The government is promoting a plan to utilize vacant buildings in local areas as government offices. As the vacancy rate of commercial buildings in regions soars, instead of building new government offices, it aims to purchase idle private buildings for this purpose. This policy is expected to positively impact the normalization of the local real estate market and the revitalization of the regional economy. However, there may be criticism regarding the government purchasing private buildings that have lost market competitiveness with taxpayer money, so it seems necessary to establish clear criteria for acquisitions based on the purpose and function of the government offices.
According to the 'regional-centered construction investment reinforcement plan' announced by the Ministry of Economy and Finance and the Ministry of Land, Infrastructure and Transport on the 18th, the government plans to introduce a new integrated utilization plan for government offices and residences, including the purchase of idle private buildings, to address the vacancy issues in regional residential and commercial real estate.
Previously, it was common to build new government offices when facilities became outdated or space was insufficient. However, as the number of buildings unable to find tenants in local areas increases, the government has introduced a plan to purchase these buildings for use as government offices.
According to the Korea Real Estate Board (REB), the nationwide vacancy rate for medium to large retail spaces in the second quarter of this year was recorded at 13.4%. Excluding the metropolitan areas of Seoul (8.7%), Gyeonggi (10.8%), Incheon (12.6%), and Jeju (11.1%), the remaining regions show higher vacancy rates than the national average. In Sejong, the vacancy rate reached 26.7%. Chungbuk (20.2%) and Gyeongbuk (19.0%) were also among the areas with high vacancy rates.
A government official noted, "Previously, it was common to construct new government offices," adding, "However, now there are many vacancies in local areas, so we are pursuing a plan to buy buildings instead of directly (building government offices)." The official continued, "By purchasing buildings, we can quickly supply government offices and simultaneously solve the local vacancy problem."
To this end, the government plans to utilize the 'reserve land budget'. The reserve land budget is designed for the purchase or reserve of national property for the supply of administrative government offices among the projects utilizing the National Property Management Fund. Currently, the standards and procedures for purchasing real estate using the fund are focused on land. The government is working to reform the institutional framework so that buildings can also be included as purchase targets for the fund. Starting next year, it plans to expand the reserve land budget to investigate idle real estate and connect it with the demand for government offices or residences.
A government official stated, "We are supplementing the evaluation criteria for building acquisitions. There are existing criteria for reserve land purchases, which are mainly focused on land, so additional provisions for real estate are necessary," adding, "Purchasing is already possible under current regulations and we will conduct a pilot project this year." The official continued, "The reserve land budget is for purchasing land and buildings, and we plan to increase its scale next year," stating, "We will begin to carry out the project in earnest from next year."
In the real estate market, this project is evaluated as demonstrating the government's commitment to addressing the vacancy issues in local commercial buildings. If vacant buildings are utilized as government offices, it could lead to the normalization of the local real estate market and the revitalization of the surrounding economy. However, given that the demand for government offices is limited, it seems insufficient to structurally solve the local vacancy problem.
Lee Eun-hyung, a research fellow at the Korea Construction Policy Research Institute, stated, "Unless there is a need for a government office due to transfer to local areas or an increase in staff leading to a shortage of office space, most public offices have already settled in. Considering this, the government should be seen as trying to efficiently find all possible solutions to address the vacancy issues in local commercial real estate by reflecting the necessary demand in the public sector."
There is also criticism that clear acquisition criteria need to be established when utilizing idle buildings in local areas. To avoid criticism of purchasing vacant buildings that lack competitiveness in terms of location or price with government budgets, it is necessary to properly assess the marketability of the buildings and make acquisitions.
A real estate expert stated, "This is a measure that can partially alleviate the issue of vacant local commercial buildings, but since it is a policy in which the government purchases items that have low demand in the market, it is necessary to establish clear criteria to prevent over-purchasing or tax wastage controversies while acquiring private buildings."