Seoul office vacancy rates to hold steady until H1 2026

Most vacancies will be taken up by pre-leases.

During 1H/2024, current vacancies in the Samsung Main Building in Seoul CBD will be taken up by financial tenants while Meritz Fire & Marine Insurance will consolidate its Yeouido and Gangnam offices to the new headquarters. 

A Savills report notes that vacancy rate is forecast to remain steady until 1H/2026 when three large-scale prime offices are introduced to the market. 

Here’s more from Savills:

Ongoing large-scale mixed developments in the Gangnam Business District (GBD), including Hyundai GBC and Suripool project, face delays in discussions with authorities and physical changes regarding permits. Despite concerns about potential tenant departures due to landlords seeking much higher rents, vacancy rate is anticipated to remain near current levels, supported by resilient demand for spaces in GBD. 

Most vacancies at the newly-completed Anchor One (completion in Q3/2023) and upcoming TP Tower (Q2/2024) will be taken up by pre-leases, rapidly reducing the Yeouido Business District (YBD) vacancy rate by approximately 2% QoQ. Yuanta Securities has committed to space at Anchor One, while the Korean Teachers' Credit Union will relocate to the 42nd floor of TP Tower, and Shinhan Securities, Kiwoom Securities, and Timefolio AMC together occupy the remaining 90%. 

In 2H/2023, rental growth led by GBD gradually slowed, but move-ins and expansion demand rapidly backfilled any new vacancies, with most new projects securing pre-leases. The vacancy rate is forecast to remain near current levels, while rental growth will likely surpass inflation in a landlord-favoured market. 

Management fees, below inflation for the past two years on average, are expected to slightly increase or align with inflation, along with elevated value-added taxes levied to assets owned by Real Estate Funds.