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Oahu Investment Market Report Q2 2019

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Key Takeaways

  • For the first half of 2019, commercial real estate investment sales volume posted $1.29 billion, a dramatic 58.25% drop from last year. While the amount of investment dollars spent on commercial real estate slowed, the number of sales transactions for the year posted a solid 15.5% gain with the transaction counts increasing from 117 in June 2018 to 135 in June 2019.
  • The lack of megadeal transactions (priced $100 million and above) is the primary reason for the dramatic drop in sales volume for 2019. So far, only three megadeals closed for a total of $454 million during the first six months of the year.
  • For the first six months of 2019 Hawaii recorded only two international transactions. This decrease in international sales volume from a midyear 2018 total of $86.4 million to $20.42 million at midyear 2019 continued the downward trend that started since 2016.
  • While sales volume for 2019 declined significantly, that has not dampened the enthusiasm of two institutional investors that have gone on a buying spree. Blackstone added the Courtyard at Marriott King Kamehameha Kona Beach Hotel and the Kalaeloa Rental Homes portfolio to their holdings. These acquisitions boosted their Hawaii investments to more than $2.2 billion since the beginning of 2018.
  • When Alexander & Baldwin Inc. (“A&B”) sold 41,000 acres of land of Maui to Mahi Pono LLC in 2019, they were faced with the challenge of reinvesting the $262 million proceeds into alternative properties, this led to A&B’s aggressive acquisition of more than $217 million in properties during 2019.
  • Capitalization rates remained virtually unchanged during the past year, only recording minor differences to retail and apartment property types that rose a few basis points over the past six months.
  • The lack of megadeals in the first half of 2019 will place a dampening effect on the year-end 2019 investment dollar volume. Global volatility, exacerbated by rising trade tensions, will continue to inhibit foreign investment and Hawaii’s sales volume will drop below last year’s $5.15 billion record by 40% to 45% at the end of 2019.

Investment Summary Statistics


2Q2019 Hawaii Highlights
 Number of Transactions:  135
 Sales Volume:  $1.29

Oahu Investment Market Report Q2 2019

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Related Experts

Mike Hamasu

Research & Consulting Director

Hawaii - Honolulu

Michael brings to Colliers Monroe Friedlander, Inc. over 25 years of marketing and marketing research experience. Michael has directed research efforts at commercial brokerages with a focus on providing information to assist in strategic decision making for real estate investors and brokerage clientele. This effort reported on nearly 600 million square feet of commercial/industrial properties in the San Francisco Bay Area.

Having been quoted in the Wall Street Journal, USA Today, Real Estate Forum and Commercial Property News as well as other regional publications, Michael has been recognized for his detailed analysis of the commercial real estate marketplace and has  become the recognized source for commercial real estate trend analysis and forecasts for Hawaii’s marketplace.

In addition to managing the primary and secondary research efforts in the collection of commercial office, retail and industrial market information and statistics, Michael established the company’s real estate consulting division. Utilizing market factors such as: vacancy rates, absorption, net effective rents, and sales comparables, this consulting unit is able to advise developers, investors, property owners, and tenants on current and projected market trends.

PROFESSIONAL EXPERIENCE
Whitney Cressman Limited — Commercial Real Estate Marketing Research Director
Directed brokerage, internal research efforts, and generated real estate consulting assignments at a busy boutique firm in San Francisco Bay area. Served as the principal liaison to press and media. Analyzed office, retail, and development site criteria for market demand and feasibility.

Cushman & Wakefield — Commercial Real Estate Research Services Manager
Oversaw the compilation of market analytics for 600 million square foot commercial and industrial markets throughout the San Francisco Bay area. Recognized nationally and regionally for innovative data management and analysis. Selected to serve on a national career development board for research services. Directed research staff of 12 in five Bay area markets.
Identified by brokers as a manager achieving service excellence.

CONSULTING ASSIGNMENTS
• Development Feasibility Analysis
• Market Demand and Absorption Report
• Broker Opinion of Value 
• Highest and Best Use Studies
• Real Estate Portfolio Analysis
• Strategic Positioning Study
• Market Rent and Vacancy Forecasts

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