- The South Korean capital has the strongest office real estate sector in the world, a report says.
- Some have put this down to the country’s reluctance to accept post-pandemic remote working.
- In the US, office vacancies are at a 30-year high as WFH continues after the pandemic.
The debate over whether companies should allow flexible working-from-home arrangements versus return-to-office mandates continues to divide the US workforce.
But the booming South Korean office market may bolster arguments that it is better for employees to head back to the office — at least for those watching the US’s struggling commercial real estate sector.
In Seoul, over 98% of grade-A offices are occupied thanks to white-collar workers returning to the office post-pandemic. The increase in competition for office space has led to a 15% rise in rental prices over the last year, Bloomberg reported.
Claire Choi, the head of research for Korea at Global Commercial Real Estate Services (CBRE), told Bloomberg that the trend was “a cultural thing.”
“If we are told to come back to the office, we will come back to the office,” Choi said.
In the summer of 2021, 91.5% of the country’s leading firms were implementing a WFH policy, a survey by Korea Enterprises Federation (KEF) found, per Pulse News.
As the Covid-19 pandemic eased, jobs that allowed employees to work from home declined. Now, fewer than 60% of big companies will allow their employees to work remotely, KEF found.
Of the 40% of companies surveyed that still allow remote work, almost two-thirds said they were only allowing it selectively.
“The main form of telework nowadays is selecting those who need to work from home or allowing it on a limited basis by receiving applications as needed,” an official from Korea Enterprises Federation (KEF) told Pulse News.
The Korean market’s strength is not solely down to demand and working culture. There has been a general shortage of office space since 2021 due to government restrictions on redevelopment and disruption to construction caused by the pandemic.
The Korean economy has also seen steady growth, bolstering both international and domestic investment.
But comparatively, US business districts have been struggling following the rise of home working and the reluctance of many employees to start commuting again five days a week.
Goldman Sachs found that the share of US workers who work from home for at least some of the working week has stabilized this year to around 20%-25%. That’s below a pandemic peak of 47% but above the pre-pandemic average of 2.6%.
Almost 30% of employees also now use a hybrid work model, per Forbes.
Commercial landlords have seen tenants cut space or move out completely amid the new remote working culture, and office vacancies were at a 30-year high of 18.2% in the US in the second quarter, according to research by CBRE.
The Biden Administration recently announced plans to incentivize developers to convert empty offices into apartments in an effort to alleviate the housing crisis.
