Honolulu, Hawaii/USA

Vacancy rates in Oahu's industrial real estate market during the first half of 2008 hit their highest level in six years, as more than 370,000 square feet of space went back on the market, according to a new report.

At the same time, for the first time in seven years, the average industrial rent fell by almost 4 percent from the record highs set last year, according to the midyear industrial market report from Colliers Monroe Friedlander.

The islandwide vacancy rate at midyear was 3.97 percent, up from 2.2 percent at the same point last year, and up from 3 percent at year-end 2007.

The average asking base rent halfway through this year was $1.26 per square foot per month, down from $1.31 per square foot at the end of 2007, but still a 38 percent increase over the past five years, the report said.

Average operating expenses at midyear were 30 cents per square foot, down a penny from 2007.

The report attributed most of the 372,563 square feet of negative absorption to the completion of the Waipio Business Center, an industrial condominium project that added some 250,000 square feet to the Gentry Business Park district and boosted the vacancy rate there to almost 15.5 percent.

Mike Hamasu, consulting and research director for Colliers and author of the report, explained that the Waipio Business Center, although a condominium that will be occupied by some owner-users, was used in factoring the vacancy rate because "if the building has a roof on it and its empty it's considered a vacant building."

Large vacancies in Halawa, where a new industrial building was recently completed, accounted for some 116,452 square feet of available space, pushing the vacancy rate there to more than 8.7 percent. Some Halawa tenants also moved to Kapolei, where they had purchased industrial condo space, Hamasu said.

The airport-Mapunapuna district accounted for 101,734 square feet of vacant space, but the vacancy rate there was just 2 percent.

The area with the greatest amount of positive absorption was the Kalihi-Sand Island district, where 161,850 square feet was newly occupied since the start of the year, most of it the former Kilgo's space along Sand Island Access Road.

That demonstrates the volatility of the market, the report noted. The vacancy rate for that district went from 3.9 percent at the end of 2007 to just under 2 percent.

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 808-523-797 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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