehang-ro. They didn't stop there; through ongoing programs and events like the "Magye Incheon Festival" and "Magye University," they evolved the area beyond a simple commercial space into a platform for the local community."
—As a developer, which do you weigh more: data or intuition?
"At the stage when the company purchases land for commercial facility development, data is paramount. Foot traffic and sales, vacancy rates, rent trends, and competitor sales are all essential factors in commercial development. But hot places are different. A hot place begins with "unfamiliarity" and "unexpectedness." This is an area that cannot be calculated on Excel. When visitors feel "something is different here," word of mouth starts and a foundation forms. You cannot capture such insight in numbers."
—Which places have the potential to become the next Dosan Park, and what future trends do you see?
"Now we should focus less on specific locations and more on what specific players are doing and where. Paying attention to what they post on SNS, the books they publish, and the brands they launch is very meaningful. I'm watching the areas around Cheongnyangni, Jangchung-dong, and Seongbukcheon, and lately, they seem to be taking shape quite well.
In terms of trends, large shopping malls have been gaining strength recently due to climate change. As days get much colder or hotter, more people flock to large malls. Also, the "otaku economy" is expected to go mainstream. Just as the Hongdae AK Plaza has become a mecca for enthusiasts and the top-selling popup at The Hyundai Seoul was the virtual idol "PLAVE," space planning built on powerful IP (intellectual property) and fandom will draw growing attention."