Oahu retailers expanding heavily
OAHU'S holiday shoppers have significantly more choices this year, with retailers occupying an additional 300,000 square feet compared with last year, creating the highest amount of total shopping space in the past seven years, according to a report released yesterday.
Healthy leasing activity at Ala Moana Center, Pearlridge Center and the Royal Hawaiian Shopping Center took the shopping center vacancy rate down to 3.38 percent, the best it's been in a decade, according to commercial real estate firm Colliers Monroe Friedlander.
The vacancy left by J.C. Penney's closure at Ala Moana and Pearlridge helped the centers broaden their pool of new retailers by replacing the large, multilevel anchor spaces with more tenants.
"I've been in retail management for 18 years and I've been through a lot of Black Fridays and I've never seen anything like what I've experienced here," said Fred Paine, the new general manger of Pearlridge Center. "There were so many people walking around with shopping bags that when I went to get in my car, I felt like a salmon swimming upstream."
The pre-Thanksgiving holiday opening of the Children's Place and an expanded Pac Sun have created more consumer interest in Pearlridge Center, Paine said.
"These businesses did extremely well," Paine said. The opening of a 23,000-square-foot Borders Books and Music as the anchor for Pearlridge Center's new extension also spurred traffic at the back end of the mall.
Leasing of other extension space is brisk with an anticipated 80 percent of the development to be leased by year-end. Other tenants who have signed on include Price Busters, Cingular Wireless, Fantastic Sams, Price Busters, Kay's Jewelers and Local Motion.
Ala Moana Center announced the opening of 11 new stores in time for the holiday season. New retailers include Harry Winston, Romano's Macaroni Grill, Ruehl No. 925 and a Barnes and Noble Bookstore. The center also plans to redevelop retail space along the makai side of Kapiolani Boulevard between Keeaumoku and Kaheka streets, which includes construction of a Nordstrom next year.
Despite reports of a national drop in consumer confidence, based on the strength of sales Ala Moana Center is expecting single-digit growth this holiday season.
"It looks good," said Sharon James, marketing director for Ala Moana Center. "Our retailers reported that they had a great Black Friday."
Rising personal incomes, rapid appreciation in home values, low unemployment and solid job growth in Oahu have culminated in an increase in consumer confidence, said Mike Hamasu, director of consulting research for Colliers Monroe Friedlander.
"This optimism resulted in a rise in retail sales over the past year of 10 percent," Hamasu said. More than $18 billion in retail spending was recorded by the state Department of Taxation for the past fiscal year, he said.
Judging from a high amount of jewelry sales during the post-Thanksgiving holiday rush, concern about gas prices and increased shipping costs and prices hasn't impacted Oahu's seasonal shopping, Paine said.
"One of our jewelers reported a Black Friday gain of 37 percent from the prior year," he said.
Retail sales for the year should set another record and many expect healthy sales growth from the holiday season, Hamasu said.
The International Council of Shopping Centers forecasts that this year's sales growth will range from 3 percent to 3.5 percent, a fair performance in view of the mixed economic news that has been reported.
To be proactive, many retailers are planning to advertise more, promote sooner and discount items earlier, Hamasu said.
"Many shoppers will capitalize on the early reductions in prices, but analysts caution that these strategies may even encourage shoppers to delay their purchase until late in the season," Hamasu said.
The strengthening of the economy and growth in the construction, hospitality and business sector has made it difficult for retailers to hire enough staff to meet the holiday shopping demand, he said.
"We could become a victim of our own success," he said. "When vacancy rates drop and rents rise, developers usually start thinking about building, but in this case, many have been dissuaded by high land prices and the tight job market."
