"12 Out of 100 Locations Vacant"... Nationwide Medium to Large Commercial Vacancy Rate Hits Record High

Economic Downturn Due to COVID-19 Spread and the Impact of Online Market Activation

[Asia Economy Reporter Onyu Lim] As the spread of the novel coronavirus infection (COVID-19) prolongs the economic downturn, the vacancy rate of medium-to-large commercial buildings nationwide has reached an all-time high. In particular, the vacancy rate in Gangnam-gu, which attracts a large influx of people, has exceeded 10%.

On the 3rd, the Commercial Information Research Institute analyzed statistics from the Korea Real Estate Board and found that the nationwide vacancy rate for medium-to-large commercial buildings in the third quarter of this year was 12.4%. This is an increase of 0.4 percentage points (p) from 12% in the second quarter, marking the highest since statistics began being compiled.

Among major cities nationwide, the region with the largest increase in vacancy rate was Daejeon. The vacancy rate in Daejeon for the third quarter was 14%, up 1%p from 13% in the previous quarter. This was followed by ▲Seoul (0.6%p increase) ▲Incheon (0.4%p increase) ▲Gwangju, Daegu (0.3%p increase) ▲Busan, Ulsan (0.1% increase).

The commercial district of Gangnam-gu in Seoul, which had maintained a relatively active commercial market, also showed signs of stagnation. The average vacancy rate in the Gangnam area in the third quarter was 11.3%, an increase of 1.5%p from 9.8% in the previous quarter. This is the first time the vacancy rate in Gangnam-gu has exceeded 10% since statistics began being compiled.

Within Gangnam-gu, the area with the largest increase in vacancy rate was the Gangnam-daero commercial district. The vacancy rate on Gangnam-daero in the third quarter was 16.4%, up 7.9%p from 8.5% in the previous quarter, marking the largest increase within Seoul.

Nationwide, only two regions did not see an increase in vacancy rates in the third quarter. The vacancy rate for medium-to-large commercial buildings in Gyeonggi-do was 9% in the third quarter, down 0.8%p from 9.8% in the previous quarter, and the Gyeongnam region also recorded a decrease from 14.3% in the previous quarter to 13.9%, down 0.4%p. Vacancy rates increased in all other regions except these two.

Researcher Hyuntaek Jo of the Commercial Information Research Institute said, "For several years, the growth of the online market and the increase in users have caused the atmosphere of the commercial market, centered on offline stores, to show signs of stagnation," adding, "Moreover, the ongoing spread of COVID-19 has caused the commercial market atmosphere to freeze."

He continued, "As the risk of COVID-19 persists, commercial districts that used to attract many people, such as Gangnam, have seen a decrease in incoming population, resulting in a stagnant atmosphere," and predicted, "This stagnant atmosphere is expected to continue for the time being unless there are special variables such as the end of the COVID-19 virus or improvement in the domestic economy."

This content was produced with the assistance of AI translation services.