Nearly four out of 10 commercial spaces in Seoul’s downtown shopping mecca Myeongdong are idled as retailers cannot afford the expensive rents amid prolonged Covid-19 that has led to a sharp decline in the number of foreign travelers and local strollers.
According to data released by state-run Korea Real Estate Board on Wednesday, the vacancy rate of mid- and big-size commercial spaces in Myeongdong stood at 38.3 percent in the first quarter, the highest since the board released the survey based on a new sample in 2020. Commercial spaces began to empty out from the fourth quarter of last year.
In the first and second quarters last year the vacancy rate came to 7.4 percent and 8.4 percent, respectively. The figure reached 9.8 percent in the third quarter ended September before adding 12.5 percentage points to 22.3 percent in the fourth quarter and nearly 40 percent in the January-March period.
The high vacancy rate is blamed at prolonged Covid-19 that has resulted to a sharp decline in the number of foreigners and spending.
Lee Jin-seok, vice president at Realty Korea, said that businesses endured deteriorated environment until early last year but their fatigue deepened. Districts whose major visitor groups are foreign travelers and students will continue to struggle from high vacancy rate.
The survey also showed commercial spaces in other areas like Itaewon in central Seoul and Hongdae and Hapjeong in northern Seoul also had high vacancy rate of 22.6 percent and 13.1 percent, respectively.
Mid- and big-size commercial spaces are those whose total floor area is over 330 square meters or higher than three floors with more than half rented out.
The vacancy rate of overall mid- to large-size commercial spaces in Seoul also reach an all-time high of 8.9 percent in the first quarter, up 0.1 percentage point from the previous quarter.
The rate for the whole of Korea also jumped 0.6 percentage points to 13 percent in the first quarter.
More than one out of 10 office spaces were also empty, survey showed.
The rate for small commercial spaces, meanwhile, fell slightly from 6.5 percent in the fourth quarter last year to 6.4 percent in the first quarter as businesses sought smaller spaces to cope with lagging business.
The rent cost of mid- to large-size commercial spaces in Korea fell 0.26 percent to 25,600 won ($23.1) per square meter in the first quarter on increased supply. In Seoul, rent fee also fell 0.41 percent from 54,200 won to 52,300 won.
Rent cost in Myeongdong, the most expensive area in Seoul, also fell from 296,700 won per square meter in the first quarter last year to 271,700 won in the fourth quarter, data showed.
By Chung Seok-hwan and Lee Eun-joo
[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]