The Pandemic Changed the Commercial District Map... Stability Is the Answer! Residential Commercial Districts 'Reexamined'

- Prolonged COVID-19 Pandemic Shifts Commercial Centers from Large Districts to Residential Area Vicinities
- Commercial Spaces in Residential-Dense Areas with Strong Demand See Complete Sell-Outs

Recently, commercial facilities supplied in densely populated residential areas are gaining popularity. As commercial districts have stagnated due to the prolonged COVID-19 pandemic, investors' attention is focusing on areas with abundant hinterland demand where stable profits can be expected. In particular, as consumers' range of movement has decreased due to COVID-19, the center of commercial districts is shifting from large-scale commercial areas in old downtowns to residential commercial districts densely populated with housing.

Looking at the commercial properties that successfully sold out this year, apartment complexes are formed around the complexes. 'Hills Avenue Cheonggye Central,' which was sold in Jung-gu, Seoul in January this year and completed sales within a month of contract, attracted much attention for having a total residential hinterland demand of about 8,000 households, including Wangsimni New Town. Also, the commercial facilities of 'Inocity Ashiang' in Gwangju-Jeonnam Innovation City succeeded in selling out with an average competition rate of 8.4 to 1 in the bidding held last April. These commercial facilities have a hinterland demand including 1,478 households of 'Inocity Ashiang' apartments, 1,078 households of Bitgaram Umirin, and 698 households of Bitgaram Junghung S-Class Liberty. The commercial facilities within the first phase of 'Ulsan New City Aileen's Garden,' which has about 2,000 households as hinterland demand, also completed contracts for all units on the day of signing last April.

An industry insider said, "Residential commercial districts, which had been overlooked due to large commercial districts, are recently being re-evaluated," adding, "With the increase in telecommuting due to COVID-19 and the rise in local consumption, residential commercial districts are actually benefiting, and investors' interest is also focusing on densely populated residential areas."

As the floating population increases in residential commercial districts, the number of sales transactions is also on the rise. Centered around Wirye Central Tower in Wirye New Town, where thousands of apartment households are densely located, the number of sales transactions in the restaurant and bar sectors within a 500m radius in April was 1,474 (according to the Small Business Commercial District Analysis System), a 4% increase compared to 1,417 transactions last month. In contrast, during the same period, the number of sales transactions in the restaurant and bar sectors in Seongnam City decreased by 1.9% (from 1,054 to 1,035).

The vacancy rate of medium to large commercial facilities is also lower in densely populated residential areas. According to the vacancy rate data of medium to large commercial facilities by region from the Korea Real Estate Board, in the first quarter of 2021, the vacancy rates of commercial facilities in downtown Seoul and Gangnam areas were 14.6% and 10.7%, respectively, whereas the vacancy rates in neighborhood commercial districts such as Suyu and Yeonsinnae were relatively low at 3.7% and 3.2%, respectively.

Amid this, commercial facilities with abundant residential hinterland demand that can expect stability are attracting attention as they are scheduled for sale in the second half of this year.

Hyundai Engineering plans to sell the 'Hills Avenue Sosa Station' commercial facilities in Bucheon-si, Gyeonggi-do, around July. It consists of approximately 28,000㎡ of total floor area, with 238 units from basement level 1 to ground level 3. The commercial facilities are located right in front of Sosa Station, which serves Subway Line 1 and the Seohae Line, and have a hinterland residential demand including 629 households of 'Hillstate Sosa Station' apartments and about 9,000 households within a 1km radius, allowing for rapid commercial district activation. Additionally, Catholic University and Seoul Theological University are located nearby, making it possible to expect demand from university students. Various redevelopment projects such as the Sosa Redevelopment Promotion District, Sosa 1-1 District, and Sosa 3 District are planned nearby, which will not only increase the floating population due to residential expansion but also enhance future value through synergy effects of residential environment improvement.

Hyundai Construction will sell 'Hills Avenue Gwanggyo Central Station First' in Yeongtong-gu, Suwon-si, Gyeonggi-do, in July. This commercial facility, developed together with 'Hillstate Gwanggyo Central Station First,' consists of 366 units from basement level 3 to ground level 3, with a total floor area of 42,776㎡. Located within the Gyeonggi Convergence Town, where the new Gyeonggi Provincial Government Office, Gyeonggi Provincial Assembly, and Gyeonggi Provincial Office of Education are scheduled to move in, it has a solid hinterland demand. The complex's basement is planned to be directly connected to Gwanggyo Central Station on the Shinbundang Line and the bus transfer center, ensuring abundant floating population.

Bando Construction plans to sell 'Papier Godeok' in Pyeongtaek-si, Gyeonggi-do, in July. It will be developed with a total floor area of 30,085㎡, from basement level 1 to ground level 2, and will house 1,116 units of 'Godeok New City U-Bora The Crest' residential officetels as fixed demand. Godeok New City, where the complex is located, is expected to grow into a southern metropolitan new city with about 56,000 households in the future, boasting abundant hinterland demand. World-renowned pop artists Craig & Karl participated in the design of the central plaza, commercial facility gates, common halls, and installation sculptures, presenting it as a 'trendy new concept shopping culture space.'

This content was produced with the assistance of AI translation services.