As high interest rates persist, the major players in Korea's commercial real estate market are changing. In the past, the market was driven by funds and institutional investors that bought buildings, boosted their values, and resold them. Recently, corporations and high-net-worth individuals who can buy buildings in the 100 billion to 200 billion won range without loans are filling the gap. Kim Sung-soon, deputy head of Cushman & Wakefield (C&W) Korea, said, "Commercial real estate advisory is moving away from the 'off-the-rack' approach of choosing one among sale, lease, and consulting, and into an era of 'bespoke suits' that design the client's overall asset."
Kim, whom we met at C&W Korea's headquarters in Jung District, Seoul, on Jun. 29, said, "The transaction where one fund buys a building for 100 billion won and sells it for 150 billion won, and the next fund takes it and sells it for 200 billion won, has hit a ceiling," adding, "With high interest rates and yields not what they used to be, the old model no longer works easily."
Kim joined C&W in 2008 after working at Samsung Electronics and Samil PwC. He is a retail and commercial district expert who has led planning and operations consulting for mixed-use commercial facilities such as IFC and D Tower, guided the Korea entries of global brands such as Apple and Blue Bottle, and overseen flagship strategies for luxury brands including Fendi and Van Cleef & Arpels.
He now leads the corporations-tailored solutions team (CTS), launched late last year. The CTS team bundles acquisitions and sales, leasing, consulting, construction management, architectural design, and marketing like a single team to support decision-making by corporations and individual asset owners. On Jun. 18, it completed the sale of Netmarble's Guro G-Tower, the company's Seoul Guro headquarters. The transaction totaled about 700 billion won and is cited as the largest domestic office transaction by area in the first half of the year. The following is a Q&A with Kim.
─ How is the landscape of the commercial real estate market changing recently?
"The biggest change is on the buyer side. In the past, institutional investors and funds led the market. Now, the share of individual asset owners and owner-occupier corporations has grown rapidly. If these players accounted for under 10% of the overall advisory market before, I see it at around 30% recently. Just as individual investors face off against foreigners in the stock market, the power of individual asset owners is growing in commercial real estate. In the past, individual asset owners often moved assets in the 20 billion to 30 billion won range, but now they are directly reviewing assets in the 100 billion to 200 billion won range."
─ How are individual asset owners different these days compared to before?
"They are different from traditional real estate asset owners. Some are corporate owners, but many are emerging asset owners who built cash in diverse areas such as stocks, coins, YouTube, education, fashion, and games. Even though the lending rate has risen to around 5%, making leverage difficult, they have cash capacity and can do transactions.
Also, whereas past asset owners focused on real estate itself, recent asset owners view real estate as part of portfolio diversification. Rather than seeking high revenue through aggressive development, they prefer low-risk safe assets. That is why attention is concentrated on core assets in verified commercial districts with foreign tourist demand, such as Seongsu, Hannam, Dosan, and Hongdae."
─ How is the CTS team different from conventional advisory methods?
"Funds come with a clear request for proposal (RFP). It's like, 'Sell it by when for how much.' In contrast, corporations or individual asset owners ask different questions. They start discussions with all possibilities open, like 'Should we buy a headquarters or lease one?' and 'Is it better to sell this year or next year?' Decision-making is also long and complex because it involves taxes, inheritance, and gifting issues.
Conventional advisory firms split into sales, leasing, and consulting teams. Each has expertise, but from the client's perspective, they must deal with multiple teams separately. We judged that this structure makes it hard to satisfy the complex needs of corporations and individual asset owners. So we brought together experts in capital markets, office and retail leasing, consulting, construction management, building management, and design and architecture. When clients don't know exactly what they want, we find solutions like tailoring a bespoke suit."
─ How does the organization actually operate?
"Internally, we often compare it to the movie 'The Thieves.' Just as there are different people for cracking safes, walking the wire, and planning the operation, a big project can't be solved by a single expert. Many cases start as sale advisory and then expand into lease management, construction management, and retail MD composition. My role in a given project may be small, but experts in each field must move simultaneously to deliver results."
─ The Guro G-Tower sale was a large transaction completed outside the three major business districts.
"Guro G-Tower is an ultra-large asset with a transaction amount of about 700 billion won and a gross floor area of 172,975 square meters. When we first gauged demand from overseas funds and institutional investors, the response was cautious. It is not in the three major business districts—central business district (CBD), Gangnam business district (GBD), and Yeouido business district (YBD)—and there were also mid- to long-term vacancy concerns due to Netmarble's plan to relocate to a new headquarters in Gwacheon.
From a buyer's standpoint, the key risk was 'How to fill a large vacancy in Guro if the main tenant leaves.' So we didn't just present a sale price; we also proposed demand from large corporations that could consider relocating their headquarters to cut expense, the possibility of existing tenants staying, and vacancy-mitigation scenarios. It worked because experts across fields gathered data to persuade the buyer."
─ What was challenging in the sale process?
"Netmarble is an excellent game company, but selling a large headquarters building is a completely different realm from a typical game business. The structure of common and preferred shares, NOC, which is expense per net floor area, and how maintenance fees are included—commercial real estate terminology and transaction structures were inevitably unfamiliar.
So instead of simply selling an asset, we explained transaction terms and procedures step by step and made decisions together. Whether a corporation or an individual asset owner, the final decision ultimately converges on the judgment of one owner or key decision-maker. It's important to help that person fully understand the asset value and transaction structure. After this transaction, the relationship developed into lease agency work as well, allowing us to build trust."
─ How do you see the commercial real estate market trending?
"In a word, polarization. Like the stock or housing market, in commercial real estate, only some places move while others don't sell, and that trend is strengthening. Asset owners' money is flocking to verified safe assets. Ultimately, the ability to select core assets in good commercial districts and grow their value will determine investment success or failure.
Corporations are also increasingly selling non-operational idle assets to secure liquidity. Advisory demand for hotels is rising with more tourists. In key commercial districts such as Hongdae, we are seeing cases of reconfiguring existing buildings around medical facilities. Going forward, liquidity in the commercial real estate market is likely to be reshaped around owner-occupier corporations and cash-rich asset owners. The ability to deliver tailored planning and integrated solutions by asset class—such as data centers, medical, education, and hotels—will become even more important."