Warming Up to MZ Generation Foot Traffic... The Vibrant Commercial Districts of 'Cheongdam and Hongdae'

As the COVID-19 pandemic prolongs, major commercial districts in Seoul are experiencing stagnation, while areas mainly frequented by the ‘MZ generation’ such as Cheongdam and Hongdae are somewhat recovering their vacancy rates and regaining vitality.

According to the ‘Retail Report’ released on the 20th by Cushman & Wakefield (hereafter Cushman), a global commercial real estate consulting firm, Cheongdam’s vacancy rate in the fourth quarter of last year fell by 1.9% compared to the same period the previous year. Among the six major commercial districts in Seoul (Myeongdong, Gangnam, Hongdae, Garosugil, Hannam·Itaewon, Cheongdam), it was the only area where the vacancy rate decreased during the same period.

Industry experts analyze that the luxury consumption patterns of the MZ generation influenced the recovery of the Cheongdam commercial district. Cheongdam was strongly perceived as a place visited by people in their 40s and 50s with high purchasing power, but after COVID-19, the psychological entry barrier to luxury goods for younger generations lowered, changing the atmosphere.

Cushman explained, "Cheongdam-dong had been in decline due to a long-term recession and changes in distribution structures 3 to 4 years ago, causing brands to withdraw, but recently, many global luxury brands’ flagship stores have opened, signaling the revival of the commercial district."

Hongdae shows a similar trend. The vacancy rate in Hongdae in the fourth quarter of last year was 14.1%, which increased by 5.9% compared to the same period the previous year, but it decreased by 3.3% from the previous quarter, showing signs of recovery. This area also could not avoid the COVID-19 crisis, but recently many stores targeting young consumers have opened, and the floating population is recovering.

Nam Shingu, Director of Cushman’s Retail Tenant Advisory Team, said, "Several major stores targeting teenagers and people in their twenties entered Hongdae last year. Since it is a place frequently visited by young people, brands that are on the rise even during the COVID-19 era consider entering here first, showing differentiation from other commercial districts."

In addition, commercial districts such as Seongsu-dong and Hannam-dong are also attracting more foot traffic as popular restaurants and cafes favored by young people increase. On the other hand, traditional commercial districts like Myeongdong and Garosugil still show no signs of recovery. Myeongdong’s vacancy rate in the fourth quarter of last year was 49.9%, more than double compared to 23.0% in the same period the previous year. It also increased by 1.6 percentage points compared to 48.3% in the previous quarter.

Garosugil’s vacancy rate also rose significantly from 19.1% in the fourth quarter of 2020 to 36.7% in the fourth quarter of last year. Although it decreased by 0.8 percentage points from 37.5% in the third quarter of last year, the vacancy rate remains high. Director Nam explained, "Since Myeongdong and Garosugil had a high proportion of foreign tourists, the commercial districts are likely to revive when the air routes reopen."

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