International Law

Seoul?s Growing Law Firms Finding ?No Room at the Inn?

Trumpeting Large Law Firms “One Family Under Three Roofs”, the Law Times reported Thursday on a phenomenon of relevance to all law firms in Seoul, including the foreign law firms supposedly salivating just outside the gates: Seoul’s office buildings are bursting at the seams, and law firms are finding it impossible to locate places with enough space to accommodate their growing numbers.

According to the Law Times, the vacancy rate of commercial office buildings with more than 10 storeys is at or below 1%, and fully 65.5% of office buildings across the Seoul metropolitan area have no empty space at all. In Kangnam it’s 71.7% of all buildings; Mapo and Yeoido, 64.9%, and the Central Business District (Kwanghwamun area) 62.6%. But remember that this is across all classes of buildings; in the Class “A” space the ratio of zero-vacancy buildings must be much greater.

Jeong Jin-Kyu, managing partner of the combined DeRyook/Aju law firm which announced its merger last month, told Law Times, “Originally we intended to lease one office north of the [Han] river for the whole combined firm, but the office situation is really serious. We’re not in a position to be taking up spaces all over the place.” He continued, “Regardless of whether in Kangbuk or Kangnam, we have to take up space for 100 lawyers as well as reserve space for anticipated growth. Finding such a place is very difficult.”

The Law Times mentioned the Horizon/Jisung firm as having a similar problem as DeRyook/Aju, being scattered across three offices already in Kangbuk and Kangnam. Bae Kim & Lee is said to have its people in the Hankook Tire Building on Teheran-no, plus three other locations—and Bae Kim & Lee reportedly is growing by 50 lawyers per year.

And, of course, Korea’s largest law firm Kim & Chang, with its 600-some fee earners, has metastasized from the Seyang Building where it started into three other buildings (to my knowledge, the Northgate Building, the Heungkook Insurance Building, and the Naray Building next door to Seyang).

Our own firm Hwang Mok Park PC is in this same bind: In 1999, the firm occupied the entire 9th floor of the Daekyung Building across from Namdaemun (before it burned down last year), and over time grew to take up 1/3 of the 10th floor. Then the Shinhan Bank designated this building their headquarters, and started to squeeze out the other tenants. HMP, when it needed yet more space, was forced to lease offices on the 10th floor of the neighboring Booyoung Building. Those offices now hold 15 lawyers. HMP overleased in the neighboring building, so we have growth space for maybe another 10 professionals. But our lease in the now Shinhan Bank Building is up in 18 months, and there isn’t space in the Booyoung Building for all of us to come over all of a sudden.

Where are the law firms going to end up? The traditional location for corporate law firms is the Kwanghwamun area north of the river, and due to building restrictions very little new supply appears to be available or on the horizon. In the late 1990s, several corporate firms got rooted in Kangnam, south of the river—notably Bae Kim & Lee, but also Yulchon, Yoon Yang Kim Shin & Yu, and Barun Law are all down there. And there’s not so much additional space coming on line down there, either.

In Yeoido, there are two major developments—the AIG International Finance Centre and Skylan Development’s next-door neighbor Parc 1—each of which will dump massive amounts of space onto the Yeoido market starting in 2010. IFC will have 88,000m² (26,667 pyong), while Parc 1 will have 268,000 m² (81,212 pyong) of office space—each in addition to retail and residential/hotel uses. Historically, no major law firm has been officed in Yeoido despite the island having been designated “the Manhattan of Korea”. But all that empty first-class space may entice one, as the Canary Wharf development got some out of the City of London, and the Landmark East and related redevelopments are pulling firms to the Kowloon side in Hong Kong. Hopefully the rates on offer for long-term early occupants will be favorable.

Additionally, there is one other area I can think of that has a lot of empty office space: Sangam-dong, near the World Cup Stadium in Seoul’s northwest corner. There are a number of completely empty, 25-storey buildings available in Sangam-dong. However, this area is far from Kwanghwamun, taking 25-40 minutes by car, and very far from Yeoido and Kangnam (over an hour to each). We have a client that moved over there, and have to visit on a regular basis. With the busiest district court in Seoul down on Teheran-no an hour away, the only law firm that might move to Sangam-dong would be one with a substantial transactional practice and a profile as a firm which could offer economical service due to location—sort of an Eversheds for Korea.

Full post as published by Korea Law Blog on August 25, 2008 (boomark / email).