As Covid-19 impacts the globe, commercial properties and tenants are “feeling the burn” according to Mark Bratton. It is crucial that tourism comes back to the islands as tenants are treading water. Mike Hamasu, Director of Research at Colliers International also is anticipating that office spaces will rise in vacancies by 2% and by the end of the year to 12% vacancy statewide. Retail is currently from 6% vacancy and could rise to as high as 10% by the end of the fourth quarter. We are hopeful that we as a state will recover, but it could be awhile before tourism comes back as the 14-day self quarantine has been extended to June 30th.
Mark Bratton, senior vice president for Colliers International, said commercial properties throughout Hawaii are feeling the burn, with 41 of them already on a commercial mortgage-backed securities watch list with a servicer appointed to monitor their loans.
“It’s a relatively small percentage of the total commercial properties, but I’d say half of the properties on the watch list went on it because of COVID-19,” Bratton said. “There are some big hotels, large retailers and some very well capitalized owners on the list.”
Bratton said so far the only foreclosures on the watch list were already there before COVID-19. However, the timing of tourism’s reopening is crucial as many commercial properties and their lenders have kicked the can down the road.
“I don’t think we’ll see that many foreclosures or sales for a year or two, but eventually bond holders may say enough is enough,” he said.