Net absorption in Seoul CBD’s office sector falls for the first time since 2021

It stood at -2,700sqm in Q1 2023.

According to a Savills report, the net absorption for the Seoul prime office market fell across all districts in Q1 2023, except for the GBD (Gangnam Business District), totalling 8,200 sq m, with vacancy up 0.5%ppts QoQ to 2.7%. 

With no contiguous floors available in the GBD and the YBD (Yeouido Business District), most lease transactions occurred in the CBD.

Here’s more from Savills:

Net absorption in the CBD stood at -2,700 sq m, the first fall since Q1/2021, while the vacancy rate remained unchanged from the previous quarter at 3.3%. Notable lettings in the CBD included the relocation of Boston Consulting Group from Center 1 to Grand Central (6,200 sq m), the Korea Arts Management Service from Hongik University's Daehak-ro Campus to the Twin Tree Towers (6,500 sq m), and Korean Air from its Gimpo Airport HQ to Hanwha Financial Plaza Taepyeongno Building (6,800 sq m). 

SK hynix leased 6,800 sq m in Center 1 as a new satellite office for its sales and marketing employees. Yonsei Foundation Building also welcomed new tenants DN Solutions, DIG Airgas and DHL Global, totalling 7,900 sq m, while the vacancy rate of KDB Life Building fell to less than 10%, as GroupM Korea, an advertising agency formerly in SB Tower, leased 5,300 sq m, and CJ Olive Young and CJ Olive Networks, the current anchor tenants within the building, each expanded by 2,600 sq m. However, as Orange Center’s Shinhan Life moved out upon expiration of its lease, overall net absorption for the CBD decreased as a result. 

Vacancy rate for the GBD stood at 2.3%, an increase of 1.4%ppts QoQ with the addition of Scale Tower, but also showed the highest net absorption among the three districts of 11,000 sq m. Demand was driven by subsidiaries of AWS, which leased 19,500 sq m at Centerfield. 

In the YBD, net absorption was -200 sq m and there was no change to the vacancy rate QoQ at 2.2%. Shinhan Fund Partners (former Shinhan Aitas) moved into Hyundai Motor Securities Building (former KB Financial Tower) and Quintessa Investment at Hana Securities Building. Similar to the GBD, leasing activity in the YBD was limited, but is expected to increase once Anchor One Building and TP Tower are delivered later this year.