SEOUL, July 29 (AJP) - Seoul's Grade A office vacancy rate rose to 5.8 percent in the second quarter, up 1.8 percentage points from the previous quarter and the highest level since the third quarter of 2021, according to a report released by Cushman & Wakefield Korea, the local arm of the global commercial real estate services firm.
The increase was driven by new supply rather than falling demand. Two large towers, G1 Seoul in the Gongpyeong redevelopment zone and Rene Square near Euljiro 3-ga, were completed in the central business district at the same time, adding space that has yet to be absorbed. Average rents rose 1.3 percent from the previous quarter and 5.0 percent from a year earlier.
Vacancy in the central business district jumped 3.3 percentage points to 9.0 percent, the steepest rise among Seoul's three major office districts. The report said initial vacancy at the new towers remained despite lease signings by large companies, while existing buildings in the area continued to fill. IQVIA signed a lease at Pine Avenue Tower A, and LG Household & Health Care and the Korea Public Finance Information Service expanded their space at Seoul City Tower.
The quarter also saw companies moving between districts. MetLife Korea is relocating its headquarters from the Gangnam business district to G1 Seoul, taking 12,900 square meters, and Lotte Rental is preparing to move from Gangnam to NH NongHyup Tower downtown.
Their departures pushed Gangnam's vacancy rate up 0.6 percentage point to 3.1 percent, still the lowest among the three districts. Gangnam also recorded the city's highest average asking rent at 42,444 won per square meter, against a citywide average of 39,883 won. Among new arrivals, Anthropic, the developer of the AI assistant Claude, selected the Centerfield building for its Korea office, a 3,700-square-meter lease. Hyundai Marine & Fire Insurance took 4,100 square meters in the same building, and Hyosung ITX and Wyatt also signed leases in the district.
The Yeouido business district saw vacancy rise 0.5 percentage point to 3.7 percent as financial firms continued to relocate and expand. Woori Investment & Securities announced plans to expand within One Sentinel, and the Korea Trade Insurance Corporation is set to relocate to Three IFC.
Net absorption across the city totaled 8,251 square meters for the quarter, with the central business district recording 40,143 square meters against negative figures in Gangnam and Yeouido.
On the economic front, the report noted that consumer inflation reached 3.2 percent in June, prompting the Bank of Korea to raise its base rate by 25 basis points to 2.75 percent at the start of the third quarter. The 2026 growth forecast was revised up to 2.6 percent on strong semiconductor exports, though higher rates are expected to weigh on domestic demand.
Choi Yong-jun, who heads occupier services at Cushman & Wakefield Korea, said the quarter was defined by "a divergence in which a temporary rise in vacancy driven by new prime office supply and a structural realignment across districts are unfolding at the same time."
Eul Tower, a 44,900-square-meter project near Euljiro 3-ga, is scheduled for completion in the fourth quarter, and the report forecast that central business district vacancy would hold near current levels through year-end.
"The consolidation of the Gangnam district as an essential entry point for global big tech and AI companies will be a key indicator determining the direction of Seoul's office leasing market going forward," Choi said.
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