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The Honolulu Advertiser
Posted on: Saturday, October 4, 2008

Oahu's office vacancies rise to 8.3% of total space

Advertiser Staff

Another assessment of vacancies in O'ahu office buildings put the market in decline during the third quarter as Hawai'i's economic woes grow.

Local commercial real estate firm Colliers Monroe Friedlander said office users emptied 27,703 square feet of office space on O'ahu, which followed the emptying of 64,070 square feet of space in the first half of the year.

For the first nine months of the year, O'ahu office vacancies increased by 91,773 square feet.

That helped push the total vacancy rate to 8.3 percent from 8.1 percent at mid-year, representing 1.3 million square feet of empty space out of 15.7 million square feet.

The weakening market stems from business closures, layoffs and falling demand for space.

Colliers noted that landlords are beginning to consider concessions to attract or keep tenants, but that landlords still have "healthy" leverage in the market where a 10 percent vacancy rate is considered an equilibrium.

Landlords on average were asking $2.83 in gross monthly rent per square foot of space in the third quarter, up from $2.80 at mid-year.

The Colliers report followed the release of a similar report from rival firm CB Richard Ellis last week that said 34,255 square feet of space emptied on O'ahu in the third quarter to put the vacancy rate at 9.3 percent.

One substantial difference in the two reports was that CBRE said vacant space for the first nine months of the year decreased by 20,428 square feet.

The discrepancy between the two reports amounts to different methodology in surveying space. CBRE tracks 101 buildings in the two highest classes of property, while Colliers tracks 163 buildings in three major building classes.