S. Korea shows record-high commercial building vacancy rate

[Photo by Yonhap]

One out of four to five buildings are empty in key shopping and business districts of Itaewon, Myeongdong and Gwanghwamun in central Seoul as last year delivered the highest commercial building vacancy rate to date due to social distancing measures to mitigate the worst virus spread.

According to data released by Korea Appraisal Board on Wednesday, the vacancy rate for medium- and large-size commercial spaces across the country was 12.7 percent in the fourth quarter ended December, up from 11.7 percent in the first quarter ended March. It is the highest vacancy rate since the Korea Appraisal Board began compiling related data in 2002.

Medium- and large-size commercial buildings are those with three or more floors and area space of more than 330 square meters.

The vacancy rate for small-size commercial buildings jumped from 5.6 percent to 7.1 percent over the same period, data showed.

The Korea Appraisal Board said the rise in vacancy rate comes even after Covid-19 outbreaks and prolonged social distancing measures weighed on the overall rent prices of commercial building.

In Seoul, the vacancy rate for medium- and large-size commercial buildings reached 8.8 percent in the October-December period, up 0.9 percentage point from the January-March period, and that of small buildings 7.5 percent, up 3.5 percentage points.

In Itaewon – one of the most foreigner-friendly districts in Seoul that was linked to a massive Covid-19 outbreak in May – the vacancy rate for medium- and large-size commercial buildings stood at 26.7 percent in the fourth quarter following a plunge in foreign visitors. The rate reached 22.3 percent in Myeongdong, Seoul¡¯s shopping mecca that was popular also among foreign visitors, and 15.3 percent in Gwanghwamun, a central business district.

The surge in the number of empty commercial spaces led to a fall in rent prices, but the lower rent price could not stop businesses from emptying spaces.

Data showed that the rent price of medium and large-size commercial buildings dropped 2.63 percent in the fourth quarter of last year from the same period a year ago to reach 26,300 won ($23.6) per one square meter. The rent price for small-size buildings also fell 2.27 percent to 19,600 won per one square meter over the same period.

In Seoul, the rent price for medium- and large-size commercial buildings fell 2.63 percent and that of small-size buildings 3.37 percent.

The vacancy rate of office buildings averaged at 11 percent in the October-December period, down 0.1 percentage point from the first quarter of last year.

The Korea Appraisal Board said that demand for office spaces remain stable and that the vacancy rate dropped slightly with a rise in demand for shared office spaces. Office rent prices, nevertheless, fell, amid increased supply of new and large areas such as those in Parc 1 in Yeouido.

[¨Ï Maeil Business Newspaper & mk.co.kr, All rights reserved]