It appears the office market, which centered on downtown areas such as Gwanghwamun and Euljiro (CBD) just four years ago, has completely shifted to the Gangnam Business District (GBD). As GBD's standing has risen recently, 9 of the 10 office buildings with the highest rents nationwide are concentrated there.
On the 30th, an analysis of NOC (rent expense per net floor area·net occupancy cost) for office buildings nationwide through Rsquare Analytics (RA) showed that, as of the fourth quarter of last year, Arc Place had the highest net occupancy cost at 544,751 won per 3.3㎡ (pyeong). Arc Place rose to No. 1 in the third quarter of 2024 at 531,345 won per pyeong and has maintained its ranking to date.
Arc Place is a prime office building located along Teheran-ro, a core site within GBD, with a total floor area of 62,725㎡ and 6 underground floors to 24 above ground. Koramco REITs Management and Trust acquired it in 2024 from private equity (PE) Blackstone for 791.7 billion won. At the time, it was the largest office transaction since 2020. Major tenants include Viva Republica (Toss), Lotte Capital, and WeWork Korea.
Unlike the nominal rent in a contract, NOC refers to the actual expense per net floor area paid by the tenant. From the landlord's perspective, how much space is actually used is key, so NOC—rent and maintenance fees adjusted for the net area ratio—is an important indicator. Rsquare calculated the value as {(deposit/12 months x deposit operation yield 5-year treasury)+rent+maintenance fee}/net area ratio.
Including Arc Place, all office buildings up to No. 9 in NOC were located in GBD. This is thanks to GBD's heightened centrality, such as more people commuting to Gangnam than in the past. No. 2 was Parnas Tower near Samseong Station at 477,669 won per pyeong, and No. 3 was Seoul International Tower (SI) near Yeoksam Station at 474,162 won. ▲ No. 4 Centerfield (471,156 won) ▲ No. 5 Bithumb Financial Tower (462,554 won) ▲ No. 6 Lucent Tower (458,835 won) ▲ No. 7 Meritz Tower (459,01 won) ▲ No. 8 The Asset (448,217 won) ▲ No. 9 Majesta City Tower 1 (447,422 won).
An office building in CBD appeared only at No. 10. Mirae Asset Center1 was the entry, with an NOC of 444,886 won per pyeong. Compared with the fourth quarter of 2021, four years ago, when four CBD buildings were in the top 10, this is a major shift. Gran Seoul, which ranked No. 1 at the time with a net occupancy cost of 386,359 won per pyeong, has now fallen 18 places to No. 19 (431,646 won).
In Songpa District's Jamsil, Lotte World Tower (441,740 won) was the only entry at No. 11, and Concordian in Jongno District (440,714 won) ranked No. 12. They were followed by Urban Bench (URBAN BENCH·438,731 won) in Gangnam District and Park One Tower 1 (438,731 won), the only entry from YBD (Yeouido Business District) in the top 20, at Nos. 13 and 14, respectively. Looking at the distribution of the top 20 buildings by NOC, 14 were in GBD, 5 in CBD, 1 in YBD, and 1 in Songpa District.
An Rsquare official said, "In the past, CBD was the traditional powerhouse, but recently the centrality of space has shifted completely to Gangnam, with commuting and traffic to GBD increasing to a level incomparable to the past," adding, "As high value-added industries such as information technology (IT), finance, and startups have concentrated around Gangnam's Teheran-ro, human capital has flowed into GBD, which in turn appears to have naturally led to an explosion in office demand and rising rents."