Pacific Business News, February 24, 2012
Congratulations Brandon, Jessika, William, Karen, Nathan, Andrew, Jon-Eric, Susan, and Kim!
What a great year 2011 was! Let's make 2012 an even BETTER year!
59 commercial real estate properties were in some type of distress in the state of Hawaii at the beginning of 2011. These properties were primarily held by national lenders and loan special servicers. Many of the lenders and borrowers were caught-up in the peak of the last real estate boom and as rent and occupancy rates dropped, these owners were not able to keep up with debt service payments.
In 2011, we saw the number of Hawaii distressed properties begin to lower significantly compared to previous years. At year end, 10 properties were lender owned, also referred to as "Real Estate Owned" (REO), 15 properties had their loans restructured or extended, and 11 properties resolved their loan issues. This proves upwards progress on all sides. Lenders are more reasonable and borrowers are able to contribute equity.
However, some borrowers threw in the towel when the property was overburdened by debt. It was profitable for a handful of Hawaii investors who made purchase on these distressed properties. New investors are getting into the market with a completely new basis on their investment. These new owners may offer lower rents and provide homes for new commercial real estate tenants. We expect to see less distress in the Hawaii market this year and more sales of commercial and investment properties in Hawaii.
The multi-family market in Honolulu is on a comfortable and steady rise. In 2011 alone, 20 multi-families were sold in Honolulu and 61 mufti-families were sold state-wide. This can be attributed by the increasing average rental rates of 12% in the last 3 years and a decreasing vacancy rate at a low 2.1% in 3Q of 2011. The vacancy rate in Honolulu, 2.1%, is strikingly low compared to the rest of the nation which comes in at 5.6%. With a continuously decreasing asking price, -11.8% state-wide from October 2011, we will see an increase in sales for 2012.