Seoul office rents to rise by 4-5% this year

Vacancy will only start to increase from 2026.

According to a Savills report, low vacancy is expected to persist in Seoul’s office market for the short-term, given that the majority of the new prime office supply in 2024 has already secured commitments and redevelopment projects have commenced to reduce total available space. 

“Except for the 42% of prime office buildings that raised rents by 10% or more in the last two years, there is still potential for rent increases in other buildings. Rental growth for 2024 is expected to be in the range of 4-5%, similar to 2023,” the report said.

Here’s more from Savills:

As large-scale office developments in the CBD begin in 2026 and other redevelopment projects unfold across Seoul, vacancy rates are projected to increase. Landlords should devise tenant attraction strategies in preparation for future upcoming projects. 

Therefore, landlords may lean towards longer-term agreements in both new leases and Source Savills Korea renewals, potentially increasing tenant incentives and leading to lower effective rent growth compared to face rent growth. 

Tenant relocations and rent increase levels are anticipated to vary across districts, with CBD likely experiencing the highest movement due to its robust office leasing activity compared to others. Considering the enhanced locational advantages on the forthcoming opening of GTX-A, rate of rental increase for CBD will remain similar to current levels around 4-5%. 

GBD remains a highly desirable location for companies, and its vacancy rate is expected to remain among the lowest of the major districts, with rental growth similar to the CBD. YBD is showing highest vacancy due to its high levels of new supply and demolitions, but overall vacancy is expected to decline to around 2% once all contracted tenants complete their move-in to Anchor One, Q3/2023 completion, and TP Tower, Q2/2024 completion. 

As the supply of new offices with relatively high rents increases the rent gap between new and old buildings, average rental increase for YBD is expected to be lower than the other major districts.