Seoul prime office vacancy set to rise as new supply enters CBD

Expansion-led relocations will also shape the city’s office market outlook.

Seoul’s prime office market is expected to see divergent vacancy trends across key districts in the near term, driven by new supply, relocation activity and expansion-led demand, according to Savills.

In the CBD, vacancy rates are forecast to edge higher as new developments enter the market, despite a series of offsetting tenant movements. Hanwha Ocean will relocate its 12,400 sq m headquarters from Grand Central to Daishin 343, resulting in a broadly neutral impact on overall vacancy.

At Grand Central, vacated space is expected to be absorbed by Encar.com, relocating from AIA Tower, and Hanwha Life Lab, moving from Taepyeongro Hanwha Finance Center, with both tenants expanding their footprints.

Elsewhere, Centropolis will see departures from SK Telecom and Kakao Entertainment, though these are expected to be largely offset by expansions from tenants including Netflix and law firm Bae, Kim & Lee LLC. However, Savills noted that upcoming completions such as G1 Seoul and Rene Square will add fresh supply, contributing to a gradual rise in CBD vacancy.

In the Gangnam Business District (GBD), vacancy is expected to remain broadly stable. While departures from Centerfield and Samsung Fire & Marine Insurance Seocho Tower will add some vacant space, this is likely to be balanced by expansionary demand.

Examples include The Founders expanding within Glass Tower and Simmons upsizing from Icon Samsung to Parnas Tower, reinforcing continued demand for larger, higher-quality office space in the district.

In the Yeouido Business District (YBD), vacancy is expected to rise in the short term following departures by LG Energy Solution from Parc.1 Tower 1 and Geneone Life Science from Parc.1 Tower 2. However, Savills expects conditions to improve in subsequent quarters, supported by relocations such as NH NongHyup Capital moving to One Centinel and Mirae Asset Securities taking space at FKI Tower.

Overall, Savills said Q1 negative net absorption reflects constrained availability of leasable space rather than a deterioration in underlying demand. The majority of leasing activity continues to be expansion-led or linked to redevelopment moves, with demand for large floor plates remaining resilient.

The firm added that as new completions come to market, leasing momentum could strengthen further, particularly as occupiers pursue upgrade relocations into prime office assets.