Korea Major Report – Seoul Office Market Tenant Profile April 2017
NOTABLE CHANGES BY TENANT TYPE
The total volume of leasable Grade A office space increased by 5.8%pt y-o-y in 2016, mainly due to Samsung’s sale of its headquarters buildings in the CBD and GBD.
•Many Samsung subsidiaries that were previously classified as landlords now fall under the tenant category.
•The YBD was the only area to experience a rise in owner-occupied space (2.7%). This was due to KB securities acquiring POBA building, thus changing its classification from tenant to landlord.
The steady flow of relocations by the likes of Samsung led to a decline in the proportion of Grade A office space occupied by Chaebols in 2016.
•The departure of Samsung’s financial and insurance subsidiaries from the CBD along with Samsung’s electronics and construction subsidiaries in GBD drove an 8.6%pt (GBD) and 6.8%pt (CBD) decrease in the Chaebol-occupied office space in 2016.
Similar to last year’s survey, the results showed that foreign companies
prefer Grade A office buildings. Approximately 25% of Seoul Grade A office space is occupied by foreign companies.
•Foreign companies prefer to be located in the GBD. Around 31.8% of office space in this district is occupied by overseas firms, followed by the CBD (24.9%) and the YBD (15.0%).
NOTABLE CHANGES BY TENANT INDUSTRY
Demand from the IT and communications sector continued to increase in all three business districts in 2016. The strongest growth was recorded in GBD, which saw a 2.0% y-o-y increase in the proportion of total office space occupied by this sector.
Elsewhere, expansion by foreign manufacturers and pharmaceutical firms drove a 1.2% y-o-y increase in the proportion of total office space occupied by this sector in the GBD.
Although the proportion of finance sector rose by 0.5%pt in the YBD, the total office space (GFA) occupied by this sector reduced after the departure of financial entities such as IBK, Daishin Securities and Mirae Asset Daewoo.
EMERGING MARKETS – PANGYO & DMC
Pangyo saw an increase in the proportion of total office space occupied by the construction sector following the relocation of Samsung C&T from the GBD, which consequently recorded a decline in the total office space occupied by the same sector.
•While the total office space occupied by the IT and Communications sector remained relatively unchanged, the inflow of construction sector firms pushed down its total share of occupied office space by 2.9%.
In the DMC the growth of various media firms drove a 1.9% y-o-y increase in the proportion of total office space occupied by the information and communications sector.