Seoul industrial rents inch up 1.6% in Q2 | Realestate Asia
, South Korea

Seoul industrial rents inch up 1.6% in Q2

Rents in all submarkets except the West increased in the quarter.

Overall effective industrial rent in Seoul Capital Area (SCA) rose 1.6% q-o-q, reaching KRW 29,900 per pyung per month. JLL said rents in all submarkets except the West increased in the quarter. 

However, the decrease in the West was attributable to the new centre in Incheon rather than decreasing rents in other centres. Incheon tends to have lower rents than other cities in the West, thereby lowering the submarket’s weighted average rents.

Here’s more from JLL:

The logistics transaction volume recorded roughly KRW 1,583 billion in 2Q22. The biggest transaction during the quarter was for Yongin Namsa Center, which CJ Logistics pre-purchased from Hangang Logistics for KRW 356 billion. South Cheongra Smart Logistics Center sold for KRW 310 billion from Smart Logistics to KORAMCO Energy REITs. Most transactions occurred in the SCA.

Net absorption stays positive on the back of healthy demand

Overall Seoul Capital Area (SCA) net absorption in the quarter posted 164,100 pyung, aided by strong demand. A number of lease contracts took place in newly completed centres in the quarter. Multiple pre-leases led to full occupancy of the three centres completed in 2Q22. As the demand-supply imbalance for cold spaces persists, there is lingering sticky vacancy in some centres.

During the quarter, the South-East was the only submarket to witness a vacancy drop. Notably, retail and 3PL companies signed new leases in existing centres. Additionally, 3PL and fashion companies joined the newly completed centres. Meanwhile, the West welcomed e-commerce tenants while the North introduced a 3PL company.

Vacancy rate rises due to the completion of new centres

During the quarter, nine new centres were completed, adding a GFA of 194,688 pyung in the SCA. There was new supply in all districts except the Central submarket. One centre completed in the North, three in the South, three in the South-East and two in the West.

Overall vacancy rate rose from 2.7% to 3.6%. With the completion of new centres, vacancy rates in all submarkets except the South-East rose over the quarter. By district, the vacancy of the Central and the South submarkets stayed flat, reaching 1.1% and 2.0% respectively. The West’s hiked to 9.8% and the North recorded 3.0%. The vacancy in the South-East improved by 49 bps, recording 1.4%.

Outlook: Influx of new supply slows down amid construction delays

Around 873,300 pyung of new stock is anticipated in 2022. Given supply-chain disruptions of construction materials, rising construction costs, surging risk premiums, and the revision of dry-cold storage ratios, there has been substantial construction delays. This trend is likely to persist for at least one year or so, leading to lower-than-expected supply volume in 4Q22.

Despite pending projects, large-scale developments in the pipeline are speculated to lift overall SCA vacancy rate. Amid rising building costs, forward-sales will be continuously observed. Investors will also expand their interest to outside the SCA market, such as the Greater Busan and Chungcheong areas.

Note: Seoul Industrial refers to Seoul Capital Area's prime logistics market.

Follow the links for more news on

Join Realestate Asia community
Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!