Share: Share on Facebook Share on Twitter Share on LinkedIn I recommend visiting to read:%0A%0A {0} %0A%0A {1}

Supporting the Tenants Reactivating Local Retail in Korea

Jason Yun • 08/04/2019
Boutique tenants armed with exciting merchandise have been reactivating Korean local business in recent years. These tenants have the power to attract customers by meeting a diverse range of consumer preferences.

Boutique tenants armed with exciting merchandise have been reactivating Korean local business in recent years. These tenants have the power to attract customers by meeting a diverse range of consumer preferences – particularly targeting the millennial audience using multiple social networking mediums in a more skillful and aggressive way. Most of them have less capital than large tenants, but they have creative ideas and are clearly skilled at grasping the consumer needs.

A notable opportunity for these tenants is to set up shop in locations previously eschewed by traditional retailers. Few retail markets, for example, were formed in residential and industrial districts in the past, but now spaces where tenants can run their business are being generated in these locations via change of uses. It is a phenomenon that contrasts with the increasing number of vacancies in large retail areas. However, the sustainability of retail within these non-traditional locations does remain to be seen.

From Boom to Bust in Gyeongnidan-gil

Gyeongnidan-gil of South Korea (Yongsan-gu, Seoul) provides us with a valuable example of this trend. Boutique tenants helped retail locations in industrial and residential areas to grow quickly. However, a rapid rise in rents caused by this growth have slowed the opening of new stores. Because of the rise in rents, there were many cases in which existing stores were being withdrawn from the market due to deteriorating profitability.

What’s more, consumers nowadays seem to become easily bored as trends change more rapidly. As the changes in the retail market became stagnant in Gyeongnidan-gil, the inflow of consumers sharply decreased.

For Gyeongnidan-gil to regain the success of earlier years, and for the landlords and the tenants to both be successful, a “win-win” strategy is needed. High levels of fixed rent are favorable to the landlords, but disadvantageous to the tenants; something of which remains as one of Gyeongnidan-gil‘s main problems. Lower rents will be preferred by tenants, but it is obvious that landlords will not want to implement them.

A New Direction Ahead

In the end, the “win-win” strategy could well be in the form of tenants paying a minimum fixed rent, and additionally paying an incentive rent from the result of the sales to the landlord. In this case, having limits set on the tenants’ rent payment levels help prevent them from opting out of their businesses due to exceedingly high and burdensome rent levels.

Ultimately, there is an evolution underway. This evolution includes landlords pivoting from selecting tenants based on the rent payment levels, to selecting tenants whose product or merchandise they most firmly believe in. As comparable buildings within the same area become more sensitive to rent levels, there is a high potential that we will see ever more landlords who invest in tenants with high-quality contents and will ultimately be able to attain a much higher rental income.

For tenants, this form of agreement provides them with the confidence to know that their real estate can grow with them as they do. For investors, it incentivizes them to take a more active interest and supporting role in their tenants’ businesses. It remains to be seen how quickly this model reaches the mainstream, and how transformative it can truly be to boutique retail in locations like Gyeongnidan-gil.

Related Insights

main streets across the world 2023

Main Streets Across the World 2023

In this 33rd edition of Main Streets Across the World, we’ll explore the near-term outlook for the retail sector; headline rent and ranking changes for best-in-class urban locations across the world; key indicators and global main street rankings; and key trends to watch such as the cost-of-living crunch, e-commerce and more.
Dominic Brown • 21/11/2023
Reworking the office
Research • Workplace

REWORKING the Office Asia Pacific

Our ‘REWORKING’ series examines decision-making for occupiers under four key considerations: Cost, Carbon, Culture and Community – under which the changing demands, needs and impacts on office spaces and strategies can be examined.
Grant Carter • 03/11/2023
Insights • Economy

Cushman & Wakefield Comments on URA private residential price index Q3 2023

Overall sales volume declined by 3.5% qoq in Q3 2023, reversing the past two consecutive quarters of increase. The fall in overall sales volume was driven by the new sales market, which declined by 8.5% qoq to 1,946 units in Q3 2023.
Xian Yang Wong • 27/10/2023

Related Stories

Dexcom Philippines New Office Fit-out Project
Dexcom Philippines • Healthcare
Learn More
Cushman & Wakefield Stories Philippines Inc. • Travel
Learn More
Cushman & Wakefield Stories
OMD Philippines • Advertising
Learn More
With your permission we and our partners would like to use cookies in order to access and record information and process personal data, such as unique identifiers and standard information sent by a device to ensure our website performs as expected, to develop and improve our products, and for advertising and insight purposes.

Alternatively click on More Options and select your preferences before providing or refusing consent. Some processing of your personal data may not require your consent, but you have a right to object to such processing.

You can change your preferences at any time by returning to this site or clicking on Privacy & Cookies.
These cookies ensure that our website performs as expected,for example website traffic load is balanced across our servers to prevent our website from crashing during particularly high usage.
These cookies allow our website to remember choices you make (such as your user name, language or the region you are in) and provide enhanced features. These cookies do not gather any information about you that could be used for advertising or remember where you have been on the internet.
These cookies allow us to work with our marketing partners to understand which ads or links you have clicked on before arriving on our website or to help us make our advertising more relevant to you.
Agree All
Reject All