Staff reporter
Garden5 (www.garden5.com) in southern Seoul seems to tick all the boxes to be crowned “the largest and most profitable” multi-functional shopping mall in Asia, as promoted by its developer ㅡ easy accessibility, rich customer base, user-friendly shopping space and endless other amenities.
Ironically the project is being shadowed by one shortcoming: a lack of stores.
Its developer, SH Corporation, Seoul City’s construction arm, has promised a variety of benefits including subsidies, free interior design and temporary exemption of maintenance costs to encourage as many shops as possible to move into the 823,000 square meter mall, which is nearly twice as large as the giant U.S. shopping center Mall of America in Minnesota.
However nearly 60 days after its grand opening ceremony on June 10, there are no signs that the derailed business is getting back on track. Of the 8,360 market spaces up for grabs, only a 51 percent occupancy rate has been reached, according to SH.
Broken promise
Garden5 was one of the mega construction projects initiated in 2002 by then Seoul Mayor Lee Myung-bak.
To restore the shrinking Cheonggye Stream in downtown Seoul, Lee poured as much as $900 million into the project despite public outcry, dismantling an elevated highway and other concrete structures that had put the once central stream under a dark underground tunnel for nearly three decades.
The restoration project was lauded at home and abroad as a major success as an eco-friendly urban redevelopment project.
In 2007, Time magazine awarded him its “Heroes of the Environment Award.” This achievement became Lee’s trump card that helped him become the president of South Korea the following year.
To proceed with the restoration smoothly, Mayor Lee himself presided over about 4,000 negotiation sessions in 2003 with some 60,000 self-employed business owners and street vendors alongside Cheonggye Stream.
In exchange for them leaving the site, Lee promised to form an alternative venue with “better working and customer bases” in southern Seoul, which is Garden5.
“I will give the affected citizens priority to move to the alternative area and also promise a set of advantageous measures including a reduction in rental fees,” Lee vowed in an interview in 2004. “I will not let anybody fall behind in benefiting from the restoration.”
Of those displaced, about 10 percent or 6,100 expressed their will to move to the brand-new mall according to research, SH set the number of store spaces to be set up in the mall at 8,360, including an estimate of 2,000 from other areas.
The landmark construction, which cost the City government nearly 1.3 trillion won ($1.09 billion), was completed in December 2008, but had to delay its opening three times because of low occupancy rates.
Lee Soo-min, manager of the sales management team of Garden5, said higher-than-expected price tags for market space and maintenance costs were the major culprits behind the stagnant occupancy rates and the consequent delayed opening.
Setting the prices for each space at 70-80 million won in 2003, SH has faced pressure to inflate it up to 170 million won to cover snowballing construction costs and financing, partially due to the delayed opening, the manager said.
“Most shop owners engage in red-ink operations,” said Lee.
Choi Han-jae, 48, recently moved into Garden 5 after closing a profitable electronics parts shop he had owned near the restored stream for 16 years. “Our expectation of Garden 5 was very high because of a series of rosy prospects from the city. But the reality is seeing just a couple of visitors a day,” Choi said.
Eerie silence, empty
It was a sunny weekday afternoon in early July when The Korea Times visited Garden5 in Munjeong-dong, southeastern Seoul.
A subway exit leading to a marble-paved sprawling central square surrounded by one of the five buildings of the mall was clean, well-maintained and felt comfortable.
Welcoming visitors was smooth jazz from a glass-façade café with nearly 30 seats ㅡ only five seats were occupied. The 6,000-square-meter square called Central Garden was also sparse of people.
Many store spaces on the first floor, which were originally reserved for retail shops, remained either vacant or taken by realtors looking for investors. NC Department store, a chain owned by E-Land, a clothing and logistics company, was one of the few bustling places.
“Not many people visit here on weekdays,” Kim Sun-hwa, a NC clerk, said. “More people come on weekends, but it’s far less than other popular shopping spots in the vicinity.”
The first floor of the 11-story building was filled with cosmetic shops and clothing brands for women, attracting a stream of shoppers, mostly women in her late 30s and 40s.
But the stream hardly reached the fourth floor of casual clothing shops. Most shops there were hanging banners that read “Summer Sale” outside, but shoppers were thin on the ground.
Most shop managers and clerks were killing time talking on the phone, gossiping with peers next door, surfing the net, or standing around absent-mindedly. Ironically, a food court on the seventh floor was filled with starving shoppers.
The situation was much worse in another segment of the building, where those dealing with electronic and machine parts were nestled. The segment was all but empty from the ground floor. The fourth floor had only one store space occupied.
“We have consistently received phone calls over the mall’s marketability. But it’s hard to find determined people to invest,” said Park Sung-chul, a realtor. “Most inquirers are taking a wait-and-see approach.”
Park stressed the location is “perfect” and prices are not so dear. One regrettable thing is a lack of public awareness of the mall itself and poor promotional campaigns, he explained.
“To maintain the mega mall, it should attract shoppers living as far as northwestern Seoul and some parts of Gyeonggi Province,” he complained. “But the reality is tough. Even people living just a few kilometers away are not aware of the mall.”
In response, SH Corporation has aggressively pushed promotional campaigns in recent months, including TV commercials featuring actors and actresses idolized among the shopping-conscious younger generation.
Uncertain future
Moon Young-soo, a senior SH executive in charge of Garden5, was confident of morphing the silent shopping center into a bustling one by the end of the year.
“Our slow but consistent efforts will bear fruits,” he said. “We have succeeded in bringing in some wholesale chains, whose presence itself is a proven way to attract visitors to a great extent.”
Noting that a set of measures targeting the attention of potential investors had been launched and he said, “There will be drastic changes in two years.”
But many experts are certain that it will take longer than Moon’s optimistic prediction for Garden5 to become self-sustaining.
“It will take at least 5 to 10 years given the average period of time in similar cases in the past,” said an expert on the condition of anonymity.
It was recently embroiled in litigation. Amid the sluggish occupancy rates earlier this year, SH recently converted part of the undeveloped site initially reserved for those displaced from around Cheonggye Stream into one for commercial offices, hotels and other forms of residential and education facilities, an initiative to ease the financial crunch by luring more investors. A group of shop owners filed a suit against the plan, arguing the change is legally unjustifiable.
.jpg) Spaces for stores at the mega shopping mall Garden5 remain vacant in early July, even a month after its opening on June 10. / Korea Times photo by Park Si-soo |
