Maui retail vacancy drops to record low

Quarters are tight and digs are expensive for retail tenants on Maui, as development has not kept pace with the island's growth, according to a midyear report released yesterday by commercial real estate firm Colliers Monroe Friedlander Inc.

Maui's island-wide retail vacancy rate dropped to 4.87 percent, its lowest measurement ever recorded at mid-year. In mid-year 2006, the rate was 4.92 percent.

At the same time, rental rates have skyrocketed with asking rents rising nearly 10 percent over the past year, said Mike Hamasu, director of consulting and research at Colliers Monroe Friedlander.

Maui's retail tenants are paying an average asking rent of $3.64 per square foot a month, Hamasu said, versus $3.34 a year ago.

"Retail tenants consistently bemoan the lack of available options for commercial space," he said.

Contributing to this situation was the strong job growth in Maui's retail sector over the past three years, during which time more than 4,150 people have been added to the payrolls.

Increased residential development and strong tourism on Maui also strengthened the retail market, Hamasu said.

Maui's retail market is expected to continue growing, but eventually could run out of room as retailers confront their difficulty in attracting and keeping skilled laborers as well as the challenge of expanding while space is tight and the building-permit process is slow.

"Among the many Maui commercial developments being considered, only a few will actually be open for occupancy by year-end 2007," Hamasu said, adding that roughly 192,000 square feet is in the works.

The projects include Lahaina Gateway, the South Maui Center and the Wailea Gateway