Legal Law

Hawaii Commercial Real Estate Forecast

Retail Sales – By looking at the gross sales of retailers, you can predict whether they will be able to pay rent and how the property will perform as a whole. In the fourth quarter of 2009, sales started to increase again and that could be the saving factor for rental rates and occupancy rates in Hawaii.

Retailers expand and contract: The biggest surprise is that luxury retailers, along with top sellers, discount retailers, and clothing and department stores, showed an increase in sales. Stores like Neiman Marcus and Nordstrom had a 4.5% increase in sales.

Mall Stats: We’ve seen a drop in tenant sales that increases the farther you go from downtown Honolulu, and interestingly, landlord income has increased slightly. We’ve also seen homeowners’ expenses shrink as homeowners struggle to get through the year.

Vacancy Rates: Compared to the West Coast, Hawaii is in pretty good shape, but when we look at neighboring islands, we see rates go up to 11.53%. It is definitely a renter’s market as we have seen rental rates drop from $5 to $2-3 in a short period of time.

2010: Expect a slight increase in vacancy, we anticipate 4.5%, as well as a 5% increase in sales. We haven’t reached 2008 sales yet, but we’re getting close.

Expanding Retailers:

Slides 11 and 12 list the tenants that opened in 2009, spent money, made the investment, and took the risk. These are very few and far between.

Ideas for owners:

The key is to build momentum and increase publicity. Hire merchandising consultants because most tenants are not capable of producing large window displays. They could gain a lot from a professional consultant. Twitter campaigns are working for boost daily specials, like a restaurant tweeting a daily special.

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