Downtown Office Vacancy Rate Drops to 3% Range for First Time in Over 13 Years... Rent Prices Soar

GBD·YBD Maintain Vacancy Rates at 1-2% Range
Monthly Rent Up to 10% Higher Than Last Year

[Asia Economy Reporter Noh Kyung-jo] Last month, the vacancy rate of office spaces in the Seoul Central Business District (CBD) recorded in the 3% range for the first time in about 13 years since the global financial crisis. The Gangnam Business District (GBD) and Yeouido Business District (YBD) maintained vacancy rates in the 1-2% range.

Seoul city office building skyline / Photo by Yonhap News

According to the 'Office Monthly Market Trends' recently released by Genstarmate on the 19th, the vacancy rate including new buildings in the CBD last month was 3.6%, marking the first time since November 2009 that it fell into the 3% range. This figure is 0.4 percentage points lower than the previous month. The vacancy rate excluding new buildings was even lower at 3.1%.

Genstarmate explained, "SK Hynix established a base office in the Mirae Asset Center One East Tower, a large-scale office located in Jung-gu, resolving over 2,000 pyeong of vacancy. Additionally, cases of financial and insurance companies moving into Sunhwa Tower in the Namdaemun area were confirmed." It was also reported that retail businesses relocating from other districts filled the remaining vacancies in Euljiro Signature Tower.

The vacancy rates for GBD and YBD (including new buildings) were surveyed at 1.7% and 2.2%, respectively, the same as the previous month.

In the case of GBD, a medium-sized office in Seocho-gu, Daegak Building, was occupied by a business support service company, eliminating vacancies, and the large Dongwon F&B Building saw existing tenants expand. The Hana Financial Group Gangnam office on Teheran-ro in Gangnam-gu was also observed as a new tenant.

Genstarmate stated, "Many new supplies are planned near Gangnam Station in the future, but since most are small offices intended for company headquarters, the impact on vacancy rates is expected to be limited."

Regarding YBD, it is analyzed that the continuous decline in vacancy rates since July 2020 has somewhat slowed. The already low vacancy rate and tenant relocations within the district are cited as reasons. In fact, LG Chem completed its relocation from Yeouido LG Twin Towers to the nearby Park One Tower 1, and LG Energy Solution, an existing tenant of Park One, expanded.

Amid favorable vacancy rates, monthly rents rose sharply across all districts. For every 3.3㎡, GBD recorded 90,841 KRW and YBD 82,297 KRW, up 10.7% and 5.4% respectively compared to the same month last year. During the same period, CBD showed a relatively small increase of 3.7%, but the monthly rent reached 101,046 KRW per 3.3㎡, marking the first time the district surpassed 100,000 KRW.