"New Store Openings Amid COVID-19 Recovery"... Vacancy Rates Drop in Major Seoul Commercial Districts in Q1

Vacancy rates are declining as new stores continue to open in major commercial districts throughout Seoul. This appears to be due to the retail market recovering following the return to normal life after COVID-19.

[Image source=Yonhap News]

According to the "2023 Q1 Retail Market Report" released by Cushman & Wakefield on the 1st, the average vacancy rate in Seoul’s street-level commercial districts in the first quarter of this year was 21.4%, down 4.1 percentage points compared to the same period last year. In particular, Myeongdong, which had suffered a prolonged slump due to COVID-19, is rapidly recovering as social distancing measures have eased and the influx of foreign tourists has increased. According to the Korea Tourism Organization, about 480,000 foreign tourists visited Korea in February, an increase of approximately 380% compared to the same period last year, bringing vitality to the Myeongdong commercial district.

Even during the period when vacancies surged on the streets of Myeongdong due to COVID-19, global brands proactively opened large flagship stores. This is believed to be because Myeongdong holds the advantage of being the largest domestic commercial district that is difficult to replace. Recently, global brands have been expanding mainly near major roads with high visibility. In the first quarter of this year, small stores such as beauty and accessories shops also opened one after another, significantly reducing vacancies. As a result, the vacancy rate in Myeongdong fell by 32.2 percentage points compared to the same period last year.

Vacancy Rates in Seoul's Six Major Commercial Districts.
[Image provided by Cushman & Wakefield]

Some recovery was also seen in Gangnam. The vacancy rate in Gangnam in the first quarter of this year dropped by 5.8 percentage points compared to the same period last year. In March, the Apple Store Gangnam opened near Sinnonhyeon Station, and Samsung Electronics is also known to be planning to open a flagship store in Gangnam. Moreover, global burger franchises have recently been entering Gangnam one after another. The first Shake Shack location is operating successfully, and the American burger brand Super Duper recently opened. Five Guys is also scheduled to open a store in Gangnam in the second quarter.

Garosugil and Cheongdam showed a rising trend in vacancy rates. In Garosugil, the vacancy rate on the main road is rising again as clothing brands close stores, and in Cheongdam, the vacancy rate temporarily increased slightly due to the departure of some brands. However, a Cushman & Wakefield official forecasted, “Since leading global brands are preparing to open new flagship stores, vacancy rates are expected to naturally recover.”