Seoul, April 3, 2019 - CBRE Korea, a global commercial real estate service company, announced that according to its 2019 Seoul Office Tenant Profile report, the proportion of leasable space in Grade A office buildings in Seoul’s three major business districts increased by 4.7%pt y-o-y in 2018, to 80.9%. The proportion of leasable space in the overall office market increased by 2.4%pt y-o-y, to 68.9% owing to numerous cases of owner-occupiers disposing of headquarters buildings.
The proportion of Grade A office space in Central Business District (CBD) and Gangnam Business District (GBD) occupied by conglomerates increased by 1.4%pt y-o-y and 2.2%pt y-o-y, respectively, in 2018 while the figure for the Yeouido Business District (YBD) declined by -6.2%pt y-o-y due to several major companies relocating from the district. The proportion of space occupied by finance and insurance sector companies was 36.4%, the highest among all sectors. It increased by 2.1% y-o-y, driven by a 5.5%pt y-o-y rise in the YBD.
Don Lim, Managing Director of CBRE Korea, remarked, “Strategic consolidation and flight-to-quality demand has driven an increase in Grade A office leasing activity by finance and insurance sector companies over the past two years. Manufacturing firms continued to downsize across all districts in 2018, a fall of -1.3%pt y-o-y, due to a recent increase in the minimum wage and poor trading conditions.”
Approximately 15% of space in Seoul’s Grade B office buildings was allocated to serve retail functions in 2018, a rise of 1.3%pt y-o-y. The increase reflects landlords’ continued attempts to reduce vacancy arising from flight-to-quality relocations, with converting lower office floors to retail remaining a popular strategy.
Flexible office operators occupied 2.5% of Grade A office space by the end of 2018, an increase of 0.8%pt y-o-y. Their presence was highest in the GBD, at 3.3%, and CBD increased 0.7%pt y-o-y which led in terms of growth. Flexible office operators also added to their Grade B office footprint in 2018. Flexible offices, which accounted for 0.7% of Grade B office space in 2017, occupied 1.5%, an increase of 0.8%pt y-o-y in Seoul at end of the year.
Claire Choi, Head of Research at CBRE Korea, said, “In the GBD, low vacancy and insufficient Grade A office space drove rapid expansion of flexible office operators in Grade B office buildings over the course of last year. They occupy 3.7% of Grade B office space in the GBD compared with just 1.6% in 2017.”
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CBRE Group, Inc. (NYSE: CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm (based on 2020 revenue). The company has more than 100,000 employees serving clients in more than 100 countries. CBRE serves a diverse range of clients with an integrated suite of services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at https://www.cbre.com.
