Overall net absorption rebounds into positive territory

• Seoul’s quarterly net take-up recovered to positive territory, driven by scheduled tenant move-ins, totalling 3,400 pyeong. Nonetheless, the annual figure stood at -24,400 pyeong, mainly due to earlier departures of anchor tenants in the CBD for cost-saving purposes.
• Due to the upcoming refurbishment of the Korea Fire Protection Association Building, the Korea Insurance Development Institute leased two floors of Parc 1 Tower 2, with several other insurance-related institutions in the building also relocating to nearby buildings.

The overall vacancy rate drops slightly q-o-q, remaining below 5%

• All submarkets had no new office supply in the quarter.
• Seoul’s vacancy rate decreased slightly to 4.6%, down 13 bps q-o-q, remaining below 5% all year. The CBD remained flat at 8.5%, with scheduled tenant move-ins pending from 2026. Other submarkets saw marginally lower vacancy rates compared with the last quarter.

Annual office transaction volume reaches a record-breaking high

• Net effective rent in Seoul overall was KRW 147,882 per pyeong, up 0.8% q-o-q and 4.7% y-o-y. Despite concerns over upcoming new supply, the CBD saw the largest increase of 1.4% q-o-q, driven by face rent growth, while Gangnam’s effective rent remained flat q-o-q.
• The quarter’s office transaction volume reached KRW 6.0 trillion. The largest transaction was the Signature Tower in the CBD, which changed hands from IGIS Asset Management to KB Asset Management for KRW 1.0 trillion through a share deal arrangement.

Outlook: Future pipeline supply is expected to drive polarisation in leasing demand

• The CBD faces particular pressure as new supply enters the market, likely maintaining elevated vacancy levels. In contrast, Gangnam and Yeouido are positioned for stable occupancy due to their limited development pipelines.
• With domestic AMCs securing dry powder from institutions such as NPS and Korea Post, they are expected to actively lead the office investment market. Meanwhile, the CBD’s upcoming large-scale supply pipeline may create an additional risk premium.