"Why I Became a 'Building Poor'"... Confession of a Yeoksam-dong Building Owner

The era when simply owning a building could guarantee stable rental income is over. In the past, tenants would naturally come once a building was constructed, but the situation is different now. Building owners who cannot find tenants face vacancies and struggle with loan interest burdens—so-called 'Building Poor'—are increasing.

The reason for becoming Building Poor is not simply due to economic recession. In many cases, the owner's management approach and unrealistic expectations are at the core of the problem. For example, Mr. Y, in his late 60s, purchased a newly built small-to-medium building with one basement floor and six above-ground floors on a back street in Yeoksam-dong two years ago. However, currently three of the seven floors, including the first floor, remain vacant, and rental income falls below loan interest payments.

Mr. Y's case reveals the typical pattern of Building Poor. First, the investment decision was made based solely on the 'Gangnam' location without sufficient market research before purchase. Second, setting rents higher than surrounding market rates led to failure in attracting tenants. Third, despite volunteering to manage the building personally, lack of expertise resulted in inadequate facility management and tenant relations.

To prevent such failures, several core principles must be followed. First, thorough due diligence before purchase is essential. The building's physical condition, lease status, surrounding market analysis, and expected yield verification must be meticulously examined with professionals.

Next, realistic rent setting is crucial. High rents that ignore market rates are a primary cause of vacancies. Securing stable tenants at appropriate rents guarantees higher returns in the long run.

Finally, utilizing professional asset management companies should be actively considered. Professional PM companies that systematically handle lease marketing, facility management, tenant relationship management, and legal advisory play a core role in maintaining building value and maximizing returns.

As of 2025, Korea's commercial real estate market is experiencing worsening vacancy problems due to interest rate hikes and economic slowdown. It is an era where simply holding a building cannot guarantee stable returns. To avoid becoming 'Building Poor,' thorough market analysis and strategic operations are essential rather than intuitive investment.

Buying a building is just the beginning; the true success or failure of investment is determined by the management that follows.

<Korea Economic The Moneyist> Kim Yongnam, CEO and President of GlobalPMC Co., Ltd.