[New Commercial Real Estate Map] Gangnam, Where Emerging IT and Pharmaceutical Tycoons Gather, Office Space 'Vacancy Rate Zero'

[Asia Economy Reporter Ryu Tae-min] As major companies in IT and pharmaceuticals, which have grown during the COVID-19 era, flock to Gangnam, the office market in the Gangnam area is experiencing an unprecedented boom. The competition to secure IT talent has intensified, increasing the popularity of Gangnam, which has high preference among the MZ generation and regional symbolic significance.

SSG.com announced on the 5th that it will move its headquarters to Centerfield located in Yeoksam-dong, Gangnam-gu, Seoul, together with its subsidiary W Concept, and will begin creating online synergy in earnest. SSG.com and W Concept will strengthen collaboration with Gmarket, located within a 10-minute walk from Centerfield, to consolidate online business capabilities and promote growth.

With this headquarters relocation, SSG.com plans to establish a smart office to foster an autonomous and flexible organizational culture. By expanding remote and work-from-home options, they have enhanced office space efficiency and created a work environment that allows employees to choose and utilize various work styles according to job characteristics and personal preferences.

In addition, most major domestic e-commerce companies are gathering in the Gangnam area. Lotte On, the e-commerce division of Lotte Shopping, opened an office in Jamsil Lotte World Tower, Sincheon-dong, Songpa-gu in 2019. TMON and WEMAKEPRICE also have their headquarters near Sinsa Station and Samsung Station, respectively. Market Kurly settled in Yeoksam-dong, Gangnam-gu last year, and Coupang has been operating its headquarters in Tower 730, Jamsil, Sincheon-dong, Songpa-gu since 2017. 11st also operates an IT-based smart office in the Gangnam area.

Intensified Competition for IT Developer Recruitment

The reason major IT companies are settling in the Gangnam area is due to fierce competition to attract developers. Gangnam is a representative office-dense area preferred by IT company employees from the MZ generation. It has excellent transportation accessibility and symbolic significance in terms of location, making it advantageous for talent recruitment. Additionally, the concentration of IT companies and startups in Gangnam fosters a collaborative atmosphere.

In fact, the Gangnam area, where demand is concentrated, is showing a 'zero vacancy' status. Despite the increase in companies seeking to lease recently, the shortage of large building supply has led to a vacancy rate decline for four consecutive quarters, intensifying competition among tenants. According to an office market report published by Cushman & Wakefield, the average vacancy rate of Grade A office buildings in Seoul in the first quarter of this year was 3.5%, down 1.7 percentage points from the previous quarter. This is the lowest figure in 13 years since the first quarter of 2009.

The decrease in vacancy rates is interpreted as a result of increased leasing demand from companies recently, while the supply of large buildings to support this demand has been insufficient. Cushman & Wakefield expects that "since new office supply will remain limited, a landlord-favorable market will continue for the time being."

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