"These days, apartment transactions are not going well, and transactions for commercial spaces within complexes are even more difficult." (A, head of a real estate agency located in Gwangmyeong-dong, Gyeonggi Province.)
On the 6th, when asked whether there has been a lot of inquiries from consumers looking for commercial spaces in the 'Trius Gwangmyeong' complex (with 3,344 units) located in Gwangmyeong-dong, A, who operates a real estate agency near Gwangmyeong Station, responded this way. The complex began moving in last December.
Newly constructed commercial spaces within the 'Trius Gwangmyeong' complex in Gwangmyeong-dong, Gyeonggi Province are struggling to find owners. According to the Gwangmyeong real estate industry, there are over 60 commercial spaces in total when combining the first and second sections of the 'Trius Gwangmyeong' complex, which has been redeveloped from the Gwangmyeong District 2. Among them, about 30 spaces designated for cooperative members have already been sold, accounting for nearly half of them. The remaining 30 spaces are expected to be offered for general sale by the end of this month or early March.
On that day, I visited the commercial spaces located in sections 1 and 2 of 'Trius Gwangmyeong', where most of the cooperative member spaces had been occupied by real estate agencies. The first floor of the commercial spaces in both sections was filled with real estate agencies, and only on the second floor of section 2 were there a piano academy, a taekwondo studio, and an art academy.
According to the local real estate industry, during the apartment pre-sale period for 'Trius Gwangmyeong' in 2023, there were over 10,000 apartments waiting for sale next door, which led to fierce competition for commercial space entries within the complex.
B, who operates a real estate agency in Gwangmyeong-dong, said, "To secure prime spots in the commercial spaces designated for cooperative members in 'Trius Gwangmyeong', real estate agencies signed lease contracts at a monthly rent of 2.5 million to 2.8 million won for 33 square meters." He added, "Despite paying higher rents than commercial space prices adjacent to common roads in Gwangmyeong-dong, fierce competition has erupted mainly among real estate agencies trying to secure commercial spaces within the complex."
He continued, "However, as the real estate market has rapidly contracted and high interest rates persist, commercial spaces within the complex have turned into a situation where they cannot even find new tenants, despite wanting to move out." He noted, "Even if new complexes begin to open nearby in the future, the demand will be limited to the residents of the complexes, and as online orders become possible, people often eat or shop outside before returning home, resulting in further decline in the popularity of the commercial spaces within the complexes."
In the same Gwangmyeong-dong, at 'Gwangmyeong Prugio Forena' (with 1,187 units), which finished construction in September 2023, many places have signs posted or have their signs displayed but are currently not operating due to an inability to find tenants for the commercial spaces.
In reality, due to the real estate downturn and consumption slowdown, the rent paid by tenants is being adjusted downward. According to the Korea Real Estate Board's fourth-quarter 2022 survey on commercial real estate rental trends, the Commercial Space Rental Price Index (a measure of tenant rental expenditures) has fallen compared to the previous year. Large and medium-sized commercial spaces (-0.16%), small commercial spaces (-0.50%), and cluster commercial spaces (-0.44%) all recorded declines. In Gyeonggi Province, where Gwangmyeong is located, the rental price indices for large and medium-sized commercial spaces (-0.38%), small commercial spaces (-0.34%), and cluster commercial spaces (-0.52%) also decreased.
Real estate experts analyzed that when investing in commercial spaces within complexes in areas that will soon see large-scale apartment sales, careful consideration is necessary. For commercial spaces located inside new apartments, the initial prices are often set high, and the demand is limited to apartment residents, making it relatively difficult to expect price increases compared to general commercial spaces that can attract external demand, leading to a significant drop in demand.
A real estate industry official, who requested anonymity, explained, "Commercial spaces in newly constructed complexes are often supplied by the developer with basic margins added to the sales margins, putting a burden of high purchase costs on the first buyers." He added, "If a dedicated commercial space sales team exists, they will utilize marketing strategies such as signing one-year pre-leases at high rents and encourage investors to secure commercial space."
He further explained, "If the general market rate for surrounding commercial space rentals is a deposit of 50 million won and a monthly rent of 2 million won, they will induce commercial space purchases by offering to support the rent up to 3.5 million to 4 million won per month for the same deposit," adding that "after having purchased a commercial space, it is often the case that if the existing tenant leaves when the lease period ends, the space becomes vacant or one has to find a tenant for a lower rent."