[Edaily Marketin KIM SUNG-SOO Reporter] The Seoul office market showed mixed trends, with vacancy rates rising due to a large volume of new supply, while rents reached record highs. Since most of the newly supplied properties are prime offices, rents have settled at levels higher than the previous average, suggesting that the upward trend in market rents is continuing.

In the Central Business District (CBD), vacancy rates rose significantly due to the largest influx of new office space since 2010, whereas the Gangnam Business District (GBD) maintained a low vacancy rate thanks to robust tenant demand.

Office Rents Surpass 40,000 Won per Square Meter

According to Colliers, a global real estate services firm, on the 18th

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the average vacancy rate in Seoul’s office market for the second quarter of this year was 4.9%, up 1.7 percentage points (p) from the previous quarter.

This increase in vacancy was driven by large-scale new supply, particularly in the Central Business District (CBD). In the second quarter of this year, a total of eight office buildings—including G1 Seoul (gross floor area of approximately 143,000 square meters) and Le Square (gross floor area of approximately 60,000 square meters)—were newly supplied in Seoul and Bundang, totaling approximately 247,100 square meters.

The CBD recorded its highest quarterly new supply volume since the fourth quarter of 2010. Consequently, the CBD vacancy rate in the second quarter of this year rose to 8.4%, an increase of 3.9 percentage points from the previous quarter. Additional supply is expected later this year from the remodeling of Eul Tower and Seyang Building.

However, CBD rents continued their upward trend, rising 2.0% to 42,063 won per square meter. Since most of the newly supplied properties are prime offices, rents have settled at a level higher than the previous average, which appears to have sustained the upward trend in market rents.

In fact, the average nominal rent (excluding service charges) in Seoul’s office market for the second quarter of this year was 40,335 won per square meter per month, a 1.6% increase from the previous quarter, marking the first time it has exceeded 40,000 won.

In contrast, the Gangnam Business District (GBD) showed a different trend from the CBD. With companies such as Simmons, ABB Korea, and Bimer actively relocating within the district, the vacancy rate actually fell by 0.2 percentage points to 1.5%.

With limited new supply of Grade A office space in the GBD and planned relocations by companies such as Bithumb and Craver Corporation, the supply-demand balance is expected to remain stable.

Supply in Seongsu and Gangnam to Increase in the Second Half of the Year

In the Yeouido Business District (YBD), the vacancy rate rose by 0.2 percentage points to 2.7% due to the relocation of some tenants from the FKI Tower. It was reported that AMS Osram and Taesung Asset Management moved to Seocho-dong in the GBD and Sinseol-dong in Dongdaemun-gu, respectively.

However, the market was sustained by continued demand for new leases, primarily from financial firms. In addition to relocation demand within the district from financial sector firms such as Life Asset Management, Goldstone Asset Management, Lofty Rock Investment, and the Korea M&A Investment Association, there was also demand for additional space from Woori Investment & Securities and BNK Busan Bank.

With the Korea Trade Insurance Corporation, Prada, and JustCo scheduled to move in, the vacancy rate is expected to remain at its current level.

Office supply is projected to continue expanding in the second half of this year. Approximately 106,500 square meters of new office space is scheduled to be delivered in Seongsu-dong. In the GBD, supply is also expected to continue, primarily consisting of smaller-sized properties.

The investment market was also active. The total transaction volume for offices in Seoul and Bundang in the second quarter of this year was recorded at approximately 4.2 trillion won. The largest transaction involved the Hana Securities Building in Yeouido, which was acquired by Hana Alternative Investment Asset Management and Shinsegae Central for 811.2 billion won after Hana Securities exercised its right of first refusal.

In addition, a series of major transactions took place, including: △ G Tower in Guro-dong (697.7 billion won); △ the West Wing of Eulji Twin Tower in Euljiro 4-ga (657.0 billion won); and △ the Orange Center in Sunhwa-dong, Jung-gu (350.0 billion won).

A Colliers official predicted, “In the medium to long term, large-scale development projects—such as the northern Seoul Station area, the Hyundai Motor Global Business Center (GBC), and the Seoripul mixed-use development—will be brought to market sequentially,” adding, “Consequently, shifts in supply and demand will continue across each region.”