Construction costs in Hawaii are beginning to plateau after seeing year-over-year increases for the past several years. The market has seen gray shell retail building costs of about $275 per square foot; and to vanilla shell, another $80 per square foot to $100. Restaurants range from $300 per square foot to $350 to take them from gray to finished shell without fixtures. Remarkably, even with escalating construction costs, retail leasing and development are both extremely active. This, combined with retail vacancy of about 3 percent and record rents, has spurred a wave of new projects. Some of the new retail projects currently under construction are: Kilauea Lighthouse Village, Kilauea Town, Kauai — The center is a 47,000-square-foot development anchored by a 10,000-square-foot Market at Kilauea. Construction on Kilauea Lighthouse Village has begun and is expected to be complete in late 2017. It is owned by Hunt Development and leased by Colliers International. Kahala Bowl Shopping Center, Honolulu – Anchored by McDonald’s, the 10,000-square-foot center is owned by Kamehameha Schools and leased by JLL. Kealanani Shopping Center, Kapolei — This 20,000-square-foot center, anchored by Panda Express, is an outparcel of the Walmart in Kapolei. It is owned by Panda RG Inc. …
Market Reports
Hawaii is one of – if not the – top-performing industrial market in the country. The city and county of Honolulu, which contains Hawaii’s main shipping port, had a low vacancy rate of 2.05 percent at the end of the first quarter. This vacancy rate peaked at 4.8 percent in 2009. Significant gains have been made since then. The direct weighted average asking net rental rate for industrial users in Honolulu was $13.80 per square foot (NNN) at the end of the first quarter, while operating expenses ran an additional $5.16 per square foot, per year on top of that. Having bottomed out after the downturn in 2009 at $11.20 per square foot, the Honolulu market has gained almost 24 percent since then. Land values have also followed suit. Hawaii is definitely not Chicago or Los Angeles. In fact, both of those markets have individual industrial parks greater in size than the entire Hawaii marketplace, at 39 million square feet. Having said this, Hawaii is in the midst of a construction and tourism boom, with billions of dollars being allocated to urban core renewal projects, light rail, resort renovations and new residential developments. Up until recently, this renewal had occurred …
Due to its unique location and an economy pretty well recovered from the recession, Honolulu has experienced explosive growth in high-rise condo developments. These are exciting times for investors and developers of multifamily properties on the islands. Hawaii’s economy is finally on a positive growth trend for 2014. This is expected to continue into 2015 and beyond. The state’s economy relies heavily on conditions in the U.S. economy and key international economies, particularly Japan, which has experienced slow growth. Tourism in Hawaii is the No. 1 industry. Last year, it grew 4.8 percent, which resulted in more than eight million annual visitors. This is expected to taper to 3 percent in 2014. U.S real GDP is expected to increase by 2.4 percent in 2014 and 3 percent in 2015. In comparison, Hawaii’s economy is projected to show a 2.4 percent increase in 2014 and 2.2 percent in 2015. Hawaii’s unemployment rate is projected to be 4.2 percent in 2014, 4 percent in 2015 and 3.5 percent in 2017. The Honolulu Consumer Price index is expected to increase to 2.1 percent in 2014 and 2.5 percent in 2015. These are all positive signs. However, Hawaii suffers from a critical shortage of …
Hawaii has been immersed in an economic recovery over the past two years. This recovery has exceeded the overall U.S. performance in regards to total employment growth and total personal income growth. These figures have grown in Hawaii by 2.2 percent and 3.4 percent, respectively. Such economic growth has spurred strong performance from retail centers, while healthy spending from domestic and international shoppers has advanced the retail recovery in Hawaii. According to the Hawaii Tourism Authority, total visitor expenditures for 2013 were a record high of $14.5 billion, a 2 percent increase over 2012. The total visitor arrivals increased 2.6 percent, to 8.2 million, exceeding the previous record of eight million in 2012. International tourism is a strong factor in Hawaii’s economy as well. According to the Office of Travel and Tourism, Honolulu ranks as the fourth-largest port for total overseas arrivals. Honolulu received almost two million non-domestic arrivals in 2012, not including those from Canada and Mexico. Not only is the level of overseas visitor arrivals placing Hawaii close to the top of the pack, but its growth has exceeded the U.S. (on a year-over-year growth basis) every quarter since 2011. International tourism arrivals to Hawaii have grown an …
In 2012, Hawaii’s major economic indicators continued on a positive trajectory. The tourism sector, on which Hawaii’s economy is centered, showed growth in both visitor arrivals and visitor expenditures in every month of the year. According to the Hawaii Tourism Authority, total visitor expenditures for 2012 were a record high of $14.3 billion, an 18.7 percent increase over 2011, while the total visitor arrivals of 7.99 million exceeded the previous record of 7.63 million in 2006. Wage and salary jobs, personal income, and state general fund tax revenues all also increased in comparison to 2011. According to the latest reports from the Bureau of Labor Statistics (BLS), job growth accelerated during 2012 in Honolulu, with similar improvements taking place statewide. The construction sector, along with hospitality and leisure employment, both increased at a higher rate than any other sectors with increases of 5 percent and 3.7 percent, respectively. Improvement to the hospitality and leisure sector is notable due to the fact that leisure and hospitality jobs represent the third largest employment block in the state and its largest metro area. With respect to construction, this sector plays an important role in driving consumer confidence. This, in turn, gave retailers the …
Multifamily development in the State of Hawaii and specifically on the Island of Oahu is primarily focused on for-sale condominium development. This has limited new developments of rental projects, leading to a critical shortage of affordable housing. In response, county governments implemented workforce housing requirements on new developments. The limited supply of rental housing is reflected in the region’s low vacancy rates, creating upward pressure on rental rates. Perhaps the primary reason for the limited supply and resulting high rental rates in Hawaii, and on the Island of Oahu in particular, are the significant barriers to entry. The primary barriers are the high cost of land and the infeasibility of developers to put together rental residential projects without public subsidy. Secondly, building regulations and urban boundary limits aimed at reducing sprawl have constrained the amount of land that can be developed with residential uses. Additionally, a stringent and often lengthy entitlement process adds time and risk to projects, further reducing their financial feasibility. The conversion of military housing to private use over the past decade resulted in an increase in private sector apartment units for Honolulu County. However, this was a transfer from the public to the private sector, rather …
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