On the afternoon of the 7th, a digital mall in Yongsan, Seoul, was generally quiet, considering it was Monday afternoon. Aside from a mother and daughter looking at laptops, employees were the only ones moving about in the adjacent mall, which was packed with goods, but several stores were also closed.
In a large complex shopping mall in Dongdaemun, Seoul, foreign group tourists were crowded on the first floor, but the second and third floors were quiet with many vacant spaces visible. Even during business hours, many stores had absent owners.
The Dongdaemun area, concentrated with clothing, and the Yongsan area, known for its electronics mall, are struggling to recover from vacancies. Both sectors have been affected by the shift in consumer spending toward online purchases and brand-centered consumption, leading to a sharp decline in sales for small malls.
According to the Korea Real Estate Board's rental trends for commercial real estate, the vacancy rate for collective malls around Yongsan Station, including the Yongsan electronics mall, was 37.6%. More than one in three malls is vacant.
The Yongsan electronics mall was once referred to as a MECARO for PC and mobile devices. However, with the aging of the commercial district, stagnation in PC demand, and an increase in online transactions, the area is currently in a state of decline. An A computer store representative at the electronics mall noted, "The demand for PC purchases has greatly decreased, and most people buy online," adding, "There are only occasional repair demands for laptops and we are barely maintaining the store with the sale of assembled PCs."
However, with the redevelopment of the Najin Mall, which occupies a large area of Yongsan, the population operating electronics stores in Najin Mall has dispersed to nearby malls, responding that the number of vacancies has not increased as expected. A representative from a real estate office near the electronics mall stated, "As the population from Najin moves, there aren't many vacancies in the electronics mall," adding, "We have expectations that things will improve after the redevelopment of Najin Mall."
They noted, "However, due to the very poor business conditions, demands to lower the monthly rent have significantly increased," and added, "Yongsan already has low rental rates, and many are struggling so much that even the rent is becoming a burden. Given that the rent is already low, it is difficult to make drastic adjustments, and we are in a situation of lowering it by about 50,000 won per month."
The Dongdaemun clothing district seemed to show some recovery due to foreign tourist demand following the COVID-19 pandemic, but recently that has also ceased, preventing it from recovering its vacancies. The vacancy rate for medium to large malls in Dongdaemun was 14.87% as of last year’s fourth quarter, significantly higher than the Seoul average of 8.85%. The vacancy rate for collective malls has long surpassed the Seoul average (9.08%) at 11.9%.
In fact, there were not many foreign tourists in the large complex shopping mall or the nearby streets. Cafés were filled with some Korean customers.
The area near Dongdaemun is home to large complex shopping malls that were once known as the "fashion capital." The impact of the COVID-19 pandemic and the shift in clothing consumption toward online platforms has made it increasingly reliant on foreign tourist demand. After last year’s martial law situation and impeachment period, the number of foreign tourists has noticeably decreased.
A representative from a women's clothing specialty store in a large complex shopping mall said, "I have been running this business for 20 years, and this is the hardest time. Since the martial law situation last year, foreign tourists have not come," adding, "After paying rent, electricity bills, etc., our revenue is negative. There are many nearby stores that just post their contact information and are not open, and many owners are contemplating quitting the business."
A representative from a real estate office near a large complex shopping mall noted, "Last year, the overall vacancy rate for large complex shopping malls like APM, Millie’s, and Good Morning City was about 30%, but it has likely increased since then," adding, "Visitor numbers have noticeably decreased, and even if we lower the rent, there isn’t much demand."
Experts predict that a chain collapse will occur as industry trends change, making recovery difficult. Song Seung-hyun, the representative of City and Economy, said, "Clothing and electronics are products specialized for online sales, and commercial districts specialized in particular goods, like Yongsan and Dongdaemun, experience faster collapse once the breakdown begins due to chain reactions," adding, "If we lose content, finding a way to transform the entire commercial district through redevelopment may be a solution."
Go Jun-seok, a professor at the Yonsei University Business School, stated, "The Yongsan electronics mall has very low rental rates, and the Dongdaemun clothing mall is cheaper compared to nearby Jongno District," noting, "Nonetheless, due to the nature of the theme commercial district, if consumption of the themed products is not occurring within the district, it is difficult to attract rental demand. Particularly, large complex shopping malls and street-side shops find it hard to compete with department stores."