"Building Rental Market 'Smiles'... Clear Decrease in Seoul Office Vacancy Rate Last Year"

Last year, the vacancy rate of office buildings in Seoul steadily decreased. This contrasts with the continued slump in the housing market.

According to a report released by Real Estate Planet on the 1st, the average vacancy rate of office buildings in Seoul last year was 2.78%. After recording the highest vacancy rate of 3.62% in January last year, it remained in the 3% range but dropped to the 2% range from May and reached a low of 2.07% in December. The vacancy rate clearly declined toward the end of the year. The office rental market data used for the analysis was built based on market price surveys using phone and in-person inquiries as well as rental notices from real estate management companies.

Among the major districts in Seoul, the area with the lowest vacancy rate was GBD (Gangnam-gu, Seocho-gu), which recorded a monthly average of 0.5% last year. Despite slight fluctuations up and down over the year, it generally maintained below 1%. YBD (Yeongdeungpo-gu, Mapo-gu) had an average monthly vacancy rate of 1.18% last year, analyzed as 1.6% in January and 1.02% in December, maintaining a vacancy rate in the 1% range except for April (0.92%).

On the other hand, CBD (Jung-gu, Jongno-gu) showed the highest average vacancy rate of 5.31% last year. However, even here, the vacancy rate sharply declined toward the end of the year. The vacancy rate, which was 6.88% in January, dropped to 3.68% in December, marking the largest decrease among the major districts compared to the beginning of the year.

As demand increased, rents also rose. GBD saw a 2.5% increase compared to the same period last year, followed by YBD at 2.3% and CBD at 0.6%. In GBD, rents increased across all building sizes?premium buildings, large buildings, medium-large buildings, medium buildings, and small buildings?as of December compared to the previous year. However, in YBD and CBD, some rents decreased depending on the building size. In YBD, rents fell in large buildings (-0.1%) and medium-large buildings (-1.4%), while in CBD, small buildings (-0.9%) showed a downward trend.

Jung Soo-min, CEO of Real Estate Planet, said, "Despite the spread of real estate stagnation last year in not only the housing market but also the commercial and office markets, Seoul’s office building rental market showed a lone growth trend with decreasing vacancy rates." He added, "Since new office supply is limited, a landlord-favorable market is expected to continue for the time being."