Posted on: Saturday, November 20, 2004
Report finds landlords asking for higher rent
By Andrew Gomes
Advertiser Staff Writer
Going into the retail business is getting more expensive on O'ahu, according to a report that said the average rent asked by landlords has gone up for the first time in nearly seven years.
Advertiser library photo • Oct. 28, 2004 Such increases are typically passed to consumers at least in part, according to Colliers research director Mike Hamasu. "No retailer is going to absorb all the rental rate increases," he said. "They generally pass it on to the consumer."
The increase was seen mainly at shopping centers in growing residential communities such as Kapolei, Mililani, 'Ewa Beach, Pearl City and 'Aiea, Colliers said.
Although the increases being asked for are not necessarily what tenants end up paying after negotiation, the higher asking rates reflect strong tenant demand and rising landlord optimism.
Colliers said O'ahu's retail vacancy rate was 5.8 percent earlier this month, down from 8.5 percent in November 2003.
Much of the leased up space — about 100,000 square feet of 228,834 square feet filled during the 12-month period — was from retailers moving into the former J.C. Penney space at Ala Moana Center, Colliers said.
A softness in Waikiki retail persisted with higher vacancy and lower asking rents, in part from the remodeling of Royal Hawaiian Shopping Center, which is 40 percent vacant.
Colliers projected that O'ahu's retail vacancy rate next year could dip below 5 percent, a first since 1997, as large vacancies at Pearlridge Center and Royal Hawaiian fill up.
Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.
The report, by local commercial real estate firm Colliers Monroe Friedlander, said the average asking rent so far this year rose to $2.55 per square foot from $2.35, an increase that translates to an extra $1,000 per month for a 5,000-square-foot shop.
Sandal Tree is among several stores occupying the former J.C. Penney space at Ala Moana Center. About 100,000 square feet leased in the past 12 months was to retailers moving into this space.
