- Priority on Development Profit 'Sale Shops' Decline, Priority on Commercial Vitalization 'Direct Lease Shops' Rise
- Attractive with Differentiated Shop Concepts and Diverse MD Composition... Some Sites Grant Exclusive Business Rights
#. On the 14th, the promotional center for directly managed rental stores within a complex in Seo-gu, Incheon, which had just opened, was packed with self-employed individuals seeking consultations. From veteran owners operating five stores to young entrepreneurs starting new businesses, more than 80 teams visited that day alone, with consultations continuing daily.
Recently, self-employed people have been flocking to 'directly managed rental stores' supplied under the leadership of large developers. Due to concerns about the economic downturn, demand is concentrated on directly managed rental stores that offer stable rental income through the solid capital and systematic management of the operating entity. In contrast, most sale-type stores remain unsold and are struggling.
Unlike sale-type stores that prioritize development profits, directly managed rental stores are operated directly by construction companies or developers with the goal of early activation of commercial districts to increase the value of the stores. Individual stores are offered for rent while restricting unsuitable business types or brands, and optimal store compositions can be arranged by floor or traffic flow. This approach not only enhances the convenience of residents' lives but also provides customized services tailored to residents' needs, helping tenants generate stable income.
Representative successful cases of directly managed rental stores include 'Avenue Franc' operated directly by Hoban Construction and 'Alleyway Gwanggyo' managed by NeoValue Property. These two locations have transformed into promising local commercial districts as 'streets you want to visit' and 'stores you want to stay at' through specialized spaces, differentiated designs, and MD compositions. Both projects strategically introduced competitive well-known brands and invested effort in marketing such as events and promotions to make the stores local landmarks.
Kwon Gang-su, CEO of Sanggaeui Sin, explained, “In the case of sale-type stores, due to the economic downturn, high interest rates, and high sale prices, they do not sell well, and investors who purchased them raise rents to meet profitability, making it even harder to find tenants. From the perspective of buyers, directly managed rental stores, where the project entity directly manages leasing, help early commercial district activation and long-term asset value appreciation, so they are worth paying attention to.”
Sale-type stores see fewer visitors, while directly managed rental stores attract owners
In fact, sale-type stores with high initial costs are seeing fewer visitors. In a large complex in Banpo-dong, Seocho-gu, only about half of the 117 units excluding cooperative member sales were contracted in this year's general sales. First-come, first-served contracts are currently underway for the remaining units.
Most stores in a large complex in Gaepo-dong, which began occupancy in March 2023, are also mostly vacant.
In contrast, directly managed rental stores with low initial costs and systematic management that enable stable operations are attracting the attention of self-employed people. 'Royal Honors Avenue,' a store within the Geomam Station Royal Park City Prugio complex that opened its promotional center in mid-April and began full-scale operations, saw over 200 teams visit during the three-day opening weekend. Additionally, 270 online lease intention forms were submitted within an hour of the website opening, showing strong interest from self-employed individuals.
Recent surge in supply of ‘directly managed rental stores’
Reflecting this trend, large developers are increasingly offering directly managed rental stores. Large developers with solid capital directly manage these stores, allowing self-employed tenants to operate with low initial costs and stable management.
Large developer DK Asia Co., Ltd. is directly managing 'Royal Honors Avenue,' a store within the Geomam Station Royal Park City Prugio complex scheduled for occupancy in June 2023. The store spans from basement level 2 to ground level 2, with a total floor area of 7,025㎡. Compared to the residential floor area, the store area accounts for only 1%, making the stores highly scarce. As South Korea's first resort city, the Geomam Station Royal Park City Prugio apartment complex with 4,805 households was very popular with its 'staycation' concept where residents can enjoy everything within the complex. Accordingly, 'Royal Honors Avenue' is being developed as a concept-type directly managed store where residents can eat (Pulmuone Samsik Service), play (Samsung C&T Resort landscaping, top community facilities, etc.), and enjoy themselves. Connected to an 11-meter-high landmark gate, the store boasts a grand and splendid exterior with excellent visibility, and stores are distributed along major resident traffic routes for outstanding accessibility. Five schools are clustered within 100 meters, providing abundant demand from teachers, parents, and students. Currently, 50 high-quality tenants are being recruited, with special preference given to F&B businesses. To activate the commercial district early through differentiated MD composition, pre-entry screening is conducted, and the selected 50 tenants are guaranteed exclusive operating rights.
Kim Hyo-jong, Vice President and CEO of DK Asia, said, “To create a street you want to visit and a store you want to stay at, we are operating 100% directly managed rental stores within South Korea’s first resort city, ‘Geomam Station Royal Park City Prugio.’ Through direct management, we create synergy among tenants and establish a systematic system for tenants to grow together. We have devoted ourselves to enabling residents to experience differentiated value that cannot be found in typical apartments.”
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