Seoul’s office vacancy hits 10-year low in Q4: JLL Korea

The vacancy rate of Grade A offices in Seoul reached a 10-year low last year as landmark buildings in central business districts welcomed new tenants, global real estate service provider Jones Lang LaSalle said Thursday.

The latest quarterly report of JLL Korea showed that the vacancy rate for Grade A offices in the capital city came to 7.7 percent in October-December last year, down 1.9 percentage point on-quarter, marking the lowest since the third quarter in 2010.

The key business districts -- Central Business District, Yeouido Business District and Gangnam Business District -- marked the steepest drop. The average vacancy rate for Grade A offices in these areas combined dropped 4.94 percentage point on-quarter to reach the 10 percent mark for the first time since 2014.

The apparent improvement, however, was more attributable to a limited number of large-sum lease contracts rather than the recovery of the market fundamentals, according to the real estate company.

Leading the change of the index was top-tier law firm BKL which rented 15 floors in the downtown Centropolis building, as it is set to move out of its current location in Hyundai Marine & Fire Insurance’s Gangnam Tower by March.

Also, the Seoul Metropolitan Government is slated to open a third headquarters in the recently completed downtown City Square building.

In the financial cluster of Yeouido, the Grade A vacancy rate came to 9.5 percent, the lowest since 2012, data showed. Key variables were the International Finance Center Seoul and the Federation of Korean Industries, which clinched a number of small and medium-sized lease contracts during the fourth quarter.

The corresponding figure for the Gangnam area inched up slightly by 0.96 percentage point but still lingered around a relatively low 3.9 percent.

“Despite the slow growth in 2019, the Grade A office market here remained strong, with the vacancy rate in key business districts in single digits,” JLL Korea said in its release.

“But with the unprecedented level of new supply down the road, the vacancy rate will inevitably rise this year.”

Founded in 1783 in London and currently headquartered in Chicago, JLL is a Fortune Global 500 company and operates in some 80 countries around the world.

By Bae Hyun-jung (tellme@heraldcorp.com)