More than one in eight commercial properties across South Korea sits empty, with vacancy rates rising for seven straight quarters as the downturn in retail districts spreads nationwide.
The vacancy rate for general commercial buildings nationwide reached 13.36% in the second quarter of this year, up 1.40 percentage points from 11.96% in the first quarter of 2021, according to data submitted by the Korea Real Estate Board to Rep. Hwang Hee of the Democratic Party of Korea, a member of the National Assembly's Land, Infrastructure and Transport Committee, on the 28th. The rate has climbed for seven consecutive quarters since the third quarter of 2024, marking the highest level since 2021.
Regional gaps were stark. Sejong posted the highest vacancy rate in the country at 22.79%, followed by Daegu at 17.84%, North Chungcheong Province at 17.43%, North Gyeongsang Province at 16.66% and Gwangju at 16.50%. Among the 17 metropolitan cities and provinces, Ulsan was the only one where the vacancy rate fell from five years earlier. The vacancy rate for mid-to-large commercial buildings in Sejong stood at 29.68%, meaning nearly three out of every 10 units were empty.
Ground-floor space, the most sought-after in any retail district, was no exception. The ground-floor vacancy rate for general commercial buildings nationwide jumped to 6.68% from 4.79% over the same period. By size, the vacancy rate for mid-to-large commercial buildings rose to 14.33% from 12.98%, while the rate for small commercial buildings climbed to 8.47% from 6.41%.
Conditions have not improved for the small business owners who would fill those spaces. An analysis of National Tax Service statistics by the Ministry of SMEs and Startups found that 975,681 businesses closed last year, for a closure rate of 8.64%. "Poor business performance" accounted for 50.4% of closures, more than half the total. Observers point to a vicious cycle in which commercial space empties out even as the pool of small business owners available to fill it shrinks.
