Data show retail improving

By Andrew Gomes
Advertiser Staff Writer

Gilda Minassian is banking on a healthy retail climate: She has moved her Cotton Cargo store to a space at Kahala Mall that is 50 percent larger. Occupancy and sales data suggest the retail sector is healthy and growing. Jeff Widener • The Honolulu Advertiser

A recent survey of 50 shopping centers representing two-thirds of retail center space on O'ahu reports that occupancy was higher last year, and suggests continued modest growth this year.

For stores in Waikiki, or those primarily catering to Japanese visitors, the news is not as good. But the overall market appears healthy, according to the report by local commercial real estate firm Colliers Monroe Friedlander and state data.

The $18 billion retailing industry is one of Hawai'i's biggest, representing a little more than 10 percent of the gross state product. As a sector influencing components such as tourism, construction and real estate, it is a major indicator of economic health.

The number of people locally employed in retailing fell sharply after the Sept. 11 attacks, dropping by about 3,000 jobs to 113,100 in October. Since then, the most recent state figures show the retail job count bounced back in to 116,800 in March — the same as in March 2001.

By sales revenue, the picture is less clear. Total retail spending finished last year at $17.8 billion, above the $17.5 billion in 2000, according to the state Tax Department. But January sales were down to $1.6 billion from $1.9 billion the same month a year ago.

Mike Hamasu, director of research and consulting for Colliers Monroe Friedlander, said strong retail spending by residents and continuing improvement in visitor spending, despite weaker levels from eastbound travelers, should boost statewide retail sales this year.

LeRoy Stone, to his pleasant surprise, recently found consumers spending more than he anticipated. A first-time franchisee for Carl's Jr. restaurants, Stone opened his first Hawai'i store at Kahala Mall two weeks ago to higher-than-projected sales.

Stone is scheduled to open a second restaurant later this summer at Pearlridge Center, and has made a few other offers to landlords for more stores.

"We've invested a lot of funds to begin developing the market and expanding the Carl's Jr. brand," he said. "I'm extremely optimistic about the market."

Gilda Minassian is also counting on expanding sales. A long-time buyer and operations manager for clothing retailer Cotton Cargo who bought the company in 1996, Minassian is moving the small store to a space that is 50 percent bigger, in the spot of the defunct Ethel's.

"I really think people are trying to get back to their normal spending," she said. "I'm pretty sure I'm going to be doing much more (business) if I have the bigger space. If I expand my merchandise, I can cater to my customers better."

Hamasu figures people like Minassian will help fill 50,000 square feet of empty retail space this year. That's a little less than what Colliers calculated at roughly 90,000 square feet of empty space filled in the last two years, but more than 244,000 square feet of retail space the company said was vacated in 1999.

Hamasu projects O'ahu's retail vacancy rate should thus drop from 6.84 percent last year to 6.50 percent this year.

Landlords have been helping to absorb empty space and keep tenants in centers by lowering rents since Sept. 11, especially in Waikiki.

Average asking rent on O'ahu last year fell 4 percent, to $2.75 per square foot, from $2.87 per square foot at the end of 2000, according to Colliers, excluding Ala Moana Center and Waikiki because they distort the average. In Waikiki, average rents fell 11 percent to $8.78 a foot from $9.77 a foot during the same period.

Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.