The Bratton Team

Commercial real estate investment slips in Hawai’i, but still outpaces the overall US market

Rising interest rates have put a damper on Hawaiʻi’s commercial real estate sector.

According to a report from Colliers International Hawaiʻi, commercial real estate investment in the first six months of this year slowed considerably.

Sales volume for the first half of 2023 is down by more than a third compared to the same period last year. Total investments dropped from $1.43 billion to about $916 million.

Colliers attributes the slump to rising interest rates, with 30-year mortgages more than doubling from 3% at the start of 2022 to 7% by mid-August of this year. This has dampened not only residential real estate sales but commercial transactions as well.

Still, Colliers said Hawaiʻi has been doing better than the Continental U.S. And most of the investments that have been happening so far this year are by Hawaiʻi investors.

There were no international investments at all in the first half of the year.

Notable transactions for the period include the purchase of the Davies Pacific Center for nearly $77 million, and the purchase of Kings Shops for $38 million.

The only sale considered a “mega-deal” was the $130 million purchase of a 32-story affordable housing project on Maunakea Street, by Stanford Carr Development and Los Angeles-based Standard Communities.