"We've observed a notable increase in office property transactions in the second half of 2024, reflecting market expectations for potential interest rate cuts," said YJ Choi, Senior Director at Cushman & Wakefield.
Choi said the office transaction volume for next year would depend on the closure of ongoing deals.
"While commercial real estate transactions have been primarily focused on office properties, we expect this to expand into premium logistics centers and NPL (Non-Performing Loans) transactions as interest rates decrease," he added.
The office sector maintained a landlord-favorable market throughout this year, driven by limited new supply in major business districts and rising rents amid record-low vacancy rates.
"Following COVID-19, many tenants in major business districts opted to stay in their current buildings due to increased inflation and interior construction costs," Choi said.
"However, we're seeing more large corporations simultaneously considering either extending their current leases or relocating to more cost-effective offices."
Choi identified the Magok business district as an emerging office market for 2024. Major new office developments in Magok include "One Grove (123,756㎡)," "Le-West City (122,814㎡)," and "K-Square Magok (89,754㎡)."
"Magok's effective rent is below 200,000 won per pyeong (Korean term for around 3.3 square meters), less than half of the early 400,000 won range seen in prime northern Seoul offices," Choi explained.
"However, tenants are considering Magok as an alternative location due to its prime-grade building quality, amenities, and facilities."
Cushman & Wakefield forecasts that Seoul's 2024 office market will be characterized by continued preference for the Gangnam Business District (GBD) and potential moderation in rental growth rates.
"Even newly supplied offices in GBD are being quickly acquired through strategic investors' equity investments and purchases, continuing the supply shortage in the leasing market," Choi said.
He added that GBD would maintain its current status as a hub for IT startups, with a balanced distribution of key industries including finance, retail, services, and manufacturing.
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