Seoul Office Vacancy Rate at 5.2% in Q4 Last Year... Down 2.1 Percentage Points from Previous Quarter

Building panorama around Gwanghwamun, Seoul (Photo by Yonhap News)

[Asia Economy Reporter Tae-min Ryu] The average vacancy rate of office buildings in Seoul has fallen for five consecutive quarters, reaching 5%.

According to the Q4 2021 Office Market Report published by Cushman & Wakefield on the 29th, the average vacancy rate of Grade A office buildings in Seoul in Q4 last year was 5.2%, down 2.1 percentage points from the previous quarter. The report shows that the average vacancy rate of Grade A office buildings has declined for five consecutive quarters.

By major district in Seoul, the vacancy rate in the Central Business District (CBD) fell 1.3 percentage points from the previous quarter to 8.6%. The Daesang Group relocated its headquarters to Jongno Place in Inui-dong, Jongno-gu, Seoul, after 48 years. Law firm Jipyung signed a lease at Grand Central in Namdaemun, Jung-gu; Siemens at D Tower in Gwanghwamun; and Pfizer Korea at State Tower Namsan.

The average vacancy rate in the Gangnam Business District (GBD) dropped 1 percentage point from the previous quarter to 0.6%, recording a vacancy rate in the 0% range. Cushman & Wakefield stated, “GBD is a district with very high IT-based tenant demand, and the vacancy rate is expected to maintain the current trend for the time being.” Sinsa Square, newly supplied in Q3 last year, resolved all vacancies with the contract with CJ CheilJedang, and some vacancies in GBD were resolved as Kering Group signed a lease at Lucent Tower, Lunit at K-Square Gangnam 2, and Fresh Easy at Samsung Life Daechi Tower, according to Cushman & Wakefield.

The average vacancy rate in the Yeouido Business District (YBD) fell 3.1 percentage points from the previous quarter to 7.3%, showing the largest decrease in vacancy rate compared to the previous quarter. The expansion of IT companies’ tenant demand from GBD to YBD, due to the inability to find vacancies in GBD, appears to be the main reason for the rapid reduction of vacancies, especially in prime-grade offices that had relatively long-term vacancies. Major tenants include Kakao Bank and Korea Investment Trust Management at NH Financial Tower (Park One Tower 2), and Coinone at Park One Tower 1.

Cushman & Wakefield forecasted, “With the rapid growth of IT-based companies and the ongoing trend of companies expanding to improve employee productivity, new supply available for lease over the next three years will be insufficient compared to demand,” adding, “The market is shifting from a tenant-favorable to a landlord-favorable market, and the vacancy rates in Seoul’s three major districts are expected to continue declining for the time being.”