Delta Variant Dampens Office Market Recovery
At the end of 2Q2021, hope emerged that Hawaii’s efforts to curb the COVID-19 infection rate were successful. Infection rates declined and businesses eagerly anticipated a return to normalcy. Unfortunately, the virulent Delta variant emerged at the end of August, causing hospitalization and death rates to surge to their highest level since the start of the pandemic. Many businesses with plans to re-open their workforce after Labor Day were forced to revise their expectations and continue allowing their employees to work.
Reflecting these softened market conditions, Oahu’s office market posted a third-quarter 2021 loss of 27,280 square feet of occupancy as vacancy rates rose to 12.97%, the highest level since the pandemic began. Since the end of 1Q2020, the office market has lost more than 287,000 square feet of office tenancy, the equivalent of a typical 25-floor high-rise office building.
Key Takeaways
- During 3Q2021, vacancy rates rose to their highest level since the pandemic started
- Sublease space appears to have peaked
- Delta variant impedes office market recovery
- Oahu businesses adopt a hybrid workplace environment
- Market projected to continue to soften through year-end 2021
