Seoul CBD Office Vacancy Rises to 7.3% as Large-Format Rents Surge 8.5%

Why this matters

The rise in Seoul’s central business district office vacancy to 7.3%, alongside an 8.5% surge in large-format rents, underscores a bifurcation in office market dynamics increasingly relevant to institutional investors. Elevated vacancy signals persistent demand challenges, reflecting broader structural shifts in office utilization—remote work, downsizing, and tenant caution—that continue to weigh on core urban office assets. Yet the simultaneous rent growth in large-format spaces suggests a nuanced recovery pattern, where premium, flexible, or well-located assets command pricing power despite broader softness. For allocators and capital providers, this divergence highlights the importance of granular asset and submarket selection amid uneven fundamentals. The vacancy uptick may pressure underwriting assumptions and debt service coverage ratios on legacy office loans, while rent growth in select segments could support repricing and refinancing opportunities. This dynamic also signals a potential recalibration of capital flows, with institutional capital likely to favour differentiated office product types that can capture evolving tenant preferences, rather than broad-based exposure to CBD offices. In sum, Seoul’s office market illustrates the ongoing segmentation in global office sectors, reinforcing the need for nuanced risk assessment and active portfolio repositioning in a still unsettled leasing environment.

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