Seoul’s landlord-favourable office market to persist in 2025

But tenant fatigue may constrain demand.

In November 2024, the government approved the Yeouido Financial District Unit Plan, enabling skyscraper developments over 200 meters. According to a Savills report, this is expected to boost redevelopment feasibility in YBD, encouraging reconstruction of older buildings and advancing existing plans.

“The landlord-favorable market is likely to persist in 2025 due to limited new supply, but tenant fatigue from rent hikes exceeding inflation over the past three years may constrain demand,” the report said.

Here’s more from Savills:

Major tenants, including large corporations, financial institutions, and IT firms, are expected to limit expansion amid economic uncertainties. Many tenants may consider relocating to secondary offices or integrating operations outside key districts to reduce costs. As a result, vacancy rates may rise slightly from 3.5% at the end of 2024, while rent growth is projected to slow to 2~4%.

In the CBD (Central Business District), tenant relocations from redevelopment projects like Korean Reinsurance’s headquarters and Metro Tower will help absorb some vacancies. However, additional relocations and downsizing by corporate affiliates may slightly increase overall vacancy rates. GBD (Gangnam Business District) is expected to maintain the lowest vacancy rate (below 3%) due to strong demand from large corporations and IT firms, with rent growth remaining steady at around 3%.

In YBD, while KB Kookmin Bank’s move into Anchor One will reduce some large vacancies in Q1/2025, One Centinel’s pre-leasing rate remains low at approximately 30% as of 2024 year-end. Consequently, YBD’s vacancy rate is expected to remain around 6%, similar to 2024 levels.