[Monthly/No. 21] The office in crisis, the new normal is here

 

이 메일이 잘 안보이시나요? OCT, 2023   Vol 21 Over 30,000 people in the commercial real estate industry are viewing this letter right now. The 'New Normal' in the Office Market Clear signs in the U.S., and South Korea seems to be the next in line The office market is also facing a 'new normal' in the aftermath of the pandemic. For years, the market, which thrived in a low-interest environment, is now rapidly shrinking due to interest rate hikes and a slowdown in demand. Landlords unable to fill vacancies are pinning their hopes on repurposing, while under the "carbon zero" initiative, older buildings are at a crossroads between undergoing remodeling or bearing hefty taxes. It's becoming difficult to maintain asset value the traditional way. There is a need to create a value proposition that will draw people back to offices, something that hasn't been the case for a while. The U.S., which is at the epicenter of this 'whirlwind' of change, is already showing distinct signs of this new normal. It appears South Korea will follow suit before long.   #office #newnorbal #zerocarbon #change #RSQUAREUNIVERSE Footprint 신속하게 만나는 알스퀘어 소식   Pan-Asia Speed: RSQUARE's First Deal in Singapore RSQUARE has won its first deal in Singapore, marking a notable success in its operations. RSQUARE Singapore has long served as a forefront base for expansion into Southeast Asian countries, including Indonesia, Malaysia, and Thailand. Their primary focus has been on enhancing communication with global enterprises, leveraging Singapore's strategic position as the financial hub of the APAC region and an epicenter for the APAC headquarters of various global firms.   Using this contract as a springboard, RSQUARE plans to bolster its commercial real estate services in Singapore, specifically in data operations, research, and consulting. Last year, the company conducted an exhaustive survey of over 65,000 office buildings, hotels, and retail spaces throughout Singapore, building a comprehensive database.   Furthermore, there has been a recent surge in real estate service inquiries from companies in IT, e-commerce, and distribution. This implies that businesses looking to venture into the Southeast Asian market are strategically utilizing Singapore as a pivotal base, ensuring efficient exploration and local investment opportunities.   English Reports Available at RSQUARE We offer English reports beginning with the "Q2 Office and Knowledge Industry Center Sales Index."   The office market in South Korea has been faring well post-pandemic, in contrast to the U.S. or Europe. And certainly, there's no shortage of interest from foreign investors.    These reports aim to provide these investors with valuable market analysis, metrics, and insights, offering a comprehensive view on the current state and outlook of the commercial real estate market in South Korea. We appreciate your keen interest and support. REPORT DOWNLOAD 'MagazineR' The Premier Newsletter for Mid-Sized Buildings by RSQUARE RSQUARE proudly presents 'MagazineR', packed with premium information specifically curated for mid-sized buildings. Highlights of MagazineR include: In-depth Analysis: Comprehensive research into commercial and office real estate transactions in Seoul valued below 50 billion KRW. This analysis dives deep, breaking down data by autonomous districts, to provide the most detailed market insights. Spotlight on Notable Transactions: We showcase noteworthy transaction examples, segmented by transaction values. Comprehensive Market Analysis: Delve into the growth trajectory of different business districts, upcoming development prospects, and transaction examples. MagazineR ensures you get a thorough analysis of evolving markets. Real Estate Taxation Know-how: Demystify the complex realm of inheritance tax, gift tax, and capital gains tax related to real estate. Get acquainted with real estate concepts that might have sounded familiar, but never truly resonated until now. Explore our insights in 'MagazineR' and empower yourself with the knowledge to enhance the value of your properties. MAGAZINE R DOWNLOAD '2023 Cinema Market Report' The Future of Post-Pandemic Cinemas RSQUARE Research Center released ‘Content Report’ that covers the future of cinemas. The movie theater industry has been severely impacted by the COVID-19 pandemic. With the rise of online streaming services like Netflix and Disney+, the post-pandemic recovery of movie theaters remains uncertain.   So what does the future hold for the cinema industry? Kyu-Jung Choi from RSQUARE Research Center has delved deep into the current state of the industry, identifying challenges and suggesting potential alternatives REPORT DOWNLOAD Despite Historic Cap Rate Rise, Sales Price Drop is Minimal According to RSQUARE's recent '2023 Q2 Seoul Office & Knowledge Industry Center (KIC) Sales Index' report, the real office cap rate has shot up from 3.5% in Q2 2022 to 4.3% in Q2 2023, marking a 0.8% point increase over the last five quarters. Such a sharp rise in the cap rate has been unprecedented in history. Typically, the relationship between cap rate and the property's selling price is inversely proportional: when cap rates rise, sale prices tend to drop, and vice versa. However, the recent market observations have challenged this traditional understanding; Q2 sales index for Seoul offices only fell to 483.1, a mere 4.2% decrease from its peak in Q3 2022. Gang-min Ryu, Head of Research Center, quoted, "The rise in the cap rate is attributed more to the reduction in rent-free periods and the increase in rental rates, which led to a surge in Net Operating Income (NOI), rather than a drop in sales prices." The average rent-free period for Seoul offices has significantly decreased from 1.79 months in Q2 of the previous year to 0.46 months in this year's Q2. REPORT DOWNLOAD Office & Commercial Transaction Value in July Sees an Increase for Two Consecutive Months According to an analysis by RSQUARE on the data of Ministry of Land, Infrastructure, and Transport regarding actual transaction values for office and commercial real estate in Seoul (as of September 1st), July's transaction amount (1.1334 trillion won) increased by 4.0% from the previous month. This marks the second consecutive month of growth in transaction values since June. The total number of transactions in Seoul for July also increased by 9.4%, registering 139 transactions. While the office and commercial real estate transaction market in Seoul seems to be on the path to recovery, it is still significantly below the levels seen last year. The transaction value in July this year decreased by 58.6% compared to July of the previous year. Similarly, the number of transactions during the same period also decreased by 18.2%. People   "Database on 300,000 Buildings Drives Success: Aiming for Overseas Markets via Vietnam and Singapore" by RSQUARE In a recent interview with Aju Business Daily, John Lee, the CEO of RSQUARE, highlighted the company's core strengths. "RSQUARE's biggest advantage is the comprehensive data on 300,000 buildings nationwide, obtained through a complete survey, coupled with a sophisticated IT system that allows us to utilize this information precisely where it is needed," he stated. Lee emphasized that "By leveraging data and IT, we aim to address inefficiencies in the commercial real estate market and information asymmetry, creating a range of added values." Subscribe to our newsletter VDomestic and international office and commercial buildings 300,000 deep and unique data points to address information asymmetries in the real estate market.   Office, warehouse, and retail leasing brokerage, buy-sell advisory, asset management, and data analytics, Interior & Remodeling, Overseas Business(Vietnam, Singapore) Contact us        Partner with us       Past Newsletters RSQUARE on the 3rd floor of Anam Tower, 311 Teheran-ro, Gangnam-gu, Seoul, Korea ⓒ 2023 RSQUARE All Right Reserved. 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