'MZ Sangkwon' Seongsu·Cheongdam, Vacancy Rate Zero Streak

[Asia Economy Reporter Minyoung Kim] In the fourth quarter of last year, the vacancy rate for small commercial spaces in Seongsu-dong and Cheongdam-dong in Seoul recorded 'zero.' These areas, where the MZ generation (Millennials + Generation Z) are the main consumers, managed to avoid the impact of COVID-19. In contrast, the vacancy rate in Myeongdong, known as a traditional commercial district, showed a stark difference at 50.3%.

According to commercial real estate data company RSquare on the 17th, the vacancy rate for small commercial spaces near Seongsu-dong, including Ttukseom and Cheongdam, was 0% in the fourth quarter of last year. Seongsu-dong, once lined with abandoned factories and warehouses, is now considered one of Seoul's hottest commercial districts. As demand for commercial spaces surged, rents in Cheongdam (53,200 KRW per ㎡) and Ttukseom (44,300 KRW per ㎡) increased by 0.5% each.

In the Sinsa Station commercial district, centered around Garosugil and Serosugil, the vacancy rate in the fourth quarter of last year was 4.4%, down 3.3 percentage points from the previous quarter. Teheran-ro recorded a vacancy rate of 1.3%, a 4 percentage point decrease from the previous quarter. According to the Korea Real Estate Board, commercial spaces over 330㎡ in total floor area and located on the third floor or above are classified as medium to large-sized, while those on the second floor or below with a total floor area of 330㎡ or less are classified as small-sized commercial spaces.

On the other hand, vacancy rates soared in traditional commercial districts such as Gwanghwamun, Namdaemun, Myeongdong, and Jongno. The average vacancy rate for small commercial spaces in Seoul’s downtown area, which includes these districts, rose 2.4 percentage points from the previous quarter to 11.2% in the fourth quarter. This marks an increase in vacancy rates one year after they first hit double digits in the fourth quarter of 2020. By district, Myeongdong’s vacancy rate rose 7 percentage points from the previous quarter to 50.3%, meaning one out of every two commercial spaces is vacant. Gwanghwamun’s vacancy rate increased by 2.4 percentage points to 21.7%, and Jongno’s rose 1.1 percentage points to 9.8%.

As vacancies increased, rents also fell. The downtown area saw rents drop 1% from the previous quarter to 68,000 KRW. In particular, Myeongdong’s rent fell 4.2% to 152,700 KRW. Compared to the fourth quarter of 2019, before COVID-19, this is a sharp decline of 41.7%. The situation for medium to large-sized commercial spaces was similar. Vacancy rates rose in Myeongdong (50.1%), Namdaemun (14.5%), and Euljiro (9.1%), but fell in Apgujeong (5.6%) and Cheongdam (9.8%). The vacancy rate in the Ttukseom area remained in the 1% range.

An RSquare official stated, "Seongsu, in particular, continues to experience a supply shortage as entertainment and fashion companies steadily demand space," adding, "It is transforming from a space exclusive to the MZ generation into a mixed-use office commercial district."

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