Due to Rent Burden... 7 out of 10 Startups "Considering Office Relocation"

RSquare Conducts ‘Office Relocation Preference’ Survey Targeting Domestic Startups

Gangnam Area Preferred, but Downtown Areas Also Considered as Relocation Candidates

Rent Burden? Employee Relocation Requests? Measures to Counter Economic Slowdown

[Asia Economy Reporter Kim Min-young] A survey revealed that 7 out of 10 domestic startups are considering relocating their offices due to rent burdens and the possibility of an economic slowdown. While the Gangnam area (GBD) remains highly preferred, there is a growing trend of startups favoring downtown areas (CBD) such as Gwanghwamun, City Hall, Euljiro, and Jongno.

On the 6th, commercial real estate data company RSquare conducted a ‘Office Relocation Preference’ survey targeting startup representatives from the 9th to the 31st of last month. Among the total respondents (84 companies), 71.4% answered that they are currently considering relocating their offices.

The area most considered by startups for their new offices was the Gangnam, Yeoksam, Seolleung, and Samsung Station vicinity (66.7%, multiple responses allowed). This is likely because the Gangnam area remains preferred due to the concentration of investment firms, many peer companies, and advantages in talent acquisition, information gathering, and network formation.

Respondents who preferred downtown areas such as Gwanghwamun, City Hall, Euljiro, and Jongno accounted for 50%. This is because they believe that for the same rent, they can have more comfortable spaces compared to Gangnam. It is also interpreted as considering the recent increase in companies moving to the northern part of Seoul. Yeouido area (YBD) accounted for 13.3%, and the Ttukseom and Seongsu Station areas in Seoul accounted for 10%.

The most common reason for relocating offices was ‘rent burden (50.0%)’. This was followed by employee relocation requests (30.0%), proactive measures against economic slowdown (26.7%), and dissatisfaction with the current location (16.7%).

Regarding office location, startups considered proximity to subway stations and transportation environment (90.5%) as the most important factor. Rent (71.4%) and office building facility standards (61.9%) were also major considerations.

Research Center Director Ryu Kang-min said, "Steep interest rate hikes and a slowdown in the investment market are also influencing companies’ office relocation trends," adding, "Cases focusing on ‘cost-effectiveness’ rather than aggressively entering prime areas or creating extravagant work environments to attract talent are expected to increase." He also noted, "As of the second quarter, the average rent for large offices above the 3rd floor in Seoul’s downtown area is 31,800 KRW per 1㎡, which is actually higher than the Gangnam area (25,400 KRW)."

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