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Oahu Office Market Report Q2 2019

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1132 Bishop Street

Tenant Relocations Fuel Market Growth Surge

Key Takeaways

  • As of mid-2019, Oahu’s office market generated a robust 164,584 square feet of occupancy growth and pushed the island-wide vacancy rate down to 10.65%, its lowest rate in over a decade.
  • During the past six months, the vacancy in the Central Business District (“CBD”) declined from 16.44% to 12.13%. This 431 basis point decline in vacancy rates is unprecedented in such a short period of time for the CBD.
  • Upon the completion of 1132 Bishop’s conversion to residential, which is projected to take several years, Colliers anticipates the Oahu office vacancy rate will continue its rapid descent when an additional 270,000 square feet of 1132 Bishop Street’s office tenancy relocates and occupies other office buildings.
  • In addition to relocating 1132 Bishop tenants, Hawaii Pacific University’s consolidation of its Windward, Kukui Plaza and Fort Street campuses to Waterfront Plaza during the second quarter of 2019 contributed an additional 100,000 square feet of new occupancy in the CBD.
  • Between 2017 and 2018, the average CBD asking base rent jumped from $1.39 per square foot per month (“psf/mo”) to $1.49 psf/mo. This healthy 7.2% increase established a new benchmark for recently negotiated leases, with these asking rates holding steady for the past six months.
  • Colliers forecasts that the island-wide office vacancy rate will dip to 10% within the next few quarters. In fact, Oahu’s office market will have come full circle to levels not seen since the beginning of the Great Recession of 2008.

Summary Statistics

2Q2019 Office Market

 YTD Net Absorption:  164,584 SF
 Vacancy Rate:  10.65%
 Full Service Gross Avg. Asking Rent:  Island wide: $3.14 PSF/Mo
 Full Service Gross Avg. Asking Rent:  Class A: $3.01 PSF/Mo
 Full Service Gross Avg. Asking Rent:  Class B: $3.42 PSF/Mo
 Full Service Gross Avg. Asking Rent:  Class C: $2.89 PSF/Mo

Oahu Office 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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