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Honolulu office space is getting scarce

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Honolulu office space is getting scarce

Source: Honolulu Advertiser


Businesses continued to fill empty office space on O'ahu during the first half of the year, making Honolulu one of the tightest office markets in the country.

An estimated 7.6 percent to 7.7 percent of office space on the island is vacant, pushing rents higher and making it tougher for companies to find room to grow in Hawai'i's robust economy, according to reports by three local commercial real estate firms.

Colliers Monroe Friedlander said the equivalent of a 14-story office building, or 143,000 square feet, has been filled since January, putting the vacancy rate at 7.7 percent, the lowest rate since 1991. That compared with 8.6 percent at the end of last year and a recent high of 13.8 percent in mid-2003, Colliers said.

The firm said average monthly office rent per square foot of space has increased by 3.6 percent in the past six months, from $2.36 to $2.45.

Another firm, PM Realty Group, said expanding Hawai'i companies are primarily fueling the record pace for office space leasing, though new businesses moving into the market are also a factor.

"It was a phenomenal quarter," said Jeff Nasrallah, project manager for PM Realty's research department, which counted 180,000 square feet of office space filled in the first half of the year to put the second-quarter vacancy rate at 7.7 percent.

CB Richard Ellis Hawai'i Inc. said O'ahu's office market already had the fourth-lowest vacancy rate among the nation's major office markets during the first quarter with an 8.7 percent vacancy rate, which it said declined to 7.6 percent in the second quarter to possibly move O'ahu up on the list of tightest markets.

The three local commercial real estate firms use slightly different ways to measure vacancies, which accounts for variations in the reports.

Colliers predicts that strong leasing activity will continue through the end of the year to drop the vacancy rate near 7 percent, though wage inflation and low unemployment should dampen hiring by businesses to slow the pace of office space absorption by mid-2007.

*Although, office space has been filling up over the past few years there are no plans to build new office towers until the price per square foot doubles. :( I think the only semi-office tower proposed is the Hawaii World Trade Center.

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