Seoul prime office vacancy rises to 3.4% in Q3

Net absorption was at -14,200sqm during the quarter.

According to a Savills report, in Q3/2024, the total net absorption of Seoul’s prime office market was recorded at -14,200 sq m, with the vacancy rate increasing by 0.1ppts from the previous quarter to 3.4%. 

Among the three major districts, the vacancy rates in CBD and GBD rose by 0.7 ppts and 0.3ppts, respectively, reaching 2.8% and 2.0%. 

Here’s more from Savills:

In contrast, the vacancy rate in YBD decreased by 1.3ppts to 5.9% as most tenants with pre-lease agreements in TP Tower completed their move-ins. Notably, YBD was the only district to experience an increase in net absorption, with the share of financial tenants rising compared to the previous year. 

Meanwhile, horizontal movements (Prime to Prime) accounted for 51% of the total vacancy reduction, followed by upward movements (Secondary to Prime) at 37%. Newly-formed organisations and upgrade demand each represented 6%. The share of new organisations in the vacancy reduction has been steadily declining since Q1/2024, reflecting the challenging market conditions for new tenants entering the prime office sector.

Net absorption in CBD was -22,300 sq m, primarily due to the relocation of 11st from Seoul Square to the Gwangmyeong Uplanet Tower, resulting in approximately 10,000 sq m of large vacancies currently being marketed for lease. Meanwhile, Koreazinc, which is separating from its affiliates, moved from the Yeongpung Building to the Gran Seoul A building with six subsidiaries, utilising a total of about 16,000 sq m across four and a half floors. 

In GBD, the net absorption for Q3/2024 was recorded at -8,100 sq m. Interpark moved from its office building in Samseong-dong to its new headquarters in Pangyo's 2nd Techno Valley, generating new vacancies of 10,100 sqm. Additionally, after the transaction of ICON Samsung (formerly Golden Tower) was completed in Q3, a tenant reconfiguration led to the exit of existing occupants, creating 2,900 sq m of new vacancies.

YBD recorded a net absorption of 16,200 sq m in Q3/2024, continuing to observe the move-ins of multiple tenants. Shinhan Investment Corp., Kiwoom Securities, and other affiliates completed their moves to TP Tower, significantly reducing the vacancy rate. Shinhan Investment Corp.'s previous location in One Centinel (formerly Shinhan Investment Corp. Building) is undergoing remodelling, expected to be completed between Q4/2024 and 1H/2025. 

Additionally, Kiwoom Securities is scheduled to reconstruct its previous establishment at Kiwoom Finance Square, with a total floor area of approximately 48,915 sq m set for completion by 2028. The continued preference for YBD by financial firms, along with the demand for relocation from financial companies in other districts, has contributed to an increase in the proportion of financial tenants in YBD compared to the previous year.