For the first time in six years, the Oahu industrial market displayed a year-end occupancy loss of 157,222 square feet as vacancy rates rose to 1.97% from 1.60% in the last year. This increase in vacancy is attributed to several new Kailua warehouses that will soon be ready for occupancy. Despite this being the third consecutive quarterly increase to the market’s vacancy rate, it is too early to acknowledge any meaningful shift in overall market dynamics. Realistically, this rise in vacancy will likely be a temporary upward blip and only a short-term phenomenon.
To put things into perspective, the 38,942 square feet of negative net absorption in the fourth quarter equates to just two medium-sized industrial tenants. Even with this increase to the market’s vacancy rate, the Oahu industrial market continues to rank among the tightest markets in the country. Only when warehouse development reaches a critical mass of more than 1.0 million square feet of new inventory or roughly 2.5% of the total inventory, will the delivery of speculative warehouses influence the direction of the market.