Purpose – The street-building with “arcade” as frontage was one of the particular image in the old Asian city centres. However, by the urban alteration, the commercial function was moved out. Arcades don’t have to support the activity for trading and exchanging any longer and become the fresh “lost spaces”; moreover, this new kind of “non-places” stop the urban development. Yet, are arcades merely negative in the “new age” entitled of knowledge economy? For the interrogation, the space character of arcade, its potential for the knowledge production and the opportunity for urban regeneration with knowledge activity (various dialogs) were tried to illuminate. Design/methodology/approach – For knowing this, an approach to combine two perspectives was proposed. (1) Cities as knowledge tools: social and physical set-up of urban environments determines human communication, information exchange, and collective thinking (Edvinsson, 2006). (2) Cities as diagrams of knowledge: knowledge is regarded as a major force shaping cities into specific patterns (Alexander, 1972). Arcade provides an intensive interaction of private commercial territory and public access atmosphere. Its public sphere (Habermas, 1989) and “soft boundary” (Hertzberger, 2005) encourage communications, interactions and divergent territorial claims. Arcade offers people the heterogeneous and flexible possibility of gathering, intensive communication and appropriate atmosphere: creative milieu. Originality/value – The interrelation between knowledge and space can be realized through a matrix with the two-dimensional array to identify the physical and social environment set-up: “heterogeneity” and “flexibility”. Four kinds of spatial patterns are recognized by four quadrants and directly reflect in urban configuration. Space structure of arcade is classified in the high heterogeneity and high flexibility quadrant in this methodology. It offers the safety sense of meeting and the spatial condition for the intensive dialogue: more property for knowledge economic production. As the study result, different types of arcades are classified by the density of knowledge activity and space structure. Practical implications – It is explained by the Model, that the “knowledge activity” – various dialogs – could be coming back to the “ruins” in the city centre. This phenomenon is beginning to be observed in the arcades in Minquan Road, the past business street in Tainan with ca. 400 years history. If the spaces of arcade could be identified as one of the potential place for knowledge production, the importance of arcade in the old city centre had therefore a chance to be revalued. It might be one of the demonstrations of the strategical application for knowledge based urban development and regeneration.