Seoul's ageing offices drive flight-to-quality

Building age was not a prominent concern in past decades. However, over the last five years, ageing office buildings have become increasingly pronounced in Seoul. Stakeholders overlooked the accumulation of outdated buildings as Seoul's office market remained highly landlord-favoured, particularly since the COVID pandemic.  The supply-constrained market maintained tight vacancy levels, supported by strong leasing demand from domestic occupiers. South Korea achieved close to a 100% office re-entry rate. This also drove double-digit annual rent growth, which ran counter to global office trends.

As 2026 begins, new supply coming online signals changes in supply-demand dynamics. Large-scale developments are planned for almost every year ahead, especially in the CBD precinct. These will create a more balanced market and prompt divergent demand patterns. Additionally, investors have become more selective in deploying capital with abundant deal opportunities. With more options available, building quality has gained greater significance in both leasing and investment decisions.

Figure 1: Seoul Grade A+B office building age

Source: JLL; based on area in the CBD, Yeouido and Gangnam calculated by latest year for renovations

Up until 2015, more than half of Seoul's prime office stock was less than 10 years old. This figure declined to 45% by 2020, and by 2025, just over a quarter (28%) of the total stock was built within the previous 10 years. Consequently, some buildings now require immediate refurbishment.

Figure 2: Seoul Grade A+B office building age by sub-markets

Source: JLL; based on area in the CBD, Yeouido and Gangnam calculated by latest year for renovations

The CBD and Gangnam showed particularly evident ageing in office stock, with the proportion of newer buildings completed within the past 10 years dropping significantly. Buildings under 10 years old represented 64% and 40% of stock in the CBD and Gangnam respectively in 2015. Within a decade, the proportion of newer buildings fell sharply to 23% in both submarkets. Furthermore, almost half of Gangnam's office stock exceeds 20 years in age, underscoring how rapidly the stock is ageing.

Upcoming large-scale developments will fulfil some demand from tenants seeking to upgrade to more modern buildings. Ongoing redevelopment of older corporate headquarters is also addressing this need. Physical specifications and building age have become increasingly important in investment decisions, as prospective investors must estimate capital reserves required for potential refurbishment work. Additionally, to enhance building credentials, the number of green-certified buildings has surged. From 2021 to 2025, the number of LEED-certified office buildings increased threefold in Seoul, for instance. More than 80% of these are located within the three main submarkets. However, new office developments are not always feasible given elevated construction costs, which has expanded the building retrofit market. While upcoming office buildings will increase overall vacancy rates, demand polarisation will become more prominent, with building quality as one of the key determining factors.