Inventory of vacant office space unchanged from 2011

The vacancy rate for office space on Oahu stopped rising last year, according to a report calling 2012 the end of a five-year slide for the market.

Commercial real estate firm Colliers International said Oahu’s office leasing market ended last year with a vacancy rate of 13.04 percent, identical to the rate at the end of 2011.

The static rate represents an improvement after five consecutive years of rising vacancies, and Colliers said it expects vacancies should decline slowly over the next two years to nearly 12 percent by the end of 2014.

Still, the present rate of 13 percent remains at what is now a 10-year high, and compares with 7 percent in 2006 before vacancies took off in the face of a recession and its lingering effects.

Average rental rates sought by office landlords have been flat over the past few years, and there was little change last year, the report said.

Colliers said office leasing typically lags economic growth and other sectors of a real estate market — such as retail or warehouse property — because it is heavily dependent on job growth.

"It is only now starting to form a foundation from which to grow," the company said in the report, set for release today.

Unemployment in Hono­lulu came down to about 5 percent last year from more than 6 percent in 2009. The Colliers report cites 600 new jobs in the financial services industry and 200 new jobs in professional business services last year as contributing to office space demand.

Companies actually filled 103,842 square feet more office space than they emptied last year, or about the rough equivalent of a 10-story building, Colliers reported. But because some leased space was removed from the market, the vacancy rate was unchanged.

The rate at the end of last year represented 1.9 million square feet of vacant space out of 14.6 million square feet of available space. That compared with 2 million vacant square feet out of 15.6 million available square feet the year before.

The amount of available space for lease can grow when new buildings are developed or the use of an existing building changes.