Half the Price Compared to Prime Offices in Gwanghwamun and Gangnam
One Grove, Le West, and Case Square Completed in Succession
Deposit Per Pyeong Set at 1 Million KRW, Rent in the Mid-100,000 KRW Range
Air Incheon, DL E&C, and Others Set to Relocate to Magok
As mega new office buildings in the Magok district are being completed one after another, they are attracting companies with affordable rental rates. Compared to prime buildings in existing business districts, rents have been lowered by up to half. Since it is convenient to commute to Gwanghwamun and Gangnam by public transportation and new offices can be used at low costs, more companies are deciding to relocate or considering it.
Rapid Occupancy of Mega Buildings in Magok
According to the real estate industry on the 4th, overseas asset management firms investing through the National Pension Service are reportedly negotiating contracts with One Grove in the Magok district complex (CP4). Recently, Air Incheon also confirmed its relocation and is about to sign a lease contract. DL E&C and DL Construction, which were based near Seodaemun Station at D-Tower Donuimun, are also moving to One Grove.
One Grove (CP4) is owned by the National Pension Service and Aegis Asset Management, and is a mega office building consisting of four towers from 7 basement floors to 11 above-ground floors. Emart Traders has opened the largest store in Korea here, and Kyobo Bookstore and the kids’ theme park Champion have also settled in. Aegis Asset Management is filling the area adjacent to Le West’s senior residence with hospitals.
LG affiliates are also considering relocating to nearby offices instead of Magok Science Park. It is known that some parts of LG AI Research Institute have confirmed their move to Case Square Magok. Case Square Magok (CP3-2) was purchased by Koramco Asset Trust in 2021 and consists of four towers from 7 basement floors to 12 above-ground floors. The real estate asset management company (PM) S&I manages Case Square Magok and has relocated its headquarters there.
Lotte Construction is also considering selling its headquarters in Jamwon-dong and there is talk of relocating its office to Le West City Tower. Lotte Construction holds a 30% stake in Magok MICE PFV, the developer of Le West, and has signed a responsibility completion agreement. Korean Air’s Passenger Business Division has also confirmed its move into Le West City Tower.
Le West consists of a total of four blocks, and the office facility Le West City Tower in CP1 is composed of four towers from 7 basement floors to 13 above-ground floors, owned by KT Investment Management and Magok MICE PFV. At the end of last year, ‘COEX Magok,’ which can accommodate up to 2,200 people from basement level 2 to the 5th floor, opened. The 400-room Mercure Ambassador Magok hotel has also opened, and a shopping mall called The Square is planned to be built.
Affordable Rent Is the Biggest Advantage
Affordable rent is cited as the primary reason for considering relocation to Magok. The deposit per pyeong (3.3㎡) for One Grove, Magok Le West City Tower, and Case Square Magok is under 1 million KRW, and the rent is around 100,000 KRW. The net operating cost (NOC), which includes rent and maintenance fees per exclusive area, is in the 180,000 KRW range for One Grove and Le West, and about 200,000 KRW for Case Square. In comparison, the Gwanghwamun (CBD) and Gangnam (GBD) areas reach around 300,000 KRW.
An industry insider said, "Currently, the rental rates for large offices in Magok are set at about half the price of prime-grade buildings and about two-thirds compared to A-grade office buildings, so companies that need to maintain offices in Seoul are showing interest." The Magok district is expected to house R&D centers for advanced industries such as ICT and bio industries. It is convenient to access the airport, and complex/convention facilities and hotels are also being developed, making it an attractive relocation option.
As a result, all three buildings that started occupancy after completion in October last year have vacancy rates around 50%. As of early this year, the vacancy rate of Le West City Tower is 40%, One Grove is 60%, and Case Square is 75%. Aegis Asset Management said, "Besides price competitiveness, the geographic location and transportation conditions are favorable, so considering future rent increases, there is sufficient merit. Since it has been about six months since completion, we expect to fill about 60% of the entire building by the end of the year," they explained.
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