The vacancy rate of grade-A offices in Seoul rose, but corporations' new office leases hit a five-quarter high. With large offices newly supplied in the central business district, the overall vacancy rate increased, but vacancies in existing buildings fell instead. As a clear "preference for prime offices" has emerged, with corporations moving to buildings with better locations, amenities, and work environments, existing buildings are rushing to renovate to keep their tenants.
According to CBRE Korea, a real estate consulting firm, the average vacancy rate for grade-A offices across Seoul's three major business districts in the second quarter was 4.2%. That was up 1.4 percentage points from the previous quarter. The central business district (CBD) was highest at 6.6%, followed by the Yeouido business district (YBD) at 3.1% and the Gangnam business district (GBD) at 1.3%.
The overall rise in vacancies was largely driven by newly supplied large offices in the city center, such as G1 Seoul and Rene Square. Excluding the new supply, the average vacancy rate of existing offices in the central district actually fell.
Corporations' demand for offices did not falter. Newly leased area in Seoul grade-A offices in the second quarter was 143,881㎡, the largest since the first quarter of 2025. This means corporations are not uniformly shrinking their offices but relocating to buildings with better locations, facilities, and work environments.
Leasing demand is concentrating on prime-grade offices that are newly built or have wide standard floors and superior power and communications infrastructure. Global asset manager BlackRock transferred to Gran Seoul, which completed a remodel, from Seoul Finance Center as its domestic business expanded and headcount grew. The new office is said to be nearly twice as large as the previous one.
Existing prime buildings have also entered a renewal race to hold on to tenants. Since last year, landmark buildings in central Seoul such as Centro Polis, Gran Seoul, and Seoul Finance Center have pushed to improve common areas and amenities. Taepyeong-ro Building, Eulji Twin Tower, and Grand Central have also moved to upgrade facilities. In the past, mostly decades-old buildings underwent remodeling, but recently even buildings less than 10 years after completion are undertaking renewals.
That is because corporations' standards for offices have risen. Recently, not only interior finishes but also employee amenities, power and IT infrastructure, and systems that can keep operations running in emergencies influence leasing decisions. Even if a building is not physically old, if it lacks these functions, its competitiveness and asset value can decline.
Competition in Seoul's office market is expected to intensify. About 1.75 million㎡ of new offices are slated to be supplied in the central district alone over the next four years. Large projects such as GBC, the Seoul Station northern station area development, Iota Seoul, and the Seoripul mixed-use development, aiming for completion around 2030, are also in the pipeline.
Headquarters transfers by large corporations or global corporations can take years from site review to contracting, interior design, and actual move-in. The industry sees that competition to attract tenants for offices set to rise around 2030 could start earlier than expected.
A real estate industry official said, "It has become a market where existing buildings must secure competitiveness through renewals and new buildings through fresh designs and facilities," and added, "When large new offices are supplied in earnest, the standard for a 'good office' in Seoul will also rise a notch."