- A report says the South Korean capital has the strongest office-real-estate sector in the world.
- Some have chalked it up to reluctance to accept remote work after pandemic restrictions eased.
The debate over whether companies should allow flexible work-from-home arrangements versus mandating their employees to return to the office 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. The increase in competition for office space has led to a roughly 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, or 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 summer 2021, 91.5% of the country's leading firms were implementing WFH policies, a survey by Korea Enterprises Federation, or KEF, found, Pulse News reported.
As COVID-19 restrictions have eased, the number of jobs allowing employees to work from home has declined. KEF found that now, fewer than 60% of big companies allow their employees to work remotely.
Of the 40% of companies KEF surveyed that still allow remote work, almost two-thirds of those companies said they only allow 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 KEF told Pulse News.
But it's not only demand and working culture that boosts the Korean market's strength. There has been a general shortage of office space since 2021 due to government restrictions on redevelopment and the pandemic's disruption of construction.
The Korean economy has also seen steady growth, bolstering both international and domestic investment.
But US business districts have struggled because of the rise in popularity of working from home and many employees' reluctance to start commuting five days a week again.
Goldman Sachs found that the share of US workers who work from home at least some of the workweek has stabilized this year to around 20% to 25%, 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, Forbes reported.
Commercial landlords have seen tenants cut space or move out completely amid the new remote-work culture and office vacancies were at a 30-year high of 18.2% in the US in the second quarter, according to CBRE research.
The Biden administration recently announced plans to incentivize developers to convert empty offices into apartments to help alleviate the US housing crisis.