Hawaii’s economy is in a general recovery mode, but it won’t likely be until next year before industrial businesses are healthy enough to reduce the amount of vacant warehouse space on Oahu, according to a new report.
Warehouse space vacancies on Oahu are projected to rise to between 5 percent and 5.25 percent by the end of the year from 4.7 percent at the end of June, according to the report by local commercial real estate firm Colliers Monroe Friedlander released today.
Colliers said it anticipates improvement in the industrial real estate market starting in the first half of next year, based on economic forecasts calling for continued improvement in various sectors of the local economy, including tourism.
"The hope is that 2012 will usher in growth in the industrial market with a rise in resort retail demand, increased construction activity fueled by job growth and government infrastructure spending," the Colliers report said.
During the second quarter of this year, Colliers said, warehouse vacancy grew by 86,989 square feet primarily driven by Frito-Lay vacating a 66,000-square-foot building in Halawa. For the first half of the year, vacancies are up only 9,867 square feet due to a better first quarter.
The 4.7 percent midyear vacancy rate equates to about 1.8 million square feet of empty space from total inventory of 38.8 million square feet.
The vacancy rate has been at about 4.7 percent since 2009, which capped four years of significant increases from a 1.8 percent vacancy rate in 2005.
Colliers said a roughly 6 percent vacancy rate for industrial property is a point at which tenants and landlords have balanced leverage.
Landlords at midyear were asking 91 cents per square foot in base rent on average, down from 99 cents at the end of last year.
A different report from rival commercial real estate firm CB Richard Ellis put the industrial vacancy rate on Oahu at 6.2 percent at midyear, representing 2.1 million vacant square feet out of 34.3 million square feet. CBRE also calculated a statewide vacancy rate of 4.7 percent.
CBRE’s survey said average asking base rent at midyear was 94 cents per square foot on Oahu and 95 cents statewide.