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Honolulu's office vacancies up 10%


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POSTED: Tuesday, March 31, 2009

Honolulu businesses vacated more office space than they took during the first quarter of 2009 resulting in a negative absorption of 131,196 square feet, which was the highest since 2001, according to the latest office market report from CB Richard Ellis.

First-quarter office market vacancy climbed to 10 percent, or 1.4 million square feet of space, an increase of 1.2 percent from the year-ago quarter, according to the report from CBRE that was released yesterday. During the quarter, gross average asking rents decreased by 6 cents and net rents continued to soften.

“;As lease terms adjust to meet the realities of the marketplace, it is becoming more common to see increases in free rent concessions and a larger gap between asking rents and negotiated rents,”; Jeffrey W. Hall, Hawaii senior director of research at CBRE, said in the report.

However, the lackluster market has made it more difficult for tenants to obtain improvements unless they are leasing new large spaces, Hall said. Downtown parking costs continued to be an issue as well, he said.

Average monthly parking rates in the central business district rose by 2.6 percent to $196 from the same period in 2008 and the price for reserved parking spaces rose 9.8 percent from the year-ago quarter.

Operating expenses increased an average of 10 cents per rentable square foot in the first quarter with the average operating expense for a Honolulu office now up to $1.35 per rentable square foot. Some properties have reported operating expenses over $2 per rentable square-foot; however, CBRE expects the trend to begin to reserve as electricity costs continue to fall.