| Recently, the Seoul commercial real estate market has been showing a trend of demand concentrating in first-class business districts such as Gangnam, Yeouido, Jongno, and Gwanghwamun, rather than a simultaneous recovery across all regions.
While some outlying areas are seeing rising vacancy rates, core business districts are maintaining a stable flow, with demand quickly absorbing supply.
Small commercial and office vacancy rates
The average vacancy rate for small commercial properties in Seoul is 6.61 TPS3T. However, the city center has a relatively low rate of 5.11 TPS3T. Among these, Gwanghwamun had the lowest rates at 0.91 TPS3T, Namdaemun at 3.01 TPS3T, Myeongdong at 1.21 TPS3T, and Bukchon at 0.1 TPS3T. The average vacancy rate for small commercial properties in Gangnam is 5.51 TPS3T, with most areas, except for Dosan-daero, Sinsa Station, and Cheongdam, recording rates below 11 TPS3T.
The office market is showing a similar trend. While the overall vacancy rate for downtown Seoul offices is 7.01 tpa3t, traditional business districts such as Gwanghwamun 3.51 tpa3t, City Hall 2.71 tpa3t, and Jongno 2.11 tpa3t remain low. The average vacancy rate for Gangnam offices is 4.21 tpa3t, indicating relatively sustained demand for office space in key business districts.
A city center structure with offices, tourism, and hotels intertwined
Core areas like Gangnam, Yeouido, Jongno, and Gwanghwamun have a structure where business, tourism, and hotel demand intertwine within a single residential area. Office workers support commercial districts during the day, while tourists and hotel guests drive spending in the evening and at night.
The distinction between weekdays and weekends is blurred, creating a constant flow of people, and downtown commercial districts are constantly lit up day and night. Companies continue to favor downtown locations, particularly prime office buildings, and the increasing number of foreign tourists is revitalizing the commercial districts of Myeongdong, Jongno, and Gangnam.
Future outlook
We anticipate that the commercial real estate market will continue to trend toward key business districts like Gangnam, Yeouido, Jongno, and Gwanghwamun. Thanks to the simultaneous operation of office workers, tourists, and hotel guests, the overall commercial district dynamics will remain robust even if specific demand declines. Compared to other areas, market interest and leasing demand are expected to remain concentrated.
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