This study examines the effects of department store closures on nearby housing prices and local commercial activity in South Korea, as the sector enters a phase of structural transformation marked by increasing polarization between high-performing flagship stores and underperforming non-core locations. Unlike discount stores, department stores function as high-order urban anchor facilities that integrate retail, cultural, and symbolic roles. This suggests that their closures may generate broader urban impacts beyond a simple reduction in retail supply. Using apartment transaction data and restaurant closure records, this study applies difference-in-differences (DID) and difference-in-difference-in-differences (DDD) models to analyze housing market impacts and employs a Bayesian structural time series-based causal impact model to estimate counterfactual changes in local retail activity. The results indicate a general downward trend in housing prices following department store closures. In Suwon, the DID estimates demonstrate no statistically significant average effect, whereas the DDD model identifies an additional price decline within the core impact zone, particularly in areas closer to the closed department stores, suggesting localized spatial effects. By contrast, in Changwon, although the estimated coefficients consistently point to a negative direction, no statistically significant housing price decline is identified. Regarding retail activity, the findings suggest an increase in restaurant closures after the shutdown, implying a contraction in local commercial vitality. However, both the magnitude and persistence of these effects vary across cases, reflecting differences in urban structures and market conditions. Overall, the results suggest that department stores play a meaningful role as urban anchor facilities, but the impacts of closures are not uniform and are shaped by broader urban development trajectories and local contexts. This study provides empirical evidence to inform urban policies and post-closure redevelopment strategies that account for regional heterogeneity.
Cho et al. (Wed,) studied this question.