The first half of 2010 wasn’t pretty for Oahu office landlords, according to a survey released yesterday.
The amount of office space vacated on the island so far this year roughly equates to a 16-story building.
Local commercial real estate firm Colliers Monroe Friedlander reported that a net 167,379 square feet of office space was vacated this year through June.
That means that almost as much office space was emptied in the first six months of 2010 as was in all of 2009. A net 184,780 square feet of office space was vacated last year.
"All the office-using industries are facing cutbacks or difficulties," said Mike Hamasu, research and consulting director for Colliers.
The decline in leased office space pushed the vacancy rate to 11.4 percent, up from 10.3 percent at the end of last year. The midyear vacancy rate represents about 1.8 million square feet of empty space in the market with 15.8 million square feet of leasable space.
Colliers predicts that the vacancy rate will eclipse 12 percent by the end of the year and rise further to 13 percent early next year before stabilizing by mid-2011. A historical vacancy high was 13.7 percent in 1998, closely followed by 13.6 percent in 2002.
OAHU OFFICE SPACE
» Total leasable space: 15.8 million square feet
Hamasu said some local job gains materialized in recent months, but he doesn’t expect much positive impact on job sectors that occupy lots of office space, such as financial services and government.
If rising office vacancies continue this year, it would be the fourth consecutive year of industry contraction since 2006 when the vacancy rate was 7 percent.
Colliers said tenants have the upper hand at negotiating favorable rental rates and incentives, though landlords were asking an average of $2.79 per square foot per month in gross full-service rent in the first half of this year, or 4 cents more than at the end of last year.