Flexible workspace operators’ expansion generated ample demand, but vacancy rates will likely rise due to new supply in 2020.
Flexible workspace represented 2% of total occupied office space in Seoul at the end of 2018. Demandfor flexible workspace is increasing, and we believe this factor will drive net absorption over the next five years. Landlords should choose flexible workspace operators and plan their strategies to reduce vacancy. In this tenants’ market, we recommend occupiers take advantage of rent free periods and reimbursements for fit-out costs when negotiating new leases. A lack of office investment opportunities may lead investors to focus on retail and industrial properties. In addition, a number of domestic institutional investors will probably continue to seek to invest overseas as they pursue higher returns.