South Korean knowledge industry center vacancy crisis

South Korea is addressing high vacancy and unsold rates in knowledge industry centers, which have seen average vacancy rates of 43.5% and unsold rates of 26.9% for centers completed within the last three years. The market has faced challenges due to centers being used for speculative real estate investment, leading to a record high of 3,876 auction cases last year.

To mitigate these issues, the government is implementing a ‘negative regulation’ system to allow a broader range of businesses, such as AI software and urban logistics, to occupy the spaces. Additional measures include converting vacant centers in the Seoul metropolitan area into public rental housing for youth and newlyweds, and allowing conversions into residential officetels in industrial areas through tax and parking exemptions.

Local authorities are also adjusting land use plans, such as in Incheon’s Gyeyang Industrial Complex, where plots are being converted into multi-industry zones to support sectors like telecommunications and automotive manufacturing. To prevent future oversupply, the government is establishing a supply-demand control system requiring local governments to assess market impact before approving new construction.