Isle commercial Layoffs from the downturn in Hawaii's tourism-driven economy are also hitting Hawaii's commercial real estate business, a real estate expert said yesterday.
real estate vacancies
increasing, expert says
CEO-broker Andrew Friedlander
says layoffs left 200,000 square feet
of available office space in '01By Russ Lynch
rlynch@starbulletin.comJob losses, direct and indirect, opened some 200,000 square feet of office space in 2001, said Andrew Friedlander, chief executive and principal broker of Colliers Monroe Friedlander Inc., a commercial real estate management, rental and sales firm.
Until late Thursday, Friedlander said, his company's researchers believed the amount of vacant office space would increase by about 50,000 square feet. Layoffs, however, led to less need for administrative space.
The result is good for tenants, because they can look forward to lower rents in new contracts, but not so good for the property owners who will see their income fall.
Speakers who joined Friedlander in the 11th annual economic forecast breakfast of the Hawaii chapter of the Institute of Real Estate Management at the Ala Moana Hotel, agreed with him on one thing -- Hawaii's economy wasn't doing great just before the Sept. 11 disaster.
Hawaii tourism had "a phenomenal year" in 2000 and was doing reasonably well in 2001, but already had slowed substantially before the terrorism setback, said Joseph Toy, president and chief executive officer of Hospitality Advisers LLC, a Honolulu-based consulting firm.
But Sept. 11 brought disastrous numbers. Toy said island hotels missed $143 million in revenues in the 31 days that followed Sept. 11, including all the money coming into the hotels from room rates to food and beverage sales, compared with the same period a year earlier.
That was worse than the Gulf War period from 1990, in which the hospitality businesses saw those revenues slip by $130 million for three months, he said.
Toy said that before Sept. 11 Hawaii had already shown signs of a shift to lower-revenue tourists, from big-spending corporate incentive tours and convention-goers to families seeking low-cost deals.
The group's spokesman for residential real estate, Herbert Conley, managing director of the residential business of Coldwell Banker Pacific Properties, said Oahu has been through an exciting period when sales volume and prices both rose. However, that trend that traditionally ends in a downturn, he said.
But Conley said that low mortgage interest rates are helping sales.
"Even if rates go up, there will be a spike in sales," as potential buyers who have been sitting and watching get off the fence, he said.
But Conley said recent median prices among previously owned single-family homes show it is a good time to buy. In 1996, the year before an upsurge in Oahu real estate began, the expected mortgage payment for the median-priced house that year was $2,000 a month because of an 8.3 percent annual interest rate and a median price -- midway between the lowest and the highest -- of $335,000. Now the median has slipped to $305,000 and the interest rate is 7.2 percent, he said.
The result is a monthly payment of about $1,625, opening up $375 of additional spending money for the owner, Conley said.
The consensus among the speakers was that Hawaii got hit harder by Sept. 11 events than other states, because of its dependence on airline-delivered tourism, but has weathered previous economic storms well and probably will this time.
A major factor pointing in that direction is investor interest in Hawaii, such as their willingness to finance major hotel improvements and buy commercial buildings, the speakers said.