Office Vacancy Rising
By Yoon Ja-young
Staff Reporter
The vacancy rate is soaring in office buildings in Seoul amid the economic slump, while a growing number of businesses are going bankrupt, and the number of startups is decreasing.
According to R2Korea, an office market information provider, the vacancy rate of 747 office buildings in Seoul at least 10 stories tall or larger than 10,000 square meters was 1.8 percent in the fourth quarter, up 0.8 percentage points from the previous quarter, the biggest rise since the second quarter of 2004.
By districts, the rate was 1.5 percent downtown and 1.9 percent in southern Seoul. Mapo and Yeouido, where financial firms had trouble getting offices early this year, had vacancy rates surge 1.1 percentage points to 1.5 percent.
The buildings had no problem getting tenants, but the demand for offices has dropped due to the economic recession. Rent rose only 0.6 percent on average, and some luxury offices in southern Seoul even cut rents by around five percent, which isn't helping owners find tenants to any great extent. Not a few businesses are considering moving to smaller offices, or to the suburbs where rent is cheaper.
The vacancy rate for small buildings was 5.9 percent, surging 0.4 percentage points. R2Korea explained that the surge was small compared to big office buildings, as those who were in big offices were trying to move to smaller ones.
Only 48.9 percent of buildings in the survey were completely occupied, with the figure plunging by 15.4 percentage points from the third quarter.
Things were worse in shopping centers located in new apartments. Only 60 percent of shops were occupied in complexes completed after June this year. Shopping center owners are having trouble getting tenants.
Some global investment banks have been putting office buildings up for sale due to liquidity trouble, further setting the office market on a downturn.