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Business

Rate of empty warehouse space in state hits 4.7%

Andrew Gomes

Industrial businesses in Hawaii vacated more space than they leased in the third quarter, erasing an improvement to statewide warehouse occupancy in the previous quarter, according to a new survey.

The report by commercial real estate brokerage firm CB Richard Ellis said the local warehouse property market had a net occupancy loss of 156,079 square feet in the July-September period.

The loss roughly equates to the size of a Costco store, and pushed up the state’s industrial space vacancy rate to 4.7 percent from 3.4 percent in the third quarter of last year and 4.3 percent at the end of the second quarter.

A 4.7 percent vacancy rate represents 2.6 million square feet of empty space out of 56 million square feet of available space.

Though the rate is not terribly high, it is up sharply from rates near 1 percent as recent as early 2008, when there was still a shortage of desirable warehouse space for lease.

CB Richard Ellis said average base asking rents, which have come down to about $1 per square foot this year from recent highs between $1.20 and $1.30 in 2008, are expected to stay about flat for the rest of the year.

For the first nine months of this year, Hawaii’s industrial real estate market accrued a net occupancy loss of 315,797 square feet, which CB Richard Ellis characterized as relatively stable.

However, the decline in occupancy during the third quarter included the removal of a big warehouse condominium complex from available inventory, which had the effect of boosting overall occupancy by reducing the amount of vacant leasable space.

The warehouse condo complex, Waipio Business Center, was made available for lease after unit sales stalled amid the recession. But a lender recently removed the property from the market after repossessing the project at a June foreclosure auction.

The move helped reduce warehouse vacancy by 129,936 square feet in the Waipio/Mililani area, according to the CB Richard Ellis report.

For all of Oahu, empty space rose by 108,854 square feet in the third quarter to put the vacancy rate at 6.2 percent.

On Maui, vacancy rose by 58,876 square feet in the third quarter to put the rate at 1.9 percent.

Vacant space on the Big Island rose by 21,274 square feet to put the rate at 2.6 percent.

Kauai’s warehouse market bucked the trend with an occupancy gain of 32,925 square feet to put the vacancy rate at 1.9 percent.

 

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