How commercial districts are born and die

Entering the Mugyo-dong alley

Two distinct times flow in the alleys of Mugyo-dong and Dadong, which I pass through every day on my way to work. Amidst the modern, state-of-the-art prime offices and the alleys beneath their shadows, a line of people still forms during lunchtime in front of Buminok, which opened in 1956 and is celebrating its 70th anniversary this year; meanwhile, the Seoul-style loach soup at Yonggeumok, which began in 1932 and has embraced 93 years of history, continues to captivate the footsteps of those visiting this downtown area today.

Why do some spaces attract people for nearly a century, while others fail to last for a few years?
If we broaden this question to the entirety of Seoul, an even more dramatic landscape unfolds. Garosu-gil, once hailed as the city's most sophisticated street, now has four out of ten empty spots. Gyeongnidan-gil, the very epitome of a "hip alley," has seen only five of the 39 restaurants recommended by government agencies during its heyday survive. Conversely, global brands are scrambling to establish a presence in Seongsu-dong, a former dilapidated factory district.

What saves an alley, and what kills an alley.

I intend to examine the mechanisms of the birth and demise of Seoul's alley commercial districts through the lens of an author who confronts this question daily in the commercial real estate field.

Why Are Alleys 'Rising'? – The Rent Gap and Korean-Style Commercial Gentrification

The term 'gentrification' was first used in 1964 by British sociologist Ruth Glass to describe the phenomenon in which the middle class moved into dilapidated working-class neighborhoods in London, displacing existing residents. 'Gentrification' is not an expression praising a 'nice neighborhood.' It is a concept originating from the critical perspective of urban sociology, which asks who moves in and who is displaced.

Later, geographer Neil Smith identified the essence of this phenomenon as "capital calculations" rather than "human taste." According to his "Rent Gap" theory, capital returns to old alleys when the gap widens between the returns generated from current land use and the potential returns expected after redevelopment. The older and more dilapidated a place is, the greater this gap becomes, which strengthens the incentive for investment.

However, what is happening in the alleys of Seoul has a different character from traditional Western gentrification. While gentrification in Europe or North America manifested as the upgrading of residential areas to the middle class, in Seoul, the "replacement of business owners" is felt much faster and more dramatically than the "replacement of residents." This can be considered the unique characteristic of the Korean-style phenomenon known as "commercial gentrification."

The mechanism of 'Korean-style gentrification' exhibits a surprisingly consistent pattern. Unique small business owners and creators are the first to move into dilapidated areas with low rents. As the distinctive atmosphere they create spreads via social media, foot traffic surges.

When people flock to a place, building values and rents skyrocket, attracting franchises and large capital capable of affording the increased costs. As they move in, the unique shops from the beginning are forced out; once only familiar signs found anywhere remain, the alley's distinctiveness vanishes. Inevitably, an era of vacancies returns to commercial districts that have lost their uniqueness.

Simply put, it is a structure where the very people who created the charm of the alley are the first to leave, driven out by rents that have risen precisely because of that charm. This paradoxical cycle has established itself as a core mechanism running through the rise and fall of Seoul's alley commercial districts, much like a mathematical formula. And there is a street where this formula operated first and most clearly.

Garosu-gil – What the Vacancy Rate of 43.91 TP3T Tells Us

If one were to cite a textbook example of 'Korean-style gentrification,' the first would be Garosu-gil in Sinsa-dong. In the early 2000s, designer shops, small galleries, and unique cafes began to set up shop one by one on this street to escape the high rents of Apgujeong Rodeo Street. With a walkable width, trees lining the street just as its name suggests, and a charming scale created by low two- or three-story buildings, the lack of physical infrastructure actually served as a backdrop for emotional software, forming the brand of the 'Alley of Senses.'

In the early to mid-2010s, Garosu-gil enjoyed its heyday as Seoul's representative street commercial district. However, as large franchises and global brands entered the market one after another, attracted by the high foot traffic and brand power, rents skyrocketed, and the small independent shops that had defined the street's identity began to be pushed out one by one. The character of the unique alley transformed into that of an expensive main street commercial district.

According to a survey by Cushman & Wakefield, the vacancy rate for ground-floor commercial spaces in Garosu-gil rose from 36.51 TP3T in the second quarter of 2023 to 41.21 TP3T in the fourth quarter of 2024, and reached 43.91 TP3T in the second quarter of 2025, marking the highest level among major commercial districts in Seoul. This gap is stark when compared to the vacancy rates in Myeong-dong (in the 51 TP3T range) and Hongdae-Hapjeong (in the 101 TP3T range) during the same period.

It is worth noting that despite the rising vacancy rate, rents are showing little sign of decreasing. This is because the sale price of a building is based on its rental yield, and lowering rents leads to a decline in the building's asset value. As I discussed in the March 2026 issue of the RE/MAX Journal, it is a natural strategy for landlords to maintain nominal rents to "defend asset value." However, the current reality for Garosu-gil is that this natural strategy leads to prolonged vacancies, and this prolonged vacancy, in turn, diminishes the commercial district's attractiveness, preventing it from breaking free from this vicious cycle.

The message Garosu-gil conveys is clear. The moment an alley becomes a brand, the people who created it are the first to leave. And if the space they left behind is filled with identical signboards, the alley can no longer be a 'Destination'.

Gyeongnidan-gil – Why Only 5 Out of 39 Places Remain

Gyeongnidan-gil in Itaewon-dong, Yongsan-gu, named after the former Armed Forces Financial Management Group, is an example that shows a more dramatic trajectory of rise and fall than Garosu-gil.

In the early 2010s, amidst the expansion of the Itaewon commercial district, small independent restaurants, wine bars, and dessert cafes began to open in this alley, which offered relatively low rent and an exotic atmosphere. Located on a sloping alley rather than a main street, with shops featuring small signs and limited seating, Gyeongnidan-gil provided a "joy of discovery" and emerged as Seoul's most "hip" spot from 2015 to 2017. The name "Gyeongnidan-gil" itself became a meme, serving as the starting point for the subsequent trend of attaching the suffix "~ridan-gil" to hot spots across the country.

However, the heyday did not last long. Along with the surge in visitors, rents rose steeply, making it difficult for the small, independent business owners who had originally created the charm of this alley to survive. According to a 2020 survey by the Herald Business, 34 out of the 39 restaurants on Gyeongnidan-gil selected by Yongsan District for the 'World Food Map' had closed down, resulting in a survival rate of merely 12.91 TP3T. This occurred just 3 to 5 years after the commercial district reached its peak.

The case of Gyeongnidan-gil starkly illustrates just how short the lifespan of Seoul's alley commercial districts is becoming. While traditional commercial areas of the past experienced fluctuations in cycles of over 10 years, in an era where social media and platforms accelerate the formation and expansion of commercial districts, the golden age of these alleys is being compressed into just 3 to 5 years. Just as the speed of their rise has increased, so too has the speed of their decline.

The most painful lesson left by Gyeongnidan-gil is this: the charm of the alley created by unique small business owners soon becomes the cause of rising rents, and those rents drive out the very small business owners who were the source of that charm. Being pushed out by the very value one created—this is the cruel paradox of commercial gentrification.

Between 'the people who create value' and the 'market that sets prices,' the vacancy rate of Garosu-gil is 43.91 TP3T and the survival rate of restaurants in Gyeongnidan-gil is 12.91 TP3T. What these numbers indicate is not simply an economic downturn. It signifies that in the process of an alley growing into a brand, there exists an unbridgeable time gap between the tenant who initially created that value and the market that reflects that value in prices.

It is the first tenants who moved in experimentally, enduring low rents, who create the value of a commercial district. However, the foot traffic and buzz they generate are immediately reflected in real estate prices, and the very people who created that value are forced to leave because they cannot afford the increased rent. Franchises and major brands move into the spaces they leave behind, but identical signboards seen anywhere are no longer the unique "Why" of that alley. Yet, this has become a formula of rise and fall that alley commercial districts are inevitably bound to repeat.

If so, is this official cycle an unavoidable force majeure? Are all up-and-coming alleys inevitably bound to cool down after passing through such a cycle? We seek the answer in Seongsu-dong and Yeonnam-dong, currently the hottest areas in Seoul, and at the sites of policies attempting to institutionally prevent gentrification.

(Continued in the next part of the May issue)