CBRE Korea: New Leasing Volume in Seoul Grade A Office Market Reaches Highest Level Since Q1 2025; Average Vacancy Rate Rises to 4.2% Following New Supply

- Seoul Grade A office new leasing volume reaches 143,881 sq. m., driven by strategic relocations and new leases and expansions by IT and manufacturing occupiers
- Q2 commercial real estate investment volume totals KRW 5.8 trillion, with hotel investment increasing for the fifth consecutive quarter

July 23, 2026 (Seoul) – CBRE Korea, the world's largest commercial real estate services company, announced in its Seoul Figures Q2 2026 report that new leasing volume in Seoul’s Grade A office market reached 143,881 sq. m. in the second quarter, the highest level since Q1 2025. Resilient occupier demand was evident despite an increase in the average vacancy rate following new supply in the Central Business District.

Demand generated by the redevelopment of existing properties and companies’ strategic relocation plans translated into signed leases, including the confirmed relocations of Hyundai AutoEver and Gmarket to Seongsu. New leases and expansions by domestic and international IT and manufacturing companies were also observed in the CBD and Gangnam Business District. Together with new supply, these trends are expected to lift full-year leasing volume above last year’s level. Rents continued to rise, with average face rent increasing 1.4% quarter-on-quarter to KRW 41,496 per sq. m. per month and average net effective rent reaching KRW 39,036 per sq. m. per month.

The average vacancy rate for Grade A offices across Seoul’s three major business districts rose by 1.4 percentage points quarter-on-quarter to 4.2%. In the CBD, the vacancy rate increased to 6.6% following the completion of G1 Seoul and Rene Square, although the average vacancy rate among existing properties, excluding the new supply, declined. The GBD maintained the lowest vacancy rate of the three districts, falling from 2.0% in the previous quarter to 1.3%. Demand for prime properties remained firm, supported by Anthropic’s opening of a Seoul office and expansions by international IT and manufacturing occupiers, including Tesla. The vacancy rate in the Yeouido Business District rose to 3.1% due to increased vacancies at several prime properties, while relocations and expansions by financial-sector occupiers continued at major assets.

The retail market continued to recover across major commercial districts, supported by growth in international tourism and consumer spending. As of the third week of June, cumulative international visitor arrivals surpassed 10 million within the first half of the year for the first time. In May, international visitor card spending increased 67% year-on-year to KRW 2.1 trillion, exceeding KRW 2 trillion on a monthly basis for the first time. Against this backdrop, rents in Seongsu rose 14% year-on-year, while the vacancy rate fell to 3.4%. Rents in Gangnam and Myeongdong increased by 9% and 7%, respectively, while vacancy rates stood in the 6% range and at 5%, respectively.

The logistics market continued to rebalance amid reduced new supply and fewer large-scale lease transactions. Cumulative new supply of Grade A logistics facilities in the Seoul Metropolitan Area totaled 295,997 sq. m. in the first half of the year, down approximately 24% year-on-year. With fewer large spaces available for absorption due to the decline in new supply, first-half net absorption decreased by approximately 30% year-on-year to around 850,000 sq. m. The share of large lease transactions involving more than approximately 13,200 sq. m. also declined from 45% last year to 26% in the first half of this year.

Supported by this supply adjustment and resilient demand for dry-storage space, the overall vacancy rate for Grade A logistics facilities in the Seoul Metropolitan Area fell by 2.6 percentage points from the end of last year to 14.6%. Vacancy rates for dry- and cold-storage facilities stood at 8.7% and 33.0%, respectively. The cold-storage vacancy rate declined by 4.4 percentage points from year-end, partly reflecting the growing conversion of cold-storage facilities to dry-storage use, with such conversions covering approximately 128,000 sq. m. in the first half. Average face rent for dry-storage space rose by approximately 1.6% from the end of last year, and competition for space in high-quality assets is expected to intensify in the second half.

Commercial real estate investment volume totaled KRW 5.8 trillion in the second quarter, down approximately 10% quarter-on-quarter and 21% year-on-year. First-half investment volume reached KRW 12.3 trillion, representing a 17.7% year-on-year decline. Office transaction volume amounted to approximately KRW 4.0 trillion, accounting for 68% of total investment volume and continuing to lead the market. Logistics transaction volume increased 16% quarter-on-quarter to KRW 898.1 billion but remained below last year’s quarterly average of KRW 1.4 trillion. Hotel transaction volume rose for the fifth consecutive quarter to KRW 752.6 billion, bringing first-half volume to approximately KRW 1.4 trillion, equivalent to 76% of total hotel transaction volume recorded in 2025.

Average cap rates for Seoul Grade A offices and Grade A logistics assets in the Seoul Metropolitan Area remained unchanged quarter-on-quarter at 4.2% and 5.3%, respectively. However, the Bank of Korea’s July base-rate increase and higher funding costs have added to borrowing pressures, which are expected to place further upward pressure on cap rates in the second half of the year.

Claire Choi, Senior Director, Head of Research at CBRE Korea, said, “Rents maintained their upward trajectory, with cumulative net effective rents rising by approximately 2% in the first half, although the pace of growth has slowed compared with previous periods. The speed at which new office supply in the CBD is absorbed will be a key variable shaping the demand outlook.” She added, “Investment activity moderated due to factors including last year’s high base and rising funding costs. With the July base-rate increase adding to financing burdens, investors are expected to become increasingly selective in the second half, placing greater emphasis on individual asset fundamentals.”