In the face of rents which rise day after day, not only have organizations of homeless persons launched repeated protests, Taipei business people are also acting out a flight from high rents.

Take for example Chunghsiao East Rd. sections three and four, the Kung Kuan section of Roosevelt Rd., the area around the train station, or the best areas in the locales encircling Taipei, like Tienmu West Rd. in Tienmu, Yungho Rd. in Yungho, and Cheng-kung Rd. in Neihu--there has commonly been an exodus of shops.

Aside from shops, a lot of company offices have joined the flight, some leaving Taipei city altogether. Non-profit organizations are even more defenseless. Various theater grounds will have to take their shows on the road before long.

That residing in a big city isn't easy is not uncommon--but in Taipei even doing business is not easy, and that's a little out of the ordinary. How high are Taipei's rents? A survey indicates that housing prices are now fourth highest in the world, and are in hot pursuit of Tokyo, Osaka, and Paris. As boats rise with the water, rents for offices, storefronts, and residences also began to rise at the beginning of last year. "In general, rents have not risen as fast as purchasing prices, only going up about one or one-and-a-half times. But storefronts and purchasing prices have risen neck-in neck three to five times," says Fu Lung Hsu, manager of the Second Department of the Northern Enterprise District of Pacific Rehouse Co., Ltd., pointing at a chart, "The rent of a first floor storefront is especially high, because of its innate limitedness."

Are the storefronts worth it? For products with high unit prices or high customer turnover (like high grade jewellery and imported fashions, or convenience stores), they can still handle rents. But for relatively low profit businesses like bookstores and restaurants, these are hard times.

"Many bosses discover after a time that they are only working for the landlord, and can't even make a salary," says Howard Hu, staff director of new development of McDonald's Taiwan, ROC Quanta Foods, Ltd. This is why recently a belt of stores on Chunghsiao East Rd. have often changed hands or even been left empty.

McDonald's policy is to calculate the costs in terms of making back the investment. "How much rent one can get for a place depends on how much profit it can generate," says Hu. Before they develop a new location, they consider the rent and the rate of return on the investment, and use a computer to calculate gains and losses over the future twenty years. Recently Taipei rents have gotten too high and McDonald's has changed the locus of development from Taipei to the province as a whole.

Industries like bookstores, record companies, clinics, and beauty salons have sought refuge in the small lanes near major streets, or on the second floor or in the basement. Small scale magazines or trading companies have even rented residential units to save more than half the rent.

What's startling is that avoiding the high rents isn't only for weaker industries; it includes fast growth rising stars like computers and advertising. "Once rents jump, the companies' growth is eaten right up," explains David J.C. Shih, executive chairman of the Ball WCRS Partnership. However, moving house for these businesses is not entirely negative.

For example, Acer Inc., in order to achieve its plan of becoming one of the top ten computer companies in the world, has decided to commit its resources to overseas sales channels, creating its own brand name, and R&D. Rents which have gone up from NT$950 per ping (about 36 square feet) to NT$3,000 are one of the first targets for reduction. Therefore, Acer has already purchased 40,000 ping of land in Taoyuan County to build an office district. There are plans to buy large tracts of land for dormitories to help staff settle.

Mitac faces a similar situation. But they have chosen Linkou, on the North-South highway. "In fact, thinking through it, you really shouldn't live in Taipei city," indicates C.S. Ho, group president of Mitac. The air in Taipei is a mess, the traffic is unbearably jammed, and many people have to get to work an hour early just to get a parking space.

Moreover, taking the price of NT$9,000 for one room in Taipei's eastern district as the high water mark, "Many people can't afford to live in Taipei," says C.S. Ho. According to an internal company survey, 70% of staff wish to buy homes in Linkou. But moving is not always easy for those doing domestic operations, so the domestic operations departments will stay in Taipei.

For the offices of ordinary companies without the financial power of the majors, the problem is more complicated. Take for example Kuo Hua Advertising, Ltd. They will move from Sungchiang Rd. to the foot of Yangming Mountain. Though the new environment is clean and quiet, to solve the problems of meeting clients or workers going home after overtime at night, the company has signed a contract with a taxi organization. But there has been negative feedback from some staff and clients.

David J.C. Shih, whose Ball WCRS Partnership has a similar moving plan, believes that if you're going to move, it's better for everyone to move together. If only one company moves, the staff and clients will not feel secure. "The advertising industry has been made extremely tight by rents. I believe everyone could move to the suburbs to construct a large scale advertising village." He points out that the industry is a service industry with a high concentration of manpower, which accounts for 60% of costs. After taking out rents, administration, and equipment, net profit is only about two percent. With rents up, many companies can't absorb the costs. For example, Ogilvy Mather Company, Ltd., the country's second largest advertising firm, pays NT$30 million in rent every year.

When Shih raised his idea at a meeting of colleagues in the industry, he immediately received the support of other companies. According to Shih, an advertising village could be on the last stop on the rapid transit system or be along the second North-South highway. It could have eight to ten companies, with each having independent different style office buildings; but leisure facilities could be for common use, with a super-sized conference room and cafeteria. Many industries like typing and photography would follow.

"I've estimated that if we build in Sanhsia, every company will have to invest NT$70 to 80 million, of which half could be borrowed from the bank. Ogilvy Mather could buy a building with only two years' rent. Do you think they will not be willing?," says Shih proudly. The village is planned to be completed at the same time as the second North-South highway.

Having learned the lesson of rising rents over the past two years, Taipei enterprises are doing more than fleeing; they are also buying and building. Perhaps after several years, everyone will be his own landlord. From this point of view, it's still too early to tell, but the clouds into which skyscraping rents have disappered may turn out to have a silver lining.

Extent of Rises in Real Estate Values and Rents in Taipei City

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How many people spent a good part of their youth in the warm and fragran t Foremost ice cream shop? The soon-to-be-demolished structure is an unforgettable memory for many. Its place will be taken by fast food empire McDonald's.

In the high-rent districts, high profit imported fashion shops are among the few who can survive.

The phenomenon of shops moving to side atreets, residential buildings, or basements is most serious in the Eastern District.

The prosperous, crowded Eastern District, is often called "Eastern Gate, " a Chinese pun on the "Hsimenting" or "Western Gate" district, and has long been the equal of that latter area, Taipei's most flourishi ng section in its heyday.

Many companies have already learned their lesson, and have bought land i n smaller towns around Taipei to build their own office buildings.

Advertising companies invest most of their resources in manpower and pay close attention to office appearance. Many have already been forced out of the high-rent Eastern District.