Honolulu, Hawaii/USA

Maui's retail vacancy rate has risen by almost two percentage points since last year, while its office vacancy rate soared to its highest level in four years, according to two new reports.

The Valley Isle's retail vacancy rate rose to 6.3 percent in May from 4.6 percent last year, primarily because of 80,000 square feet of new tenancy since this time in 2007. That contributed to a net absorption of 78,449 square feet, according to a retail report released today by Colliers Monroe Friedlander.

The bulk of that new space was in the 137,967-square-foot Lahaina Gateway shopping center, which is anchored by Barnes & Noble, Central Pacific Bank, Office Max and Foodland's Lahaina Farms grocery store.

Maui's office market, meanwhile, saw its vacancy rate soar to 10.65 percent from 4.29 percent in 2007, fueled by 34,737 square feet of vacated space, or negative absorption, according to the office report from Colliers Monroe Friedlander.

Maui's office market is fairly small, with a total of 561,000 square feet of office building space, which serves primarily the government and tourism sectors, according to Mike Hamasu, consulting and research director for Colliers and author of the report.

"What you have is a lot of volatility," he said. "One or two tenants leave or one or two tenants occupy a vacancy of any size and the vacancy rate goes up or down."

Office rents on Maui fell for the first time in eight years, to an average $2.04 per square foot per month, down from $2.06 per square foot, reversing a rental growth rate of 59 percent since 2000, the report said.

Office rents likely will continue to stabilize, Hamasu said.

"The anticipation is that the general slowing in the economy will continue to impact the office market," he said.

However, retail rents rose to an average of $4.20 per square foot per month, a 5.45 percent increase over last year.

Retail rents on Maui have soared 35 percent in the past five years. While rents rose in all areas of the island, the average asking rent in the West Maui sector -- which includes the Lahaina, Kaanapali and Kapalua resort areas -- jumped 18.3 percent in the last year alone.

The report noted that stores are being affected by the drop in airlift to the island -- most notably because of the failures of Aloha and ATA airlines -- and by the skyrocketing price of gas. Maui was among the first of the islands to see gas top $4 per gallon. On Wednesday, a gallon of regular unleaded averaged $4.548 in Wailuku, according to AAA's Fuel Gauge Report.

Retailers are seeing their profits hit by increasing wholesale costs, a lower demand from consumers coping with higher fuel costs and the steadily rising rental rates, the report said.

"For the first time in nearly four years, landlords are beginning to offer more tenant and broker incentives to entice new or expanding tenants to their properties," Hamasu wrote.

A number of real estate developments centered around retail have been either delayed or postponed indefinitely, the report noted.

About Colliers International

Colliers International is a global affiliation of independently owned commercial real estate firms. The organization's 10,092 employees span the world in 267 offices in 57 countries. On a worldwide basis, Colliers manages 672,945,918 square feet, and has revenue of $US 1,620,958,349.

Contact Information

For further information please contact Andrew D. Friedlander at 808.523.9797 or via email at andrew@colliershawaii.com or Mike Y. Hamasu at 808.523.9792 or via email at mike@colliershawaii.com.

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