The new government is expected to devise measures to reduce vacant commercial spaces. As the issue of vacant stores has become serious, with 10% of all stores unoccupied, it seems likely that plans will be put in place to support the conversion of store land and uses. It is anticipated that measures will emerge to reduce the excessive supply of commercial land and facilitate the conversion of existing stores to residential use.
According to the industry on the 5th, measures to address commercial vacancy by converting commercial land to dwelling land are expected to be introduced under the new government. President Lee Jae-myung has pledged to "convert excessive commercial land to dwelling land to prevent a vacancy explosion," which has led to high expectations for detailed measures to materialize.
Currently, the number of vacant commercial spaces is increasing in most regions, including Seoul, new cities, and rural areas. According to the Korea Real Estate Board, the vacancy rate for collective commercial buildings in Seoul was recorded at 9.14% in the first quarter of this year. This means that 1 out of 10 collective stores is unoccupied. This is an increase of 0.06 percentage points from last year's fourth quarter vacancy rate of 9.08%.
To solve this commercial vacancy problem, measures are expected to be established to prevent excessive supply, one of the reasons for the increasing number of vacant stores. Currently, when building new cities, the ratio of commercial land is mandatorily stipulated in district unit plans. As consumer trends shift toward online shopping, stores continue to be supplied in areas with low demand for offline stores. The government is expected to strongly consider the conversion of commercial land to dwelling land to improve this structure of commercial supply. This would reduce the quantity of commercial spaces while potentially increasing the supply of the needed dwellings.
The conversion of the use of existing stores that have been vacant for a long time is also under review. Currently, converting the use of a store must comply with various legal regulations such as the Building Act and the Urban Planning Act. Depending on the new use, the facilities of the building may also need to be altered. Currently, the government is seeking ways to flexibly convert existing buildings from commercial use to dwelling use, including converting commercial buildings to residential use. In particular, they are focusing on relaxing construction regulations for commercial and business facilities and changing their use to residential facilities through renovations.
The Ministry of Land, Infrastructure and Transport plans to prepare measures for the conversion of building use after conducting a research service by the end of this year. Even before relevant legal amendments, they intend to expedite the conversion of building use through pilot projects involving regulatory sandboxes.
A Ministry of Land, Infrastructure and Transport official noted, "There are 30 types of building use under the Building Act, and each type has different construction standards," and added, "In the past, a detailed classification of uses was needed, but now that many compound uses have emerged, we are examining whether there is room to improve the use standards." The official also explained that the aim is to allow for flexible use of buildings, such as converting commercial spaces to dwellings or using residential single-family homes for neighborhood commercial use, in accordance with market demands.
However, some opinions suggest that a mere easing of regulations may not solve the vacant store issue. Professor Seo Jin-hyung of Korea University of Technology and Education stated, "Changing the use of a store to a dwelling can address the issues of vacancy and housing supply to some extent," while noting, "In reality, converting a store is not easy due to structural changes needed for heating piping, and the location, being on a main road, may worsen the residential environment, so we need to consider the overall issue (not just land and use changes) to ensure the effectiveness of the measures."