December 23, 2005
New warehouses will
help relieve Oahu shortages
Honolulu remains short of warehouse space, with a
vacancy rate of 1.8 percent, but construction should
bring new inventory into the market next year.
More than 900,000 square feet of new industrial
developments should be added to the market in 2006,
according to the year-end Industrial Market Report by
Colliers Monroe Friedlander. But that's still not enough
to meet the level of demand.
"It can be anticipated that rents for markets
outside the urban core will continue to rise," said
Colliers research director Mike Hamasu. "The tight
market conditions will continue at a sub-2 percent
vacancy rate and tenants will continue to be
hard-pressed to find space."
With land prices outpacing the growth of rental
rates, developers are building two-thirds of the new
inventory as speculative industrial condominiums. Among
Kapolei Industrial LLC is building Kapolei Industrial Court,
offering a 45,000-square-foot warehouse condominium on
Low & Archibald Real Estate Group, a Southern California company,
is building Kapolei Spectrum Business Park, an
industrial complex on 18 acres. Phase I and II should
bring in about 320,000 square feet of industrial
Avalon Development Co. is building about 200,000 square feet of
space with its Sugar Mill Glen Center project on 15
acres at Mill Town.
Typical sales prices for the condos range from
$225 to $285 per square foot, and will offer units
ranging from 2,000 to 25,000 square feet. Another
275,000 square feet of space is expected to enter the
market, as users purchase land to build their own
The average asking base rent, meanwhile,
remains steady at 99 cents per square foot per month,
according to Colliers, 3 cents higher than the previous
At midyear 2005, average asking rents had
breached the $1 mark, the highest in 20 years.
Hamasu said rents will probably remain steady
and increase in outlying areas until a significant
amount of new industrial construction comes into the
"As long as we have shortages, we will continue
at this level," he said.
The vacancy rate will most likely remain
somewhere between 1.7 percent and 2 percent until the
end of next year, according to Colliers.
Demand for industrial space, meanwhile,
continues to go up as retail and hospitality businesses
expand, coupled with an active housing market.
Some 100 tenants currently housed in low-priced
industrial space near Honolulu Harbor may also be
displaced as the state moves forward with plans to
redevelop the old Kapalama military warehouses.
The highest base rents were recorded in
Kaneohe, at $1.31 per square foot per month, and
Bougainville and Halawa, at $1.19 per square foot per
Lowest base rents were recorded at Campbell
Industrial Park, where the average rate was 82 cents per
square foot per month, and Iwilei, at 87 cents per
square foot per month.
Pacific Business News -
December 23, 2005
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