To stop the increase in retail vacancies, it is pointed out that the fundamental structure of retail supply, which exceeds demand, must be changed. Although demand for retail space has decreased as online e-commerce continues to develop, the retail supply structure remains stuck in the past, making it inevitable that there will be an oversupply of retail space.
There is an opinion that to address existing retail vacancies, along with changing the retail supply structure, flexible regulations such as change of use must be applied, and local governments must also work to develop business districts.
◇ The oversupply structure of retail requires change
Experts observe that as the structure of direct retail visits by consumers has changed, if retail spaces continue to be supplied as they are, the vacancy problem will only deepen. It is necessary to assess an appropriate supply scale of retail space that aligns with the changed commercial environment due to the expansion of non-face-to-face consumption culture. Factors such as the development stage of the business area and the timing of revitalization should also be considered when determining the scale of retail supply.
Currently, in public housing districts, the commercial land is adopting a standard of 6-8㎡ per person when the land development scale is less than 3 million㎡. The ratio of non-residential facilities in mixed-use buildings in urban commercial areas is over 10%.
Professor Yoo Seon-jong from the Department of Real Estate at Konguk University said, "In new towns like Sejong and Dongtan, the ratio of commercial land is high from the time the district unit plan is established and land is supplied." He noted, "Given the structural limitations of retail in new towns, even if the ratio of commercial land is lowered and the district unit plan is modified, it is necessary to reduce retail supply and supply it for other purposes."
Senior Research Fellow Song In-ho from the Korea Development Institute (KDI) stated, "Creating a retail ratio and ensuring that residents can easily utilize retail spaces is based on past experiences." He noted that while there is mandatory supply of retail spaces proportional to all newly constructed apartments, it is now a time when that system is not functioning effectively. He added, "Since retail spaces are required to be included when new apartments are built, unless there is an influx of population in that area, vacancies will continue to arise."
There is also a viewpoint that the form of retail supply needs to change. Senior Research Fellow Song said, "In the United States, there is a concept of a "Mall," which separates residential areas and shopping centers by providing a specific space for shopping." He suggested that it might be time for this concept to be introduced in South Korea as well.
◇ The need for flexible regulations on usage... local governments must work to develop business districts
It is pointed out that to solve existing vacancies in retail spaces, the government and local governments must secure flexibility in changing usage. In cases of new towns, the limited leasing of retail spaces to only certain types of business can increase the risk of vacancies as their usage is determined in the district unit plan.
Research Fellow Lee Seok-hee of the Korea Real Estate Board noted in the report "Factors Causing Retail Vacancies and Policy Measures" that "While 22 to 26 different building uses are allowed in commercial areas under the zoning system, the commercial land in new towns is determined by district unit plans," adding that "typically, only about 10 usage types are permitted, and there are regulations on building floors."
He further stated, "The segmented district unit plans by area, regulations on usage types by street type, and regulations on usage by floor are likely to cause side effects, and it seems appropriate for usage-related regulations to be operated more flexibly."
There are also opinions that the efforts of local governments to revitalize business districts are necessary. Like Sejong City, which hosted the first 'Retail Vacancy Expo' last year, local governments should play a role in consolidating connections between retail landlords and tenants.
◇ Knowledge Industry Complex is not just a simple vacancy issue... regional industrial competitiveness must be restored first
Experts agree that a fundamental solution to the vacancy problem of Knowledge Industry Complexes is to restore the regional industrial competitiveness. Simply having Knowledge Industry Complexes does not mean that corporations will come, so the government and local governments must first establish the industrial foundation to attract corporations to these complexes.
Professor Yoo indicated, "The intention of injecting self-sufficiency functions into the city led to a significant supply of Knowledge Industry Complexes," adding, "However, self-sufficiency functions do not arise simply by establishing Knowledge Industry Complexes." He continued, "It is crucial to create infrastructure that allows industries to properly enter the region, and this aspect must be taken into account from the urban planning stage."
Professor Seo Jin-hyung from Kwangwoon University also stated that "To resolve the vacancies in Knowledge Industry Complexes, revitalizing the local economy is the most urgent task," noting that due to numerous regulations on dwellings and officetels, the demand for Knowledge Industry Complexes, which emerged as an alternative (investment) product, can only arise if the local economic foundation is rejuvenated. He added, "In the short term, it would also be beneficial to consider measures such as reducing acquisition tax and capital gains tax for long-term chronic unsold units in Knowledge Industry Complexes."