Which industry accounted for the most office leasing demand in Seoul?

57% of leasing activity came from this sector.

According to a JLL report, in 4Q21, net absorption of Seoul Grade A office was about 52,187 pyeong, an increase of 11,900 pyeong from the previous quarter. It is the second-highest figure after 2Q21, which recorded the largest net absorption in seven years. 

Seoul’s overall vacancy rate y-o-y went down by nearly half, as the vacancy rate of three sub-markets decreased. The vacancy rate of Gangnam and Yeouido fell 422 bps and 318 bps from the previous quarter, respectively. 

Here’s more from JLL:

CBD vacancy also dwindled 128 bps q-o-q. Demand for relocation to Seoul Grade A and B offices accounted for about 54%, which is the highest proportion in this quarter. Expansion demand is estimated at 22% and demand for consolidation recorded about 12%, led by the consolidation of some branches of Samsung Life Insurance. Demand for upgrades and demand from new business marked about 8% and 4%, respectively. 

By industry, the financial & insurance industry accounted for the most leasing activity at about 57%. For example, Samsung Life Insurance signed for about six floors with Gran Seoul B. Also, Kakao Bank signed a contract with Parc.1. 

The manufacturing industry recorded about 14% of the leasing transactions, followed by the ICT industry and the professional service & sciences, which represented about 8% and 7%, respectively.

By nationality, Domestic tenants recorded about 89% while foreign tenants accounted for 11%, up considering 8% in the previous quarter.

CBD 

Grade A office in CBD recorded net absorption of 9,716 pyeong. The vacancy rate was about 10.8%, plummeting 128 bps from the previous quarter. 

A notable example of leasing activity in CBD was Samsung Life Insurance, which signed for about six floors (about 6,200 pyeong) of Gran Seoul Tower 2 to consolidate several of its branches, and accounting for the largest proportion of CBD leasing activities in this quarter. Additionally, Shinhan Life moved into Pine Avenue and filled about four floors of vacant space (about 2,900 pyeong). Also, Kyobo Life Insurance moved into Seoul Square and used about 1,900 pyeong. Pebblestone Asset Management signed a contract with D Tower, taking up about 300 pyeong. In terms of leasing demand for CBD in this quarter, relocation accounted for about 31%, followed by the financial & insurance industries.