Seoul Office Building Vacancy Rate at 2.11%... Declining for 5 Consecutive Months
Yeouido<Gangnam<Gwanghwamun Order
Demand Increasing Since COVID-19 but Supply Remains Unchanged
"These days, finding a good office is like picking stars from the sky. Inquiries from IT companies and others have increased sharply, but new listings are completely dried up (A real estate agent in Yongsan-gu, Seoul)."
Vacancies in office buildings in the Seoul area are rapidly decreasing. Although office demand is recovering after the COVID-19 pandemic, supply is stagnant due to a downturn in the construction industry.
According to Real Estate Planet, a commercial real estate specialist company, the vacancy rate of office buildings in Seoul was 2.11% in November last year. This is the lowest rate of the year. Since peaking at 2.59% in June last year, it has decreased for five consecutive months. In October last year (2.13%), it decreased by 0.27 percentage points compared to the previous month (2.4%), showing a particularly large drop.
The area with the lowest vacancy rate was Yeongdeungpo and Mapo-gu, including Yeouido, at 0.92%. It had consistently maintained a rate in the 1% range until September last year (1.35%) but dropped to below 1% in October (0.99%). Gangnam and Seocho-gu followed at 1.37%. This was the only area that rose compared to the previous month (1.18%), showing significant fluctuations throughout the second half of last year. Jung and Jongno-gu, including Gwanghwamun, had the highest vacancy rate at 3.19%, but it fell by 1 percentage point over six months compared to June last year (4.19%).
The reason for the decline in vacancy rates is that supply is low compared to demand. Demand is increasing due to the expansion of office work following the end of the COVID-19 pandemic, but supply is not keeping up. Seon Jong-pil, CEO of Sangga Radar, said, "During the COVID period, office development projects stopped due to increased vacancies and soaring construction costs, slowing additional supply." He explained that the shortage of office supply could worsen further.
With the office market booming, rents are also rising. In November last year, the net operating cost (NOC) per exclusive area of Seoul office buildings reached an annual high of 198,201 KRW per 3.3㎡. This figure had been maintained in the 196,000 KRW range from January to June last year and in the 197,000 KRW range from July to October. Gangnam and Seocho-gu were the most expensive at 206,055 KRW, followed by Jung and Jongno-gu (195,208 KRW), and Yeongdeungpo and Mapo-gu (189,485 KRW).
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
