Oahu warehouse to expand
Increasing rents and high demand for available industrial properties have prompted a Honolulu real estate investment company to build the largest industrial facility under one roof in West Oahu.
Watumull Properties Corp. announced yesterday that it plans to renovate and expand a recently purchased warehouse in Campbell Industrial Park to 255,000 square feet. The company acquired the 62,000 square foot facility from Mutual Welding Co. for an undisclosed amount. Mutual Welding, a locally based company, is vacating the building and moving to Mapunapuna.
"We were motivated by the low vacancy rate in the industrial market and by nice growth patterns in West Oahu," said J.D. Watumull, vice president of Watumull Properties.
The existing facility, which sits on 12.1 acres, houses Papersouce Hawaii Inc., Watumull said, adding that potential tenants have expressed interest in leasing an additional 90,000 square feet in the speculative building.
Having an existing leased structure on the property enabled the company to reduce some of the risk associated with offering a new real estate product, Watumull said.
"We are able to renovate and keep our costs down that way," he said. "That's what makes this project work."
Mike Hamasu, research consultant for Colliers Monroe Friedlander, said market conditions support the Watumull project.
After a nearly decade-long standstill in new speculative construction for Oahu's industrial real estate market, there are signs that the market is preparing for more activity, Hamasu said.
Oahu's expected construction boom has triggered a need for more industrial warehouse space to house building and other related materials, he said.
But while there have been a number of owner/user development projects taking place in industrial mixed neighborhoods, up to this point, the market hasn't supported much speculative construction, Hamasu said.
Sanford "Sandy" Granger, owner of Grapac Properties, made headlines when he announced plans in February to build three small bay warehouses, totaling a combined 35,000 square-feet, on two acres outside the entrance to Halawa Correctional Facility.
But the Watumull project is noteworthy because "it's the largest speculative construction to hit the market at this point," Hamasu said, adding that if the project succeeds it could trigger more speculative building, especially in the West.
Honolulu's industrial experts say as market conditions continue to improve, most industrial real estate development is going to take place in the West and Central Oahu area, said Jeffrey W. Hall, senior director of research for CB Richard Ellis Hawaii.
As more people and businesses move into West Oahu, it's going to become more attractive for industrial operations to locate there, Hall said, adding that increasing rents and lower land values in the region could continue to spur a development cycle.
