The Empty Streets of South Korea’s New Towns

South Korea’s new towns were built with grand ambitions. Designed to alleviate congestion in major cities and create self-sustaining urban hubs, these planned developments promised modern infrastructure, ample green spaces, and commercial centers bustling with activity. Yet, despite the gleaming high-rise apartments and well-laid-out streets, a troubling reality has set in—many of these commercial districts remain eerily empty, their storefronts dark, their corridors silent.

The problem is not confined to one or two locations. Across the country, from Sejong City to the innovation districts of Kimcheon and Naju, the same story is playing out: high vacancy rates, struggling businesses, and entire shopping centers sitting abandoned, waiting for customers who never arrive. With national commercial vacancy rates reaching 13% for mid-to-large-sized retail spaces, and some new towns seeing rates of over 40%, the promise of thriving commercial hubs is fading.

This issue has become so severe that the Anti-Corruption & Civil Rights Commission (ACRC) has launched an investigation into the causes and potential policy failures that led to this crisis. As policymakers scramble to find solutions, the pressing question remains—why have South Korea’s new commercial districts become ghost towns, and what can be done to revive them?

At first glance, South Korea’s new towns appear to be successful. Sleek, modern apartment complexes line the streets, and infrastructure projects boast world-class amenities. Yet, a closer look at commercial districts tells a different story.

Official data from the Korean Real Estate Board’s 2025 Q1 report shows that while national commercial vacancy rates hover around 13%, the situation is far worse in some new towns. Sejong City, originally envisioned as a bustling government hub, now reports 24.1% of its commercial spaces sitting empty. In the Gwangju-Jeonnam (Naju) Innovation City and Kimcheon Innovation City, the numbers are even more alarming—42.1% of commercial properties remain unoccupied. Daegu Innovation City is also struggling, with a 35.3% vacancy rate, while Incheon’s Yeongjong New Town reports 25.8%.

The crisis is not limited to retail. Many commercial districts were planned with large office spaces, assuming that businesses would flock to these new locations. But in many cases, companies have been reluctant to relocate, preferring established business hubs like Seoul, Busan, or Daejeon. The result? New office buildings stand empty, failing to attract tenants despite developers’ best efforts.

The data suggests a grim reality—South Korea’s urban planning strategies have overestimated commercial demand, leaving many new towns with an oversupply of storefronts that simply have no customers.

New Town Commercial Vacancy Rates in South Korea

The table below shows the latest vacancy rates for commercial properties across major South Korean cities. The data includes vacancy rates for office spaces, medium-to-large retail stores, small retail shops, and shopping malls.

• Sejong City has the highest medium-large retail vacancy rate at 24.1%, raising concerns about sustainable commercial planning.
• Gwangju, Kimcheon Innovation City, and Jeonnam face some of the highest overall vacancy rates, with over 20% of retail spaces unoccupied.
• Jeonnam and Gyeongbuk struggle with mall vacancies exceeding 24%, reflecting challenges in sustaining large commercial complexes.

📊 What can be done?
Urban planners and policymakers must reassess commercial zoning policies, provide incentives for small businesses, and explore alternative uses for underutilized retail spaces to prevent further economic stagnation in new town developments.

What Went Wrong? Understanding the Causes of the Crisis

Several factors have contributed to the high commercial vacancy rates in new towns, and each tells a part of a broader failure in planning and market adaptation.

One of the biggest issues has been the overestimation of commercial demand by urban developers. When planning new towns, local governments and construction firms are required to set aside a certain percentage of land for commercial use. While this regulation is intended to ensure that residents have easy access to retail and services, it has often led to an oversupply of commercial spaces that do not match actual consumer demand.

This is compounded by slower-than-expected population growth in many new towns. While high-rise apartments have been built in abundance, actual occupancy rates have lagged behind projections. Some areas, like Sejong City, were expected to attract thousands of government employees and their families, but many have opted to commute from Seoul instead of relocating permanently. Without enough people living nearby, the demand for shops, restaurants, and services simply has not materialized.

Another major factor is the changing nature of consumer behavior. South Korea has one of the world’s most advanced e-commerce and delivery networks, and the COVID-19 pandemic further accelerated the shift toward online shopping. As more people opt for next-day delivery and app-based services, traditional brick-and-mortar businesses are struggling to remain relevant. Even in well-established areas, small retail shops are finding it difficult to compete—let alone in new towns where foot traffic is already limited.

Adding to the problem, rigid zoning regulations and high start-up costs make it difficult for small business owners to adapt. Many of these vacant storefronts cannot be repurposed for alternative uses due to strict zoning laws, and high rental costs prevent entrepreneurs from taking risks in these uncertain markets. For small businesses, setting up shop in an area with low customer traffic is simply not a viable option.

Who is Affected by the Crisis?

Behind the statistics are real people—business owners struggling to stay afloat, residents left without essential services, and city officials under pressure to justify their planning decisions.

For small business owners, investing in a storefront in a new town has become a financial nightmare. Many were drawn in by the promise of a growing customer base, only to find themselves in a near-empty district with little foot traffic. Some have taken on significant debt to cover expenses, only to shutter their doors within months due to unsustainable losses.

Residents, meanwhile, are frustrated by the lack of essential services. In some areas, people have moved into their new apartments only to realize that there are no supermarkets, clinics, or entertainment options nearby—even though commercial spaces exist. In Yeongjong New Town, residents have to drive several kilometers to the nearest full-service grocery store, while vacant commercial buildings sit empty right next door.

Local governments are also facing increasing scrutiny for failing to predict these problems. Many officials are now under pressure to revise outdated commercial zoning laws and develop strategies to prevent new towns from turning into failed urban experiments.

Is There a Solution?

Addressing the issue of rising commercial vacancies in South Korea’s new towns requires a fundamental shift in urban planning and policy implementation. Experts emphasize that the existing development model, which has prioritized large-scale retail and commercial spaces based on optimistic population growth projections, needs to be re-evaluated in favor of a more flexible and adaptive approach.

One of the most pressing changes involves modifying zoning regulations to allow underutilized commercial spaces to be repurposed. Instead of maintaining rigid classifications that limit land use, local governments could introduce policies that enable vacant storefronts and office spaces to be converted into residential units, co-working spaces, or multi-purpose community centers. This flexibility would not only reduce vacancy rates but also encourage a more diverse and functional urban landscape.

In addition to regulatory changes, stronger financial incentives could play a crucial role in revitalizing struggling commercial districts. By providing targeted rental subsidies, tax relief, and government-backed financing options, authorities can lower the barriers for entrepreneurs and small business owners who may otherwise be deterred by high operating costs. These measures would create an environment where new businesses can take root and grow, rather than succumbing to the cycle of closures and prolonged vacancies.

Furthermore, experts argue that the traditional retail-centric development model needs to be replaced with a more diversified approach that integrates retail, office spaces, and cultural or recreational facilities. Many new towns were designed with an over-reliance on large shopping centers, assuming that consumer demand would naturally follow. However, changing shopping habits—particularly the rise of e-commerce—have made this model less viable. By encouraging mixed-use developments that blend retail with cultural venues, entertainment hubs, and office spaces, policymakers can foster more dynamic urban environments that attract both residents and visitors.

Investments in public transportation and infrastructure will also be essential to reversing the trend of stagnation in these areas. Many new towns remain disconnected from major urban centers, making them less attractive to businesses and potential residents. Enhancing transit accessibility through expanded subway lines, improved bus networks, and pedestrian-friendly urban design could significantly boost foot traffic and commercial activity in these districts.

Ultimately, South Korea’s new towns must move beyond the outdated assumption that commercial viability will automatically follow residential expansion. A more strategic and responsive approach—grounded in realistic demand projections, flexible land-use policies, and proactive economic support—will be necessary to prevent these areas from becoming permanent ghost districts.

As the government investigates potential reforms, business owners and residents alike are watching closely, hoping that policymakers will take meaningful action before these ambitious developments become cautionary tales of urban mismanagement. Whether these new towns can evolve into truly self-sustaining urban centers or continue their trajectory toward economic stagnation depends on the willingness of planners and decision-makers to acknowledge past mistakes and embrace a more adaptive, forward-thinking model of urban growth.