Investors ease up on Hawaii commercial real estate purchases
Hawaii’s commercial real estate market is taking a breather from r ecord sales last year, a new report shows.
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Hawaii’s commercial real estate market is taking a breather from r
ecord sales last year, a new report shows.
Colliers International forecasts that sales statewide of hotels, shopping centers, rental housing and other commercial property will decline 40% to 45% to about
$3 billion this year from last year’s $5.15 billion record.
The commercial property brokerage firm made its forecast in a report released for publication last Friday.
In the report, Colliers tallied
$1.3 billion in Hawaii commercial property sales over $1 million during the first half of this year. That’s down 58% from $3.1 billion in the first half of last year.
If the firm’s forecast is on the mark, sales this year could reach $3.1 billion to roughly match the total in 2017 under the more
optimistic end of the
Colliers said in its report that interest rates and stock market volatility this year have made commercial real estate a more attractive investment, but that other factors including a stronger dollar have negatively affected the market.
One major factor in last year’s record was a relatively large number of transactions over $100 million.
Last year, there were
10 such sales, which Colliers referred to as “megadeals.” Of the 10, seven were for more than $200 million and one property, the Grand Wailea resort on Maui, sold for $1.1 billion.
“There are only so many megadeals in Hawaii and they trade cyclically,” Scott Mitchell, a Colliers executive vice president, said in the report.
This year through June, there have been only three sales for more than $100 million. The biggest of the three was $211 million for
520 rental homes in
The 10 biggest sales this year through June included: the former King Kamehameha Kona Beach Hotel for $104 million; Hawaii island retail complex Queens’
MarketPlace for $90 million; vacant Waikiki retail building King Kalakaua Plaza for
$51 million; and a building in Kapolei housing the Honolulu Star-Advertiser printing press for $40 million.
By property type, housing complexes represented
the most sales volume at $468 million this year through June. Retail was next at $235 million, followed by vacant land at $217 million. Resort property, which in prior years led the tally, accounted for only $194 million in sales. There was also $135 million in industrial property sales and $43 million in office property sales.
Colliers noted that there were more transactions in the first half of this year than in the same period last year — 135 compared with 117.
The higher transaction volume was driven by more purchases by local investors that accounted for 107 purchases this year through June. That was up from 84 purchases by local investors in the first half of last year.
One local buyer, Honolulu-
based Alexander &Baldwin Inc., acquired four properties Colliers listed among the 10 biggest sales in the first half of this year. Those deals were Queens’ MarketPlace, a $26.5 million Kapolei warehouse, a $41 million industrial property also in Kapolei and land leased to Home Depot in Iwilei that sold for $42.4 million.
The report noted that
a stronger dollar has made property more costly for
Colliers also said reduced
investment from China was expected because of increased Chinese government restrictions on overseas investments.