Pendulum Continues its Swing from Tenant to Landlord Market
- The Oahu office market continued its transition from a tenant towards a landlord’s market as market equilibrium is nearly achieved.
- During the third quarter of 2019, more than 62,126 square feet of occupancy was added to the market, which resulted in vacancy rates falling to 10.32%.
- Overall, 2019 year-to-date absorption totaled a healthy 215,353 square feet, its highest third quarter year-to-date total in more than twelve years.
- The conversion of 1132 Bishop Street (“1132 Bishop”) office building into a residential rental project will, in the end, result in more than 300,000 square feet of commercial tenants being displaced.
- Vacancy rates are projected to continue to decline as the planned floor by floor conversion of 1132 Bishop is executed.
- As vacancy rates continue their descent, the reduction in available office space will prompt increased competition among prospective office tenants. By all account, recent lease comparables have indicated that some landlords who have witnessed competition for their office listings are already bumping up their initial asking base rents and reducing their tenant improvement allowances and free rent concessions.
- Colliers forecasts that Oahu’s office market will continue to transition from a tenant market to landlord’s market within the next two years.
3Q2019 Office Market
|YTD Net Absorption:||62,126 SF|
|Full Service Gross Avg. Asking Rent:||Island wide: $3.15 PSF/Mo|
|Full Service Gross Avg. Asking Rent:||Class A: $3.01 PSF/Mo|
|Full Service Gross Avg. Asking Rent:||Class B: $3.44 PSF/Mo|
|Full Service Gross Avg. Asking Rent:||Class C: $2.89 PSF/Mo|