Seoul office leasing turns lender’s market as vacancy rates at 2023 low

Office vacancy rates in South Korea’s capital city of Seoul fell to their lowest level this year last month as people returned to work following the practical end of the COVID-19 pandemic.

According to RealtyPlanet Co., a Seoul-based commercial real estate consultant, office building vacancy rates in Seoul stood at this year’s low of 2.13% in October, down from 2.4% in September.

The October figure is well below the so-called natural vacancy rate of around 5%.

Of Seoul’s three major business districts – the Yeouido Business District (YBD), Gangnam Business District (GBD) and the Central Business District (CBD) near the Seoul Station – Yeouido posted the lowest vacancy rate of 0.99%, down from 1.35% in September.

The GBD’s vacancy rate declined to 1.18% from 1.27% over the same period while the CBD’s rate dropped to 3.38% from 3.76%.

RealtyPlanet attributed the vacancy rate fall to the growing number of people returning to their offices, quitting their work-from-home business practices.

OFFICE LEASING: A LENDER’S MARKET

According to a recent survey of major companies by the Korea Enterprises Federation, 90.3% of the respondents said they plan to reduce or completely abolish their work-from-home programs.

As demand for offices rebounds, so do office leasing prices.

Industry data show the net occupy cost (NOC) of office buildings in Seoul was 197,854 won ($153) per 3.3 square meters in October, up from 197,590 won in September.

The NOC for the GBD was the highest at 205,718 won, followed by the CBD’s 194,874 won and the YBD’s 189,082 won.

“Office lease and management costs keep rising due to the low office vacancy rates and inflation. Office leasing will be a lender’s market for the time being,” said Jung Soo-min, chief executive of RealtyPlanet.

Write to In-Hyeok Lee at twopeople@hankyung.com

In-Soo Nam edited this article.