Honolulu, Hawaii/USA

Despite an increase in the vacancy rate for Oahu's industrial market, space is still at a premium for tenants seeking to lease warehouse space, according to a new report.

And those that do find space will pay rents that are nearly double what they were in 2001, according to the first-quarter briefing by Colliers Monroe Friedlander.

The vacancy rate for Honolulu industrial space during the first quarter of 2008 was 3.14 percent, the highest level in five years.

It's also quite a jump from the same period in 2007, when the industrial vacancy rate was 1.92 percent. The rate at year-end 2007 was 3.01 percent, according to previous Colliers reports.

This year's first-quarter rate was influenced by some 66,053 square feet of negative absorption, or more vacant space coming on the market.

Although the former Kilgo's properties were sold to an owner-user, which accounted for 180,000 square feet of newly occupied space, or positive absorption, the addition of 250,000 square feet of new construction in the Waipio Business Park industrial condominium project accounted for the negative absorption.

"The negative absorption is because of additional condos being built," said Mike Hamasu, consulting and research director for Colliers Monroe Friedlander and author of the report.

Hamasu noted that a healthy rental market would have a vacancy rate of between 6 percent and 8 percent, and that Honolulu hasn't had a rate as high as 6 percent in nine years.

Despite the proliferation of new industrial condominium properties -- several projects either have been built or are planned for Kapolei -- there are still few options for businesses seeking to lease industrial space rather than buy, Hamasu wrote.

Rents during the first quarter rose to an islandwide average of $1.33 per square foot, up from $1.14 during the first quarter of 2007.

The latest figure represents a 92 percent increase over the average asking rent in 2001, which was 69 cents per square foot.

The Colliers report differs from a report released by CB Richard Ellis last week, which pegged the first-quarter industrial vacancy rate for the entire state at 1.2 percent, based on 140,871 square feet of positive absorption. Average rents were $1.28 per square foot, according to the CB Richard Ellis report.

CB Richard Ellis' report tracked more than 54.3 million square feet of rentable industrial space on Oahu, Maui, the Big Island and Kauai.

The Colliers Monroe Friedlander report tracked about 36.9 million square feet of space, but only on Oahu.

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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