Transition to Landlord Market Completed
Key Takeaways
- After years of market stagnation, Oahu’s office market posted a robust net occupancy gain of 272,429 square feet in 2019, resulting in a 9.93% year-end vacancy rate, its lowest level in eleven years.
- Within just twelve months, Oahu’s office vacancy rate fell from 12.79% to 9.93% for an unprecedented 2.86 percentage point decline. Colliers pegs 10% as the equilibrium point – where the bargaining power of landlords and tenants is balanced.
- The redevelopment of 1132 Bishop is anticipated to take up to three years to complete and the relocation of its existing tenancy should result in more than 320,000 square feet of occupancy growth for Oahu’s office market in total.
- Leasing activity for 2019 got a tremendous boost when large tenants such as Hawaiian Electric Company, Hawaii Pacific University, Atlas Insurance Agency, Tradewind Capital Group, Hilton Grand Vacations and Aston Resorts either consummated leases or officially relocated.
- Of the various employment categories, the office and retail sectors posted the greatest number of job losses during the past year. Most office job losses occurred among the professional/services and financial service categories, which lost 1,900 and 1,100 jobs respectively.
- For 2020, Colliers believes that the Office market will continue to generate positive occupancy gains, pushing the island-wide vacancy rate even lower to a projected 9.4%.
Summary Statistics
4Q2019 Office Market
| YTD Net Absorption: | 272,429 SF |
| Vacancy Rate: | 9.93% |
| Full Service Gross Avg. Asking Rent: | Island wide: $3.16 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 |
