Retail vacancy rate shows life


POSTED: Friday, November 20, 2009

Oahu's retail vacancy rate inched up slightly despite worsening global economic conditions, according to a year-end retail market report by Colliers Monroe Friedlander.

The rate is 3.47 percent this year compared with 3.23 percent last year, but that increase is low when compared with double-digit vacancies recorded in mainland cities such as Las Vegas, Phoenix and Sacramento, Calif., according to Colliers research director Mike Hamasu.

“;The jury is still out as to whether Hawaii dodged the proverbial bullet or whether the belief that Hawaii's market lags behind the U.S. mainland holds true,”; said Hamasu.

Average base asking rent for the year went up slightly to $3.57 a square foot per month, compared with $3.47 a square foot per month in 2008.

Two new retail centers opened this year, bringing significant new space to the market, as well as several new-to-Hawaii chains.

» The MacNaughton Group opened the first phase of Kapolei Commons, an open-air mall anchored by Target, Ross Dress for Less, Sports Authority, Petco, Office Max and Price Busters, earlier this year.







        » Vacancy rate: 3.47%

        » Average asking rent: $3.57 a square foot per month

        » Average operating expense: $1.10 a square foot per month

        Source: Colliers Monroe Friedlander


        » Growth spurt: Lenders for mall operator General Growth Properties Inc., which owns and operates Ala Moana Center, have agreed to restructure $8.9 billion in shopping mall mortgages. Pg. 33

» Pearl City Gateway, a project by Robertson Properties Group, debuted with David's Bridal, Petco and Babies R Us, all mainland retailers opening their first stores in Hawaii.

Despite the economy, several retailers, including Price Busters, Ross, Blazin' Steaks, Longs Drugs (under ownership of CVS/pharmacy) and Walgreens have been expanding in Hawaii.

The outlook for resort retail is also improving, according to Colliers, with leasing agents reporting an increased interest in space.

Ko Olina Station and Ko Olina Center, a pair of new office and retail complexes near the Disney Resort, have signed on anchor tenants including Wyland Grille and an upscale ABC Store.

While some new retail developments managed to secure financing and key anchor tenants before the recession, more than 4.3 million square feet of planned retail and commercial developments have been put on hold.

Delayed or canceled projects include Laulani Village in Ewa Beach, Manana Village Center in Pearl City and Kapolei Town Square on the Leeward side.

The outlook for new construction projects is not expected to get any better next year.

“;Cautious optimism is prevailing,”; said Hamasu. “;Everyone's waiting for improvement in the market environment before further construction activity or development expansion plans.”;

While the year turned out better than expected, Colliers still forecasts a retail vacancy rate of more than 5 percent by the end of 2010 due to the economy.

A further softening in the marketplace is anticipated, according to Colliers, due to furloughs and layoffs of government workers, which hurt consumer confidence.