The industrial market posted 199,383 sf of positive absorption over the past year, according to the report, pushing vacancy down nearly one full percentage point, from 3.59% in January to 2.69% today. The tightness, across all size categories, has pushed triple-net rental rates up by 35% to $0.91 per sf per month for quality warehouse and distribution space.
As a result, developers who have been active in the build-to-suit and design-build construction arena are now considering speculative projects, however; the limited availability of industrial zoned developable land within metropolitan Honolulu means most future industrial development is likely to be relegated to outlying markets such as Waipahu, Pearl City, Campbell and Kapolei, according to the report.
Despite an expected increase in speculative development over the course of 2004, it won't be enough to offset demand, according to the report. The forecast for the end of 2004 is that vacancy will have dropped another half a percentage point to 2.21%.
On the investment side, the tightness has the owners of many smaller but centrally located industrial warehouses putting their properties on the market. Sellers are targeting owner-users, mostly, because they are more willing to pay a premium for the right location. Asking sales prices range from $75 per sf in Halawa to nearly $170 per sf in Kalihi for land and building.
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