Rents continue to rise as retail space remains tight
Waikiki tops the list with rents averaging $11.34 per square foot
An economic slowdown may be on the way, but retail space is still tight on Oahu, according to the latest market report by Colliers Monroe Friedlander.
Oahu's vacancy rate was 3.3 percent at year's end, an improvement from the record low vacancy rate of 2.1 percent at year-end 2006, but rents have continued to rise.
The average base rent for year-end 2007 was at $3.31 per square foot per month. That's a 41 percent increase in rent over the last four years.
Most of the spaces filled over the past year were due to new projects such as Outrigger Enterprise Inc.'s Waikiki Beach Walk and the Center of Waikiki.
For Waikiki, the 2007 average asking rent spiked to $11.34 per square foot per month, according to Colliers, a 23 percent increase over the past year and record high for retail properties there.
Waikiki vacancy rates ended this year at just 4.49 percent, a huge drop from 16.7 percent recorded in 2004.
Of all shopping center properties, resort and specialty retail centers posted the greatest increase in rents -- averaging $9.52 per square foot per month, more than triple the amount for neighborhood shopping centers.
Regional malls and community centers generated marginal increases in asking rents of 4 percent to 5 percent over the past year.
As 2007 comes to a close on Oahu, many retail entries and exits have made for a dynamic real estate market.
CompUSA recently announced it would be liquidating and closing stores across the nation, including the Pearl City and Honolulu locations after the holidays, with DJM Realty handling the subleases.
KB Toys, as well, announced it would be closing its stores at Kamehameha Shopping Center, Pearlridge Center and Ala Moana Center.
Meanwhile, mainland retailers entering the market include Walgreens, which recently opened its first store; Whole Foods Market, which expects to open at Kahala Mall next year; and Target, which will open three stores in 2009.
New national tenants are also expected to sign leases at the two new regional malls -- Kapolei Commons and Makana Alii in East Kapolei as well as new retail centers on former U.S. Navy lands in Manana.
Safeway Kapahulu, meanwhile, opened its largest supermarket in the state, along with close to 15,000 square feet of additional retail space leased to restaurants and shops.
Nijiya Market, a Japanese organic foods market, meanwhile, has signed on for 11,000 square feet at Pucks Alley. IHOP is also expanding its presence on Oahu, with its newest location at the Times Square Shopping Center in Pearl City.
More than 3.1 million square feet of retail developments are on the drawing board. But until they come online in upcoming years, retail space remains tight.
Hamasu said Colliers projects a slowdown in the rental rate growth compared to past years, but the vacancy rate will remain low. As retailers get squeezed by higher rents and fuel surcharges, the cost is likely to be passed on to the consumer.
2007 Oahu retail space
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Source: Colliers Monroe Friedlander