More of the same for Hawaii industrial
CBRE’s Q3 2024 Hawaii industrial report reconfirmed a storyline all too familar at this point - Hawaii has a shortage of functional industrial properties. Statewide, vacancy stood at 1.6%, up a notch from 1.5% in Q2 2024. By island, Maui and Kauai take the top prize for lowest market vacancies, at 0.6% and 0.4%, respectively. Oahu, with nearly 40mm SF of overall inventory, registered the highest vacancy at 1.9%. Oahu’s asking rents ended the quarter at $1.43 psf / mo. Maui , the state leader on asking rents, clocked in a respectable $1.52 psf / mo for the quarter. On an interesting note, the report included no asking rent figures for Kauai. With only 1.8mm SF of warheouse inventory and a 0.4% vacancy rate, it’s reasonable to assume some quarters will have no available properties for lease, as in ZERO.
Between the headline stats, the report highlights an ongoing trend for Hawaii’s industrial markets statistics. Low availability and a tight market means a lot of transaction activity is done outside of the purview of broker reports. Available spaces are often quickly leases before hitting the market. And some of the higher rate, Class A type projects like we’re seeing in Kapolei, are negotiated behind close doors, leaving up top tiers rent stats that might otherwise skew the numbers upwards. This creates a bifrucated set of date - one for the older and smaller warehouse spaces that enter market for lease and aren’t typically picked up by these reports. Secondly, a data set comprised of nicer warehouses stats that lease up through direct landlord - tenant relationships. You’ll often have to know the right brokers or owners for a good read on this tier of activity.
The storyline hasn’t change much for many quarters now, but there could be new winds blowing on the horizon. New supply is slowly creeping on the market and tenant are starting to show rent increase fatigue after taking the hit on ever-increasing lease rates since the days of COVID. I’ve noticed things platueing a bit from the listings I follow. Usually when things stay the same for this long, and we all get complacement, it’s time to expect the unexpected.