Starbucks four story Korea flagship coffee shop will be relocating due to an excessive rent increase.
Most Koreans know the Myongdong location of Starbucks. In fact, it is known not only for its coffee drinks by is used many upwardly mobile young urban adults as a place to meet on dates.
The Korean affiliate of the Seattle-based coffee chain announced that the company has decided to relocate the shop due to an unacceptable’ rent hike.
Essentially, the landlord doubled the monthly rent. This had driven Starbucks to close the flagship shop and relocate it to an adjacent area.
Industry sources in Korea estimate the new rent was to be $100,000 with an additional $300,000 down payment.
Why?
The Myongdong area of Seoul is one of Korea’s most expansive areas for retails and office rent.
In a rent survey of 229 shopping districts among 45 countries, Cushman & Wakefield Healey & Baker found that Myongdong is ranked 10th in the world and 4th in Asia.
Moreover, the area near the Starbucks location was ranked No. 1 in a survey of standard prices of real estate in 2004.
Starbucks Korea notes that with the relocation of the Myongdong shop, they expect the rent to fall to two-thirds of the proposed cost. More important, Starbucks Korea sees sales in the new Myongdong shop doubling.
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