Mid-year look at real estate on O'ahu upbeat

By Andrew Gomes
Advertiser Staff Writer

•	Hawai'i-bound retailers? Among popular Mainland retailers looking at opening stores here are: • Best Buy • Cost Plus • Linens 'N Things • P.F. Chang's ... at locations around O'ahu including: • Royal Hawaiian Shopping Center • Victoria Ward Centres • Kailua • Pearl Ridge Center

A panel of local real estate experts yesterday presented their views on the above subjects and others to a group of industry professionals at a meeting of the Hawaii Developers' Council.

The mid-year property market update was generally positive for residential, retail and industrial property sectors and less so for office and hotel markets.

Among the panelist observations:

• After five years of increasing home resales, 2003 is on pace for 12,220 single-family and condominium resales this year — more than the 10,148 at the height of the Japanese investment bubble, according to Harvey Shapiro, Honolulu Board of Realtors research economist.
• The 5,123 home resales during the first six months of this year on O'ahu represented a 21.5 percent volume increase over the same six months of last year, and nearly matched the 5,127 resales in all of 1998, Shapiro said.
• Single-family home buyers on O'ahu through June paid more than the asking price for an existing home 16 percent of the time, compared with 11 percent during the same period in 2001, 4 percent in 1997 and 2 percent in 1995, he said.
• Expect continued appreciation of O'ahu home prices, which last month reached a median of $388,500 for a single-family home resale.
• The single-family home median price, which is a point at which half the sales are higher and half lower, could rise to around $600,000 over the next few years and still be considered affordable, according to Bank of Hawaii chief economist Paul Brewbaker. (Brewbaker's affordable price figure is based on how much it would cost a median-income family to afford the median single-family home, assuming 3 percent annual income growth and a 7 percent interest rate.)
• Higher vacancies and lower rents at regional malls around the state recently have created more opportunity for popular retailers outside Hawai'i to enter the local market, according to Fred Noa, vice president at CB Richard Ellis Hawaii Inc.
• Retailers negotiating with landlords include electronics giant Best Buy, home furnishings retailer Cost Plus, Linens 'N Things and P.F. Chang's, which Noa said is considering leasing space at Royal Hawaiian Shopping Center.
• Locations being looked at by Best Buy, Cost Plus and Linens 'N Things include Victoria Ward Centres, Kailua and Pearl Ridge Center.
• There is not a lot of available and nonobsolete warehouse space in Honolulu, creating prime opportunity for warehouse development, according to Mark Ambard, a longtime local industrial real estate broker and president of Ambard & Co.
• The office leasing market in downtown Honolulu is struggling, but shows signs of improving this year, according to Steve Metter, principal of MW Group, a development firm that owns Pioneer Plaza.
• Kapi'olani Boulevard, which has about 3 million square feet of office space, filled about 64,000 square feet of space while downtown vacancies increased by about 88,000 square feet during the first half of the year, according to CB Richard Ellis.
• There has yet to be a sale of a major hotel this year, according to Joseph Toy, president of Honolulu-based visitor industry consulting firm Hospitality Advisors LLC.
• In the past three years there were 24 major hotel sales for more than $1 billion, according to Toy, who said there could be some "surprise" transactions later this year, though he said he could not identify the possible sales.