As new office supply significantly increases, the average vacancy rate in Seoul has risen, yet rental prices and investment demand remain strong, highlighting a growing polarization in the office market.
According to AlSquare, a commercial real estate service company, the average office vacancy rate in Seoul reached 6.5% in the second quarter of 2026, up 0.4 percentage points from the previous quarter. The increase was driven by the addition of 11 new office buildings, totaling approximately 99,000 pyeong, with over 60% concentrated in the Central Business District (CBD).
Notably, the CBD saw the introduction of 61,642 pyeong of new office space, including 'G1 Seoul' at 43,388 pyeong and 'Renaissance Square' at 12,587 pyeong. Consequently, the vacancy rate in the CBD rose by 2.4 percentage points to 7.3% compared to the previous quarter.
However, the increase in supply did not lead to a decrease in rental prices. The average rental price for large offices in the CBD surged by 8.5% year-on-year, marking the highest increase among major areas in Seoul. This indicates sustained demand for offices with prime locations and high product quality, despite the growing supply.
In the Gangnam area, a 'Flight to Quality' trend has become evident. The vacancy rate for super-large offices in Gangnam, which saw no new supply in the second quarter, stood at 0.3%, while the vacancy rate for large offices was 2.2%. This trend suggests that companies are increasingly favoring prime offices with strong location and building competitiveness amid limited supply.
In the investment market, transaction volumes have surged. The total transaction value for offices in Seoul and Bundang reached approximately 6 trillion won in the second quarter, nearly 1.7 times higher than the 3.5 trillion won recorded in the previous quarter. However, the average transaction price per pyeong fell by 11.1% to 27.19 million won, attributed to an increased share of non-core asset transactions, which lowered the overall average price.
The Yeouido area set notable records in both transaction volume and price. The 'IFC Office Building' was sold for approximately 1.9278 trillion won, marking the largest transaction in the second quarter. The 'Hana Securities Yeouido Building' was sold for about 811.2 billion won, achieving a record high price per pyeong of approximately 38.4 million won.
AlSquare anticipates that demand for office investments will continue to focus on prime assets in the second half of the year. Lee Sang-jun, head of AlSquare's Big Data Consulting Division, stated, "The trend of transactions centered on prime assets will persist in the second half. Properties with strong location competitiveness and stable cash flow, or those with excellent physical specifications and value-add potential, are likely to see successful transactions."
This second quarter in the office market illustrates that an increase in supply does not necessarily lead to a uniform decline in asset values. Despite the rise in vacancy rates, rental prices and transaction values for prime offices remain robust, suggesting that market differentiation based on location and asset competitiveness will intensify moving forward.
Meanwhile, AlSquare announced on the 20th that the former Hana SK Card Building, now known as 'Fast Five Tower' in Da-dong, Jung-gu, Seoul, has been put up for sale, and they have begun joint sales consulting with AcreTree.
* This article has been translated by AI.
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