More than 100 retail units inside Garden 5 in Munjeong-dong, Songpa-gu, Seoul, are going up for public auction. The expected sale price totals 19 billion won. Opened in June 2010, Garden 5 is the largest mixed-use commercial complex in Korea, located in Munjeong-dong, Songpa-gu. The city of Seoul built it to accommodate merchants displaced by the Cheonggyecheon redevelopment. But some shops sat vacant for more than 15 years, and the city has decided to put them up for public auction.
According to the auction industry on the 2nd, the Seoul Housing and Urban Development Corporation (SH), under the Seoul Metropolitan Government, is conducting a public auction for 107 retail units on the 2nd floor, 3rd floor, and basement level 2 in Garden 5's Tool building. The units are used as sales facilities and warehouses, with a total exclusive area of 3,184.68㎡ and an expected sale price of 18.9 billion won.
Nineteen units—S01, A18, and A19 on the 2nd floor; A15, A16, and A19 on the 3rd floor; E16, E17, E26, and E27 on the 3rd floor; E28, E29, E30, and E31 on the 3rd floor; E35 and E36 on the 3rd floor; and E38, E39, and E40 on the 3rd floor—will be bundled and sold as packages. The remaining 88 units will be auctioned individually.
The sale method is open competitive bidding. It will be conducted via the Korea Asset Management Corporation (KAMCO) electronic bidding system (Onbid). Bids will be accepted over two days, Feb. 23 and 24, with bid opening scheduled for Feb. 25. An SH official said, "They have remained vacant since opening, and we decided to sell them."
Garden 5 is divided into five buildings: Life, a shopping mall; Works, a business complex; Tool, a tools marketplace; Express, a logistics complex; and Dream, a residential complex. The five buildings have a combined gross floor area of about 820,300㎡ (about 248,000 pyeong). Construction cost 2 trillion won. The Life building alone has a gross floor area of 426,635.55㎡, similar in size to Starfield Hanam in Gyeonggi Province (about 460,000㎡).
Despite building an enormous complex with massive funds, the opening right after the global financial crisis brought persistent problems such as vacancies. At the end of 2011, then-Seoul Mayor Park Won-soon visited Garden 5, saw the empty interior retail spaces, and said it "looks like a haunted house."
Currently, the Life building houses the NC Department Store Songpa branch and Hyundai City Outlet Garden 5 branch, and the Tool building has an E-MART Garden 5 store. Of a total 8,379 retail units, 7,793 units (93.1%) have been sold (contracted), while 586 units (6.8%) remain vacant.
Yoo Sun-jong, a professor of real estate at Konkuk University, said, "When selling large-scale retail units, the project operator should delineate trade areas and manage them with an operational plan for each zone, but Garden 5 transferred only ownership to allottees, which led to long-term unsold units and vacancies."
A development industry official said, "This place was created by pouring in massive funds to relocate merchants during the Cheonggyecheon redevelopment, but the sales prices were higher than the compensation paid to Cheonggyecheon merchants, so few could move in," adding, "To recoup capital, some units were sold to the general public, some were held by Cheonggyecheon merchants, and many unsold units remained under SH ownership." The official added, "To attract a large mall, corporations need to come in, but the equity relationships were complicated, making it difficult," and "The places that were barely brought in are NC Department Store and Hyundai City Outlet, where buildings in a department store format are being used as warehouses inside."