Downtown Honolulu office
rents rise on solid demand

Office space vacancy in Honolulu remained close to 13 percent during the first quarter despite the addition of sublease space from Central Pacific Bank, according to a new report from Hawaii Commercial Real Estate LLC.

"We had significant absorption of direct lease space, several large sublease spaces were leased and asking rental rates increased," said James M. Brown, president of Hawaii Commercial Real Estate. The overall office vacancy rate increased slightly to 13.2 percent from 13.1 percent in 2004, almost entirely due to space opened up after the merger between Central Pacific Bank and the City Bank, Brown said.

"Central Pacific Bank added a 54,743-(square-foot) sublease to the market in City Financial Tower as a result of its merger with City Bank. It also closed its Bankers Club at the top of Central Pacific Plaza, which added several thousand square feet of new vacancy in that building," he said.

Demand for office space and an increase in operating expenses has prompted some building managers to increase rents, Brown said.

In the first quarter, full-service gross rent, with the exception of First Hawaiian Center, increased to a range of $2.36 to $2.60 per square foot a month.

Several businesses moved into Honolulu's commercial office space in the first quarter. Vacancy at Harbor Court decreased by nearly 13,000 square feet when it added four new tenants, Brown said.