Posted on: Thursday, May 6, 2004

Office rent on the rise as economy rebounds

Advertiser Staff

Owners of available office space in Honolulu are asking for higher rents because of increased operating expenses, according to a new survey.

The average asking rent per square foot during the first three months of the year rose 5 cents to $2.21, the first increase in a year and the biggest in five years, according to real estate firm CB Richard Ellis Hawaii Inc., which surveyed 105 buildings in downtown and suburban Honolulu.

The rental rate hike came despite a rise in the amount of office space available for rent, which grew by 37,000 square feet to 1.44 million square feet. The available space represented 12.6 percent of the market, up from 12.2 percent in the last three months of 2003.

CB Richard Ellis Hawaii predicts that the state's strengthening economy and job growth will lead to 50,000 square feet to 75,000 square feet of office space filled per year, and asking rental rate increases of between 22 cents and 44 cents per square foot over the next year or two in Honolulu.

"Economic projections promise expansion in the office market," said Jeffrey Hall, senior research director at CB Richard Ellis Hawaii. "We can expect to see 150,000 square feet of absorption in the Honolulu office market by the end of 2005."

Hall said he anticipates no construction of new office buildings in the next five years.