'Vacancy Surge' at Magok Knowledge Industry Centers: Seoul City Moves to Ease Regulations

Abolishing Maximum Rental Area per Company
Expanding Allowable Area for Neighborhood Living Facilities
Broadening the Range of Eligible Business Types

The Seoul Metropolitan Government is moving to ease regulations in order to enhance the competitiveness of the Magok Industrial Complex and address the vacancy issues in knowledge industry centers. As vacancy rates have recently increased due to the economic downturn, the city has decided to lower the barriers for companies seeking to move in.

On the 24th, the city announced that it will implement regulatory easing measures for knowledge industry centers in Magok within this year. Currently, there are three knowledge industry centers in Magok Industrial Complex that are either being sold or leased (△Botanic Gate, △IPark The Urban, △Newb Cloud Hills), and one more (△Layered Hub (tentative name)) is scheduled to be added next year.

Panoramic view of Magok Industrial Complex. Provided by Seoul City

The Magok Industrial Complex is the largest R&D cluster in Korea, densely populated with high-tech industries and research institutes. The knowledge industry centers located here benefit from robust transportation networks and strong demand from surrounding businesses. However, recently, sluggish construction activity and a downturn in the commercial real estate market have led to weak sales and leasing performance.

In response, the city has prepared comprehensive regulatory easing measures. After holding meetings with project operators and consultations with experts, the city plans to implement the following: elimination of the maximum rental area per company, relaxation of the maximum area allowed for neighborhood living facilities, permission for rest-area restaurants and general restaurants within these facilities, and expansion of the range of eligible business types. These revisions will be applied within the year following contract amendments with the operating companies.

First, the 120-square-meter rental limit per tenant company will be abolished. The previous restriction, intended to provide more opportunities for small and medium-sized businesses, has actually contributed to lower occupancy rates. The city believes that easing this regulation will allow companies of various sizes to use the space they need freely, helping to resolve the vacancy issue.

The maximum area allowed for neighborhood living facilities will also be increased from the current 3% of the total building floor area to up to 10%. In addition, general restaurants and rest-area restaurants, which were previously prohibited, will now be permitted. The city plans to allow flexible operation of facilities tailored to the characteristics of each knowledge industry center to enhance convenience for workers.

The restrictions on eligible business types will also be significantly expanded. Previously, only IT, BT, NT, GT, and R&D sectors were allowed to move in. Going forward, the permitted industries will newly include △professional services (such as accounting, tax-related services, and management consulting), △information and communications (publishing, video and audio recording production and distribution), and △business support services (call centers, telemarketing, and security system services).

The city has established these guidelines in response to the recent decline in investment in knowledge industry centers and the intensifying 'Mafi' (Minus Premium) phenomenon. The goal is to transform knowledge industry centers from mere investment targets into business hubs, encouraging stable settlement of companies.

Joo Yongtae, Director General of Economic Policy at Seoul City, stated, "This regulatory easing is a measure to leverage the strengths of the Magok Industrial Complex knowledge industry centers and transform them into innovation hubs that attract a diverse range of companies. We will continue to actively identify and eliminate unreasonable regulations that hinder the revitalization of the industrial complex and strive to create an environment conducive to business growth."