The Oahu office market continues to soften as vacancy rates increase for the fourth consecutive quarter. The second quarter loss of 26,040 square feet of net absorption brought the YTD loss to 52,687 square feet. Reaching its highest level in more than five years, the Oahu office vacancy rate has steadily risen with the absorption losses and hit 13.12% in 2Q2018. With more than 140,000 square feet of tenancy lost over the last year, the office market is a continually challenging environment for landlords.
The Central Business District (“CBD”) vacancy rate of 16.87% remains that highest among Oahu’s eight office submarkets. Many of the vacant office spaces are in CBD Class A office buildings, which generated a 17.43% vacancy rate at the end of 2Q2018. Large vacant blocks of space over 9,000 square feet in size increased to a high of 23 at the end of 2017, but receded to 16 by midyear 2018. As a positive sign, this may indicate that fewer large tenants closed or consolidated their spaces during the past six months.