By Kim Hyun-cheol
Staff Reporter

The sluggish economy is damaging both building owners and firms residing in them, as offices are becoming less occupied while rent is rising owing to high inflation.

As of Sept. 30, about 5.5 percent of 500 office buildings in Seoul and five other major cities were vacant, up 0.2 percentage points from three months ago, according to a survey announced Sunday by the Ministry of Land, Transport and Maritime Affairs.

Office room vacancy in Seoul was tallied at 3.3 percent, below the nationwide average but still up 0.2 percentage points from the second quarter of the year. It has been experiencing a consistent downturn until the second quarter, after hitting 6.1 percent in July 2005.

Within the capital city, secondary centers and non-downtown buildings were the victims of mal-occupation as that of Gangnam and central downtown areas remained below the average at 2.3 percent and 2.5 percent, respectively.

The vacancy rate was much higher in other local cities, including 8.9 percent in Busan, 13.6 percent in Gwangju and 21.4 percent in Ulsan. Most of them saw the figure grow compared to the April - June period, except for Daegu and Daejeon.

Monthly rental to offices, however, modestly rose regardless of shrinking popularity,

In Seoul, office rent per square meter averaged 18,700 won ($13), up 100 won from the previous quarter. Among the six local metropolitan cities, Incheon had the highest rent at 8,100 won per square meter, 76 percent higher than that in Daejeon.

With the local economy showing no clear signs of an immediate rebound, the vacancy rate is likely to stay at the current level, while rent is expected to rise under the influence of inflation and interest rate increase.

"Inflation seems to have impacted on higher rent in spite of the rising vacancy of offices, and the rent is likely to go up a bit more from now," said Kim Dong-soo, a realty appraisal officer of the ministry.

hckim@koreatimes.co.kr