The office rental market around Dosandaero and Nonhyeon Station in Gangnam, Seoul, is experiencing dramatic changes in a short period of time. According to statistics from the Ministry of Land, Infrastructure and Transport, the vacancy rate on Dosandaero fell to 4.61 tpa3t in the second quarter of 2025, a 17.11 tpa3tp decrease from the previous quarter (21.71 tpa3tp), marking the largest decline nationwide. Nonhyeon Station also showed a marked improvement, dropping 9.31 tpa3tp from 14.41 tpa3tp to 5.11 tpa3tp during the same period. Such a large-scale improvement in the vacancy rate in a single quarter is considered extremely unusual.
Source: Ministry of Land, Infrastructure and Transport, 2nd Quarter Commercial Real Estate Lease Trend Survey, 2025 Q2
Rapid decline in vacancy rate and changes in rental transaction index
The sharp drop in vacancy rates in the Dosan and Nonhyeon districts is attributed to the significant reduction in vacancy rates in large buildings. While vacancy rates were largely attributed to remodeling and re-lease waiting units through the first quarter, the figures improved in the second quarter as major tenants, including branches of global corporations, IT startups, and co-working space operators, moved in one after another.
Rent levels and price competitiveness
Office rents in Gangnam in the second quarter of 2025 averaged 26.6 thousand won per square meter. Gangnam-daero had the highest rent at 31.1 thousand won per square meter, followed by Teheran-ro (27.0 thousand won per square meter), Nonhyeon Station (26.4 thousand won per square meter), and Dosan-daero (24.4 thousand won per square meter). Nambu Bus Terminal, on the other hand, had the lowest rent at 16.2 thousand won per square meter, showing a clear gap between districts.
Looking at the rental price index fluctuation rate, Gangnam-daero (2.291 TP3T) and Teheran-ro (1.361 TP3T) showed strength, while Nonhyeon Station (0.081 TP3T) and Dosan-daero (0.131 TP3T) remained virtually at the bottom. The low rental index increase despite the significant decrease in the vacancy rate is interpreted as landlords lowering rents or adjusting conditions to attract tenants. In fact, compared to the previous quarter, the rental transaction index increased by 1.301 TP3T for the entire Gangnam area, 2.291 TP3T for Gangnam-daero, and 1.361 TP3T for Teheran-ro, while Dosan-daero and Nonhyeon Station only increased by 0.131 TP3T and 0.081 TP3T, respectively. Price competitiveness can be considered a key factor in attracting rental demand.
Small commercial establishments have '0' vacancies.
Small commercial districts in the same area are virtually vacant. With cafes, beauty, and lifestyle brands actively entering the market, leases are being secured immediately upon arrival. The opening of flagship stores by major brands, including Olive Young, is further stimulating the commercial district's vitality. This robust demand in small commercial districts is also expected to have a positive ripple effect in alleviating office vacancy.
Source: Ministry of Land, Infrastructure and Transport, 2nd Quarter Commercial Real Estate Lease Trend Survey, 2025 Q2
In summary, the sharp decline in vacancy rates in Dosandaero and Nonhyeon offices is the result of a combination of large-scale vacancy reductions and lease adjustments. Accumulated vacancies from the previous quarter led to lower rents, making the area more competitive compared to other areas, further contributing to the vacancy reduction. Furthermore, the recent surge in tourists has solidified this area as a beauty and lifestyle shopping district, particularly for the MZ generation. The continued opening of related businesses is further fueling interest in future market trends.
