It is projected that the new supply of offices in three major areas of Seoul will increase by about 45% over the next seven years.
According to the report 'Seoul Office 2030' released on the 8th by global comprehensive real estate services corporations CBRE Korea, a total of 4.71 million square meters of new supply is scheduled for the A-grade office market in Seoul over the next seven years.
By 2031, 83% of the new supply of offices in Seoul is expected to be concentrated in the central business district (CBD). This amounts to 3.89 million square meters, which is 78% of the existing CBD size. Upon completion of the supply, the CBD is projected to expand to twice the size of the Gangnam business district (GBD) and three times that of the Yeouido business district (YBD).
CBD office development projects are expected to average 105,000 square meters in size and an average height of 131 meters. The average floor area ratio is anticipated to reach 1,106%, indicating that supply will be primarily led by prime offices.
Meanwhile, due to the long-term expansion of supply, it is also projected that the A-grade office market in Seoul will shift from a landlord-centered market to a tenant-centered market. CBRE Korea explained that tenants, offered a variety of options, may return to the city center or drive the transfer of anchor tenants' partner companies, leading to a demand for higher-quality offices (FTQ) and additional demand absorption. Accordingly, the vacancy rate of the A-grade office market in Seoul in 2030 is expected to fluctuate between 4% and 14% depending on the variables of development projects.
Choi Su-hye CBRE Korea Head of Research noted, 'The Seoul office market is facing a critical turning point with large-scale supply and changing demand by 2030,' adding, 'The CBD area is expected to see both the potential for a leap forward as a core main business district among the three major areas and an increase in short-term vacancy rates and intensified competition.'