Retail vacancy rate hits 15-year low
Space is expected to get tighter this year and ease in 2008
The retail vacancy rate is at a 15-year low of 3.7 percent and is expected to get even tighter by year's end, according to the latest market overview by the PM Realty Group.
While some 3 million square feet of new retail space is already planned or under construction, mostly on the Leeward Oahu, most of that won't be ready for occupancy soon.
"As it comes online in 2008 and 2009, you're going to get the relief," said PM Realty project manager Jeff Nasrallah.
Until it does, however, the retail vacancy rate will continue to be tight. PM Realty Group forecasts it will be lower than 3 percent by the end of this year.
The tight retail market pushed base asking rents to $2.88 per square foot per month at year-end 2006, and is expected to go up to $3.05 per square foot per month by year-end 2007.
Common-area maintenance fees rose by 10 cents last year to about $1 per square foot per month at year-end 2006, and is forecast to rise another 5 cents by year-end 2007.
Among the retail projects planned: Kapolei Commons and Kapolei Mall, which will bring more than 1.5 million square feet of new space. Laulani Village, a 250,000-square-foot shopping center, is expected to provide more retail room in Ewa Beach.
Also, Central Oahu is slated to be home to new retail centers like Pearl City Gateway and Manana Village Center, which are slated for completion next year.
The retail construction boom should boost the total amount of retail inventory on Oahu by a staggering 24 percent, according to PM Realty Group.
A number of factors are driving the boom, including rental rate appreciation, low-cost financing and interest from national and international tenants wanting to enter the Hawaii market, PM Realty said.
Target Corp. announced plans to open at Kapolei Commons, as well as at the former Costco Wholesale site in Salt Lake, in 2009.