For the third consecutive year, Hawaii commercial real estate investment sales volume exceeded $4.0 billion, hitting $4.1 billion in 2016. Despite an 8.3% decline from the $4.47 billion recorded for 2015, the number of transactions rose by a healthy 18.1% from 254 to 300 over the past year (for commercial real estate transactions with a minimum of $1 million sales price).
The Oahu retail market posted a loss of 124,960 square feet of net absorption at the end of 2017’s first quarter, resulting in an increased vacancy rate to 9.17% from 8.44% at year-end 2016. Underlying the contraction in the market was the vacancy left after the 147,000-square foot Kmart closed at Waikele Center in Leeward Oahu.
Vacancy rates rose to 12.66% from 12.38% over the past quarter, as 61,190 square feet of lost occupancy was generated in the fourth quarter, bringing the total year net absorption to 42,103 square feet. While this is the second consecutive year of positive occupancy gains for Oahu’s office market, vacancy rates have zigzagged over the past five quarters and have not set a definitive direction for the market. It has been seven years since the end of the Great Recession and while many other commercial real estate sectors have boomed, the office market still remains mired in mediocrity.
The industrial market continues to get squeezed tighter and tighter. The Oahu market posted a second quarter gain of 61,411 square feet of net absorption, pushing the year-to-date occupancy gain to 129,093 square feet. As a result, the island-wide industrial vacancy rate fell to another record low at a miniscule 1.33%.