Honolulu office market shows gains in Q3

The Honolulu office market improved recently.

Property management companies with interests in the Honolulu office market experienced improved conditions during the third quarter, as vacancy and inventory declined, while rents remained relatively stable.

The gross rent level for office space dropped $0.03 per square foot per month during the third quarter, which brought it to $2.99 per square foot per month, according to a report from Hawaii Commercial Real Estate. Much of the decline in rental price was due to operating expenses, which cost $0.02 per square foot per month.

The total inventory on the island of Oahu dropped by more than 4 percent during the third quarter, as the latest figure was 702 properties, the report explained. The previous figure was 735 properties.

Absorption increased markedly in Downtown Honolulu, as it jumped nearly 30,000 square feet, the firm noted. This was the second quarter in a row where absorption improved. Much of this was due to the commerce in that part of the city, as this is where many companies are located. Additionally, the best vacant space in the city is in this area, while gross rental rates are more affordable.

Vacancies drop in the city last quarter
The vacancy level on the island of Oahu for the three-month period fell to 14.2 percent from the previous figure of 14.6 percent, according to the report. The lowest vacancy rate was East Honolulu, which was 5.7 percent, while the highest level was recorded in Waikiki. The city's level was 25 percent.

The national office market also experienced improved conditions during the third quarter. According to a report from CBRE, the quarter experienced a vacancy decline to 15.5 percent. This was 20 basis points lower than the previous quarter's level. This was also 70 basis points lower than the same point in 2011. When examining downtown areas, the vacancy rate dropped to 12.4 percent, 10 basis points lower than the previous quarter.

Additionally, the report showed that occupancy rose in more than 35 metropolitan statistical areas, while 15 of these areas had a occupancy jump of 50 basis points or more. The areas that had the most progress during the first quarter were markets that had many technology firms including Austin, Boston, San Jose, Portland and Fort Worth, Texas.

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