Hawaii’s commercial real estate market expected to remain strong

By Kristen Consillio
kconsillio@starbulletin.com

Hawaii's commercial real estate market is expected to fare better than the national average in 2008 even as economists predict a 50 percent chance of a nationwide recession.

The nation's retail market has the highest risk, followed by multifamily, suburban office and industrial space, according to a 2008 commercial real estate forecast by Colliers International.

However, the subprime lending fallout is not expected to affect the national economy or pull down the profitability of the commercial real estate markets, the report said.

Hawaii is among the states expected to dodge a significant downturn resulting from the credit crunch, said Mike Hamasu, director of consulting and research for Colliers Monroe Friedlander Inc.

While job growth locally -- following the national trend -- is forecasted to slow next year, along with retail and consumer spending, it is expected to remain positive.

Commercial real estate transactions in Hawaii are expected to total more than $2.3 billion this year, a 40 percent decline from 2006, but double the commercial sales volume recorded five years ago at less than $1 billion. Moreover, the state's commercial transactions are expected to weaken even more in 2008.

"As a result of the credit crunch, that impacted the velocity of transactions," Hamasu said. "We're seeing a lot of re-trade --- sellers and buyers rethinking what the sales prices should be and extending the timing of sales. What would've sold in 2007 will probably roll over to 2008."

Colliers predicts national growth in 2008 will include exports, health care, education, telecom/multimedia and hospitality and tourism. Foreigners are expected to invest heavily in real estate, consumer goods and colleges, according to the report.

While a decrease in demand is projected next year, absorption of commercial space will not go negative, the report said.

"Everybody's predicting a plateau or slowing in growth pace ... but we're not going to sink into any recession," Hamasu said.