ICT Companies Rush to Secure Properties as They Become Available
Rental Prices Soar Vertically... Yeouido Soon to Be Surpassed
A panoramic view of the office area around Pangyo New Town in Seongnam, Gyeonggi Province. The Alpha Dome City 6-1 block building (left), with a total floor area of 49,000 pyeong, is scheduled for Kakao to move in during the second quarter of next year and use the entire space.
Backed by big tech companies that have grown in the untact era, the office market around Pangyo New Town is experiencing a boom.
According to the real estate industry on the 23rd, A-grade office buildings in the Pangyo New Town area of Seongnam-si, Gyeonggi Province, are recording a '0%' vacancy rate despite the pandemic triggered by COVID-19. The vacancy rate refers to the proportion of vacant space out of the total rentable area. The office market in Pangyo New Town is thriving due to the concentration of ICT companies creating strong synergy effects and excellent accessibility to Seoul.
As corporate demand surges, Pangyo office rents are on track to surpass Yeouido, one of Seoul's three major business districts. According to the '2021 Pangyo Office Market Report' released by global integrated real estate services company JLL Korea, the rent for A-grade office buildings in the Pangyo area in the second quarter of this year was 73,000 KRW per pyeong. This is an increase of 1,200 KRW (16.2%) from 62,900 KRW per pyeong in the third quarter of last year, reaching a level similar to Yeouido’s A-grade office rent of 76,600 KRW per pyeong.
Despite the high rents, corporate demand continues unabated. The leasing demand for Pangyo offices is already the highest nationwide. As of the second quarter, the vacancy rate for A-grade offices in the Pangyo area was recorded at 0%. This contrasts sharply with the vacancy rates of 12.2% and 17.4% for A-grade offices in downtown Seoul areas such as Gwanghwamun and Yeouido, respectively. Gangnam also has a vacancy rate of 8.6%.
Experts predict that the 'zero vacancy rate' will continue as big tech companies are consecutively securing newly available properties. Alpha Dome 6-1 Block (with a total floor area of about 49,000 pyeong) in Pangyo New Town, scheduled for supply in the third quarter of this year, has already been fully leased by Kakao. About 80% of Alpha Dome 6-2 Block (approximately 28,000 pyeong) is leased to Naver. The only remaining vacant land in the area, a temporary parking lot site (the former planned site for Pangyo District Office), was recently purchased by NCSoft for its headquarters.
A JLL Korea official stated, "While office supply in the Gangnam area, which has a similar business zone to Pangyo, is limited, demand for Pangyo offices is high, resulting in low vacancy rates. IT and BT companies like Kakao and Naver are set to move into newly supplied offices such as Alpha Dome City and the 2nd and 3rd Techno Valleys, so low vacancy rates are expected to continue."
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