Hawaii’s retail sector expanded substantially over the past year as new shopping centers opened across Oahu.
A Colliers International study due to be released today said retail space grew by more than 350,000 square feet over the past year due to the opening of major developments, including a new Safeway on Beretania Street, Whole Foods Market at Kailua Town Center, Foodland at Kapolei Village Center and Safeway at Laulani Village in Ewa Beach.
Ross Dress for Less, Walgreens and T.J. Maxx are among the retailers that opened new stores this year and added 4,300 jobs to the retail industry, the report said.
Despite the growth, the addition of new centers boosted vacancy rates to 4.6 percent from 4.2 percent at the end of 2011 as developers sought to fill non-anchor spaces.
"Although we added a bunch of new growth, there’s still a bunch of empty space in the shopping centers," said Mike Hamasu, Colliers consulting and research director.
A significant portion of the vacancy came from Aloha Tower Marketplace, which has struggled for years to generate enough traffic to sustain retailers.
The average asking rent on Oahu fell to $3.24 per square foot from $3.39 in 2011 as tenant demand at neighborhood shopping centers still remains softer than that of the resort market. That doesn’t include resort areas such as Waikiki and Ala Moana, where rents are three to four times higher due to a rebound in tourism contributing to higher sales, the report said.
Colliers is projecting additional gains in the retail industry next year as new developments gain traction and national retailers continue to expand in the market.
Those projects include Kapolei Commons Phase II, Ka Makana Ali‘i and General Growth’s expansion of the Sears anchor site at Ala Moana Center, as well as a plan for hundreds of thousands of square footage of commercial space at Ward Centers.
"Basically the bottom line is that the retail market shows a lot of strength," Hamasu said. "The growth of the retail sector is indicative of a market that’s healthy.
"You’ve got retailers that are interested in expanding in the marketplace. A lot has to do with the overall health of the economy. When people start to feel more confident in the future, they tend to feel more at ease in spending money."
