'Main roads are empty, alleys are packed' What happened to Itaewon...

On a recent visit to the main road between Noksapyeong Station and Itaewon Station in Yongsan District, Seoul, long-vacant buildings were visible throughout the area. The first and second floors of Deokheung Building, located along the main road, have remained empty since Coffee Smith's Gyeongridan-gil branch closed in 2023. A notice saying short-term leasing is available is posted there, but it still appears difficult to find a tenant.
The situation nearby was not much different. The ALDO Itaewon branch has remained vacant since the brand withdrew in 2021, and the site where Foot Locker was removed has also been empty for 16 months. Across the street, it was not hard to find buildings that were completely vacant. The spaces left behind by global brands and large stores that once filled the main road have not been easily replaced by new tenants.
By contrast, the atmosphere on the back streets one block in was different. As soon as you entered the alleys inside Itaewon-ro, restaurants, bars and other businesses were already drawing crowds from early evening. Even before the main dinner hour began, many first-floor shops were already full. Aside from some family tourists, most of the visitors were Koreans and foreigners in their 20s and 30s. While the main road is emptying out, the alley commercial district is being filled by younger customers.
A man in his 30s, identified as A, who visited a taco restaurant in Itaewon that day, said, "Itaewon is a place where you can experience food and culture from many different countries." He added, "I come to the alley shops on purpose because I can enjoy not only the food but also the different music and atmosphere at each store."
As the center of gravity in the commercial district shifts from the main road to the alleys, rent trends are also reversing. According to Real Estate Statistics Information, average rent for small shops in Itaewon in the first quarter of this year was about 66,000 won per square meter, higher than the roughly 59,000 won per square meter for large roadside stores. In other words, a reversal is taking place, with small alley shops commanding higher rents than large stores on the main road.
This trend is also reflected in returns. In Itaewon, the income yield from medium- and large-sized commercial properties, including operating income and rent, stood at 0.42 percent in the first quarter, while small commercial properties posted 0.47 percent, making them 0.05 percentage points higher. That is the opposite of the broader Seoul market, where medium- and large-sized commercial properties had an average income yield of 0.61 percent, 0.16 percentage points above the 0.45 percent yield for small commercial properties.
Industry observers say the prolonged vacancies stem from a mismatch between Itaewon's consumer profile and the character of large roadside commercial spaces. Itaewon has a strong identity as a night-time district centered on experiential consumption, such as foreign cultures, unusual food, bars and clubs. By contrast, large roadside stores are geared toward mainstream brands, shopping and big-box retail, which analysts say does not align with the spending preferences of the MZ generation that visits Itaewon.
Ko Jun-seok, a professor at Sangnam Institute of Management, Yonsei University, said, "Itaewon was once a typical foreigner-oriented commercial district, but it has lost some of its former competitiveness as foreign demand has spread to Myeong-dong, Mangridan-gil, Seongsu-dong, Hongdae and Gangnam." He added, "Clubs and bars on the back streets fit a commercial district that runs from early evening into the night, but the main-road area does not match Itaewon's consumption hours."
going@fnnews.com Choi Ga-young Reporter