State industrial vacancy rate inches upward
The industrial market in Hawaii has softened, resulting in a slightly higher vacancy rate of 1.7 percent in the second quarter of 2008, according to the latest MarketView report from CB Richard Ellis.
In the first quarter, the state industrial vacancy rate was 1.2 percent.
Due to unsold warehouse condos now up for lease in Kapolei, there is now 934,621 square feet of industrial space available statewide.
The weighted-average base asking rent, at $1.26 per square foot per month, declined in the second quarter after three years of consistent increases. It is still, however, 12 cents more than a year ago in the second quarter of 2007.
More space was vacated than filled in the second quarter, resulting in a loss of 281,182 square feet that was previously leased.
At the same time, increasing energy costs, along with the higher cost of other utilities and taxes, are expected to drive gross rents upward.
The new Kapolei warehouses are asking for $1.55 per square foot per month, well above the market average and just ahead of the airport and Mililani/Waipio markets.
The high cost of gasoline, however, is expected to reduce the desirability of the West Oahu warehouse inventory, according to the CBRE report.
Leasing activity also has slowed, according to CBRE, as prospective tenants watch economic developments with caution. Although Hawaii's foreclosure rate is low compared to the mainland, there have been mortgage business closures here, the report said.