As the average vacancy rate of recently completed knowledge industry centers exceeds 40%, the government has decided to regulate new supply and significantly ease entry restrictions for businesses. Centers with high vacancy rates will be supported in converting to rental housing or officetels.
The Ministry of Trade, Industry and Energy announced these measures during a meeting of the Emergency Economic Headquarters and the Ministerial Meeting on Structural Innovation on September 10.
There are 1,553 knowledge industry centers approved for establishment nationwide. Among these, the average vacancy rate for centers completed between 2023 and 2025 is 43.5%, with an unsold rate of 26.9%. The number of auctions last year reached a record high of 3,876 due to loan suspensions and falling market prices.
The government will first manage supply from the new establishment phase. Local governments will be required to comprehensively review the vacancy and unsold status of nearby centers, the impact on the commercial sales and rental market, and the conditions of infrastructure such as electricity and water when approving the establishment of knowledge industry centers.
A new procedure will be established requiring local governments to notify the Ministry of Trade, Industry and Energy of their application before approval, allowing the ministry to provide feedback. Local governments will also be required to investigate and publicly disclose the vacancy and unsold rates of their respective knowledge industry centers every six months.
To reduce vacancies in existing knowledge industry centers, the government will promote conversion for other uses. In the metropolitan area, vacant centers will be utilized as public rental housing for youth and newlywed couples through the LH non-residential remodeling rental housing project. In non-metropolitan areas, vacant centers will be included in public rental-type knowledge industry centers and remodeling projects for closed or abandoned factories.
The proportion of support facilities that can be used for commercial and convenience purposes will be expanded for centers that have already received establishment approval for two years. In industrial complexes within the metropolitan area, this will increase from 30% to 50%, and in non-metropolitan areas, from 50% to 70%.
The government will also support the conversion of centers with high vacancy and unsold rates to quasi-residential use. The temporary conversion of office buildings in general industrial areas will be allowed, and the obligation to secure additional parking spaces during the change of use will be temporarily exempted. Remodeling for officetels and dormitories will receive loan support of up to 70 million won per unit at an interest rate of around 3% for a maximum of 14 years, and a new HUG mortgage guarantee will be established for quasi-residential conversion projects.
Entry regulations for businesses will shift to a 'negative list' approach. Previously, entry was allowed primarily for specified manufacturing and knowledge and information communication industries, but now, businesses can enter unless they fall under restricted categories such as gambling and harmful facilities, environmentally burdensome industries, and hazardous materials facilities.
This change will allow new industries, such as AI application development, urban micro-fulfillment centers (MFCs), and drone photography services, which previously had unclear entry status, to establish themselves. The interpretation criteria for support facilities will also be revised to allow entry for businesses, not limited to employees of the tenant companies.
The management system for knowledge industry centers inside and outside industrial complexes will also be revised. Knowledge industry centers within industrial complexes will be allowed to lease before completing factory establishment or reporting business commencement, and the existing tenant contract procedures will be simplified to a tenant reporting method. A new tenant reporting system will be introduced for knowledge industry centers outside industrial complexes, which previously had no separate tenant management procedures.
Additionally, the government will solicit public opinion on whether to change the name of 'knowledge industry center' and strengthen management during the sales process. Before approving recruitment announcements, the installation of sales promotion centers will be required, and pre-sales to more than two individuals before usage approval will be prohibited.
The government plans to implement measures to alleviate vacancies in knowledge industry centers while closely monitoring market conditions. If unforeseen market overheating or other side effects are detected, necessary supplementary measures, including a review of regulatory easing, will be promptly pursued.
Minister of Trade, Industry and Energy Kim Jeong-kwan stated, "As knowledge industry centers are facing difficulties due to oversupply and accumulated vacancies, we will establish a supply-demand adjustment system while boldly innovating entry regulations to respond to industrial changes such as AI and digital transformation. We will swiftly implement policies through amendments to related laws so that they can be felt on the ground."
* This article has been translated by AI.
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