Office Space Crunch to Moderate
By Jane Han
Staff Reporter
The amount of new office space in the market will slip in the fourth quarter of this year, but the tight vacancy rate will ease as the economic downturn, coupled with corporate consolidation and budget cuts, is driving down demand for space, a real estate consultancy said Friday.
R2Korea, a local firm specializing in commercial buildings, said about 610,000 sq. meters of new office space in 43 buildings will be made available in Seoul by the end of this year, which is less than the 1.5 million sq. meters that was newly available at the same time last year.
Most of the vacancy comes from the Kumho-Asiana and Hanhwa Financial Plaza buildings in central Seoul, Nara Kiwoom building under construction near Namdaemun and the LG Telecom building inside Sangam DMC.
Kim Tae-ho, a senior analyst at R2Korea, said the supply of space won't increase much until 2010 because many new construction projects are being delayed due to cash shortages, but the vacancy rate will slightly ease to about 1.35 percent in the last quarter of the year.
The vacancy rate has stood at a steady 1 percent, as the metropolitan area had a severe lack of quality office buildings available for rent, especially to foreign companies. Market data shows that Seoul's vacancy rate is lower than major cities like Hong Kong, London, Paris and Washington D.C.
``Even though supply is falling, the demand is weakening at the same time, so the two will strike a moderate balance for now,'' said Kim.