Myeongdong Revitalized by Rising Foreign Tourists... Vacancy Rate Falls Below 50%

[Image source=Yonhap News]

[Asia Economy Reporter Noh Kyung-jo] As foreign tourists return amid the COVID-19 endemic phase, the Myeongdong commercial district in Seoul is regaining its vitality.

According to the '2022 Q3 Retail Market Report' recently published by global real estate consulting firm Cushman & Wakefield on the 23rd, the vacancy rate in Myeongdong in the third quarter was 45.8%, down 6.7 percentage points from the previous quarter.

Myeongdong was the most severely affected among Seoul's six major shopping districts during the COVID-19 pandemic. The vacancy rate, which was only 4.5% before COVID-19, soared from 23.2% in 2020 to 49.9% in 2021, and reached 52.5% in the second quarter of this year. Fortunately, with the increase in foreign tourist inflow in the third quarter, it is emerging from the long-term slump.

Street vendors are operating in Myeongdong, Seoul, which is bustling with activity due to the increase in foreign tourists. / Photo by Moon Honam munonam@

The report stated, "As of August, about 310,000 foreign tourists visited Korea, an increase of 220% compared to the same month last year," adding, "The area most visited by these tourists was Jung-gu, where Myeongdong is located, followed by Mapo-gu with Hongdae and Gangnam-gu."

The increase in foreign tourists, leading to crowded department stores and hotels, is having a significant impact on retail districts, especially Myeongdong. Hotels, department stores, and tourist attractions are clustered near Myeongdong, naturally increasing foot traffic. Foreign sales at the main stores of Lotte and Shinsegae department stores in the area reportedly increased fourfold and doubled, respectively, in September compared to January this year.

The report also noted, "The foreign occupancy rates of major hotels in Myeongdong, such as Lotte Hotel Seoul and Westin Chosun Seoul, have also risen significantly compared to the previous year," and added, "Attention is focused on whether Myeongdong will restore its status as Korea's representative commercial district amid the endemic baseline."

Changes in the character of the Myeongdong commercial district are also being observed. While small brand stores highly dependent on foreign tourists, such as cosmetics shops, struggled after the pandemic, large flagship stores are filling those spaces.

The report explained, "About 56% of the vacancies in Myeongdong after the pandemic were cosmetics stores," but added, "In April, the largest Apple Store in Korea opened in Myeongdong Hyde Park, and Nike and Eider also opened flagship stores last year." Adidas is also preparing to open a new flagship store at Myeongdong M Plaza.