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Office MarketBeat Report

Jinwoo Jung • 22/07/2022
Overall Grade A office vacancy fell to 3.0% in Q2, down 0.5 pp from the previous quarter. Continued scarce office supply, coupled with strong leasing demand, prompted falls in previously relatively higher vacancy rates in the YBD and CBD submarkets. The overall office rent increase in Q2 was 2.2%, the highest growth in 10 years. Rents and maintenance fees are expected to continue to rise due to inflation and interest rates.

Vacancy in the CBD submarket dropped 1.2 pp q-o-q to a low of 5.2%. CJ Logistics’ lease contract with Tower 8 resolved the vacancy from the KB Kookmin Bank call center. The CBD experienced active take-up in the quarter, with noted transactions including KT IS to K-Square City, and BAT Rothmans’ move in at Center One West.

The vacancy rate in the GBD submarket rose slightly as some vacant spaces were still scheduled to be signed. Some firms relocated out of GBD upon lease contract expiry. However, the vacancy rate is expected to fall in Q3, with many potential tenants. Notable transactions included Class101 to Wework Tower, and Dealicious to Icon Yeoksam, and CLO Virtual Fashion to Gangnam Finance Center.

YBD submarket’s vacancy rate fell 1.6 pp q-o-q to a record 1.5%. The vacancy rate has fallen as large vacancies have been taken up following signing contracts at Parc.1 Tower 1, Tower 2 (NH Financial Tower), and KT Yeouido Tower. YBD once recorded a vacancy rate of more than 20% with the completion of Parc 1. But at around a 1% vacancy rate, the area has now recorded the fastest decline in vacancy in two years among all submarkets. Notably, non-financial companies continue to flow into YBD, including I Hate Flying Bugs (Mildang English) to Parc.1 Tower 1, and Magnachip and Okestro to Parc.1 Tower 2.
 

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