[Report] Itaewon and Hannam Commercial Areas Recovering... "Vacancies Partially Filled"

Unlike the previous year with continuous closures,
foreigners and Koreans on the streets,
new buildings and stores are also increasing

Around 3 p.m. on the 19th, the Itaewon and Hannam-dong areas were visited. The streets, which were quiet just a year ago, had regained their vibrancy with foreigners and Koreans who came to visit the area.
Photo by Hwang Seoyul

[Asia Economy Reporter Hwang Seoyul] "There have been many rental inquiries this spring. Especially in the entertainment industry, business seems to be better than before COVID-19. As vacancies have been filled, inquiries have now decreased." (Representative of A Real Estate Agency in Itaewon-dong, Yongsan-gu, Seoul)

At around 3 p.m. on the 19th, we visited the Itaewon and Hannam-dong areas in Yongsan-gu, Seoul. Although the Itaewon commercial district had almost collapsed last year due to numerous store closures, a bright atmosphere was felt after a year. Joyful singing could be heard from shops, and the streets were crowded with foreigners and Koreans alike. At one dessert cafe, customers were lined up in front of the store despite the hot weather, as there were no seats available. Stores with banners stating "Scheduled to open at the end of July" or undergoing interior renovations were seen here and there.

Nearby real estate agents agreed that vacancies have significantly decreased this year due to the easing of social distancing. The representative of B Real Estate said, "Vacancies disappeared instantly in March and April when talks of easing COVID-19 social distancing began," adding, "Now that vacancies have been somewhat filled, inquiries have quieted down." A representative from C Real Estate also reported, "Depending on the location, vacancy rates have decreased by as much as 80-90% compared to the previous year, or by 30-40% at the least." According to Cushman & Wakefield, a commercial real estate consulting firm, the vacancy rate in Hannam and Itaewon in the second quarter was 10.8%, down 5.3 percentage points from 16.1% in the first quarter. This is also an improvement compared to 16.6% in the same period last year.

Banners announcing upcoming openings were hung throughout the streets, and stores undergoing interior renovations were easy to find.
Photo by Hwang Seoyul

Clubs and entertainment bars, which were almost impossible to operate due to social distancing, have started to reopen one by one, increasing foot traffic in the Itaewon commercial district, and local merchants appeared to have regained vitality. An analysis by Cushman & Wakefield of subway station exit numbers by major commercial districts from the Seoul Open Data Plaza showed that as of May, the number of exits in Hannam and Itaewon increased by more than 40% compared to the same period last year. Kim, who runs a cafe, said, "Sales have improved so much that they cannot be compared to last year," adding, "Especially on Friday, Saturday, and Sunday evenings, there are no empty seats."

There are also more new buildings and stores. On a three-story building, a bakery on the first floor had completed its move-in, and a large contact number for rental inquiries was posted on the second floor. Near the station, newly constructed shared offices stood tall along both sides of the main road. Additionally, in the Itaewon and Hannam commercial districts, vacancy rates have significantly decreased as beauty and fashion-related brands have opened new stores. A representative from D Real Estate said, "There is a lot of large capital coming in," adding, "With remodeling and new construction, buildings are generally becoming more upscale."

However, rental inquiries in the third quarter are not as active as before. A representative from E Real Estate hinted, "July and August are usually off-seasons, so there are fewer rental inquiries, but recently, with COVID-19 spreading again and economic downturn factors, inquiries have decreased."