Seoul prime office vacancy hits 13-year low of 4.9% in Q2

Net absorption increased 156,400sqm during the quarter.

A Savills report reveals that Seoul’s prime office demand increased across all districts, resulting in a 156,400 sqm increase in net absorption and 2.2 pp decrease QoQ in vacancy to 4.9%, the lowest in 13 years.

The CBD saw the largest number of tenant relocations recording 57,600 sq m in net absorption, resulting in a 1.8 ppt decrease QoQ in the vacancy rate to 7.8%. 

Here’s more from Savills: 

There was some new vacancy from the relocation of SSG.COM (12,700 sq m) from Centropolis to Centerfield in the Gangnam Business District (GBD) and the relocation of KB Kookmin Card IT service group (10,300 sq m) from Tower 8 to ICON Cheonggye. Meanwhile, SK sustainability affiliates such as SK On, SK Geo Centric and SK Energy took up existing vacancy in Jongno Tower. 

Korea Inclusive Finance Agency (10,300 sq m), Lock & Lock (6,300 sq m) and POSCO International (6,300 sq m) all completed their relocation to Grand Central and UBASE (7,200 sq m), a call center company, moved into City Center Tower. Samsung Life Insurance opened a flexible working space (20,700 sq m) at Gran Seoul while their offices at the Seosomun Building are being redeveloped.

Prime office vacancy rate for the GBD on move-in basis stood at 1.6%, the lowest across all districts, but it is expected to be at 0.2% considering the committed area at Centerfield. SSG.COM, Emart DT and Facebook took up 19,600 sq m vacancies in Centerfield, with the later relocating from Arc Place, where Viva Republica expanded. New vacancies in GBD have been rapidly backfilled rapidly due to strong tenant demand. In Q2/2022, Office demand was dominated by IT and E-commerce companies, which accounted for 57% and 35% of new take-up respectively. 

The Yeouido Business District (YBD) also witnessed strong leasing demand recording the highest net absorption of 71,100 sq m, which reflects a 4.1 ppt decrease QoQ in vacancy to 4.0%, the first time it has dropped below 5% since 2012. HMM (30,800 sq m) relocated its base from Hyundai Group Building to Parc.1 Tower 1, which also welcomed newcomers such as online education company I Hate Flying Bugs (7,400 sq m), and apparel company Dong-il Devanlay (3,400 sq m).

Parc.1 Tower 1 now boasts a 9.7% vacancy rate. Nexus Community (3,400 sq m) and Korea Investment Real Asset Management (3,300 sqm) took up vacancies in Parc.1 Tower 2. The YBD’s tenant profile has continued to become more diversified in Q2/2022 with new tenants from the financial, transportation, software, and apparel sectors.