From Itaewon to Gangnam... Vacant Stores Increasing After COVID-19

Q3 Vacancy Rate of Medium to Large Commercial Spaces in Seoul at 8.5%
1st Itaewon 2nd Gangnam-daero
"Commercial Districts Frozen Due to COVID-19"

[Image source=Yonhap News]

[Asia Economy Reporter Onyu Lim] Due to the impact of the novel coronavirus infection (COVID-19), the number of vacant commercial spaces in Seoul has increased, deepening the sighs of self-employed business owners. Itaewon, which experienced a 'club-originated cluster infection' incident, now has rental signs on every other place, and even the bustling Gangnam commercial district is losing its vitality.

According to the Korea Real Estate Board on the 7th, the vacancy rate of medium-to-large commercial spaces in Seoul in the third quarter of this year recorded 8.5%. This is 0.6 percentage points higher than 7.9% in the second quarter. During the same period, the vacancy rate of small-scale commercial spaces was 5.7%, which also rose by 1.5 percentage points compared to 4.2% in the second quarter. The Korea Real Estate Board classifies small-scale commercial spaces as those with a total floor area of 330㎡ or less on two floors or below, and medium-to-large commercial spaces as those exceeding 330㎡ on three floors or above.

In particular, the commercial district with the highest vacancy rate was Itaewon. In Itaewon, the vacancy rate for medium-to-large commercial spaces was 24.9%, and for small-scale commercial spaces, it was 30.3%. The vacancy rate for small-scale commercial spaces surged from 6.4% in the first quarter to 15.2% in the second quarter, and then exceeded 30% in the third quarter. This means that 3 out of 10 places have closed or relocated.

The Itaewon commercial district began to decline after the relocation of the US Forces Korea Command and the United Nations Command, which were stationed in Yongsan in 2018. Although various spots emerged as hot places through social networking services (SNS), excessive monthly rent increases by building owners accelerated gentrification, causing the area to lose vitality. Furthermore, after the COVID-19 outbreak originating from Itaewon clubs in May, visitor foot traffic sharply dropped.

Researcher Hyuntaek Cho from the Commercial Information Research Institute analyzed, "While sales significantly decreased due to the relocation of the US military base, monthly rents remained the same, causing distinctive stores to leave due to rent burdens, which increased the vacancy rate. The COVID-19 outbreak further caused the vacancy rate to surge."

Following Itaewon, the commercial district with the highest vacancy rate for medium-to-large commercial spaces was Gangnam-daero. Gangnam-daero recorded a vacancy rate of 16.4% in the third quarter, marking the largest increase in vacancy rate within Gangnam-gu, rising by 7.9 percentage points from 8.5% in the second quarter, the biggest increase in Seoul.

Centered around Sinnonhyeon Station, Gangnam Station, and Yangjae Station, this boulevard is lined with various banks, commercial, and office facilities, and also features parks such as Hangang Park and Yangjae Citizen's Forest, attracting many visitors. Thanks to this, Gangnam-daero became a representative commercial district in Gangnam with various food and beverage and shopping stores. However, as COVID-19 spread this year, the atmosphere of Gangnam-daero, the central commercial district of Gangnam, became depressed.

Researcher Cho stated, "Gangnam-daero has a large number of companies, providing a steady demand from office workers, and it was one of the famous domestic commercial districts visited by tourists. However, as the spread of COVID-19 continued, the atmosphere in commercial districts where many people gather froze, and Gangnam-daero also showed signs of stagnation."

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