Archive for the ‘Hawaii Economy’ Category

Safeway and the drug stores continue aggressive purchase of property

August 25th, 2010 1 Comment

walgreens

Last week, Walgreens closed on the purchase of the existing Safeway store in the heart of Honolulu.  This is subsequent to Safeway purchasing a larger site two blocks away within the past 60 days.  Walgreens elected to partner with Etco[?] on the site and will sublease part of the site to them.
As outlined at the beginning of the year, the top half dozen retailers in the state of Hawaii are becoming the biggest buyers of real estate and the most active developers of sites within the state.  With a success record and sales topping their list of stores throughout the country, Hawaii is a very attractive market to these retailers.

Last week, Walgreens closed on the purchase of the existing Safeway store in the heart of Honolulu.  This is subsequent to Safeway purchasing a larger site two blocks away within the past 60 days.  Walgreens elected to partner with Petco on the site and will sublease part of the site to them.

As outlined at the beginning of the year, the top half dozen retailers in the state of Hawaii are becoming the biggest buyers of real estate and the most active developers of sites within the state.

With a success record and sales topping their list of stores throughout the country, Hawaii is a very attractive market to these retailers.

Click on the link below to view the original article in the Star Advertiser:

Walgreen buys Safeway land

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Posted in Articles, Development, Hawaii Economy, Hawaii Retail Properties, hawaii commercial real estate Tags: , ,

Where are we in the Hawaii Commercial Real Estate investment cycle?

August 17th, 2010 No Comments
Many seasoned investors know that the commercial real estate market is difficult.  We did almost forget that over the last extended period of prosperity.  If you think of the cycle as either a side wave with crests and valleys or as a clock, peaking at noon and hitting the bottom at 6 p.m., you are likely to do well with your investments in commercial real estate.  Key to making money over the past five cycles has been to predict the upswing.  It doesn’t need to be an exact science.  One of our clients says that anywhere in the bottom third of the cycle is a good time to invest.  That same client also stops investing when they believe we are in the top third of the cycle.  Many clients today feel that some of the best buys that we’ve seen in the bottom of the cycle may be defined as a period during 2009.  If you remember back to the uncertainty in the market and how people were holding onto cash, you will note that the few that spent equity dollars actually received very strong returns.  I believe we are still in the bottom third of the cycle, but probably on the way up.
If you are looking to invest in Hawaii commercial real estate, pick the time when you believe we are 12 to 24 months from a strong market, meaning increase in occupancies and strong capital availability, and invest at that point in time on the upswing.

Many seasoned investors know that the commercial real estate market is cyclical.  Although, we almost forgot this fact over the last extended period of prosperity.

If you think of the real estate cycle as either a side wave with crests and valleys, or as a clock, peaking at noon and hitting the bottom at 6 p.m., you are likely to do well with your investments in commercial real estate.

They key to making money over the past five cycles has been to predict the upswing.  It doesn’t need to be an exact science.  One of our clients says that anywhere in the bottom third of the cycle is a good time to invest.  That same client also stops investing when they believe we are in the top third of the cycle.

Many clients today feel that some of the best buys that we’ve seen in the bottom of the cycle may be defined as a period during 2009.  If you remember back to the uncertainty in the market, and how people were holding onto cash, you will note that the few that spent equity dollars actually received very strong returns.  I believe we are still in the bottom third of the cycle, but probably on the way up.

If you are looking to invest in Hawaii commercial real estate, pick the time when you believe we are 12 to 24 months from a strong market, meaning increase in occupancies and strong capital availability, and invest at that point in time on the upswing.

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Posted in Articles, Hawaii Economy, Investments, hawaii commercial real estate Tags: , ,

Office Buildings in Hawaii – market is starting to rebound

August 3rd, 2010 No Comments
With the closing today of the sale for Bishop Square (usually described as the best office complex in Honolulu), it can be said that the market for the purchase of office buildings in Hawaii is strong again.  There was strong bidding for this asset which was openly marketed.  There were several established bidders and a couple of major national office building owners looking to enter the Hawaii market who were competing for this asset.
The purchase of this property at roughly 50% of replacement costs will be a good buy for this buyer and allows them to control a major portion of the market place in downtown Honolulu for office buildings.  This buyer was well positioned and had put their ducks in line for a purchase like this in 2009.  By first addressing any existing building and issues as the recession came on, and then building liquid capital and credit lines to make strategic and opportunistic buys while the market was in the lower range of it’s natural variations.
We expect to see continued strong interest for quality office buildings in Honolulu that do come to market.  There are two other office complexes under contract at this time on Oahu that will be major indicators of current value in the marketplace.
Mark D. Bratton
Vice President
Colliers Monroe Friedlander
220 S. King Street 18th Floor
Honolulu HI 96813
Tel 808.523.9708
email mark@colliershawaii.com
www.markbratton.com
www.colliershawaii.com

bishopsquare

With the closing of the sale for Bishop Square (usually described as the best office complex in Honolulu), it can be said that the market for the purchase of office buildings in Hawaii is strong again.  There was strong bidding for this asset which was openly marketed.  There were several established bidders and a couple of major national office building owners looking to enter the Hawaii market who were competing for this asset.

The purchase of this property at roughly 50% of replacement costs will be a good purchase for this buyer and allows them to control a major portion of the marketplace in downtown Honolulu for office buildings.  This buyer was well positioned and had put their “ducks in line” for a purchase like this in 2009.  By first addressing existing building issues as the recession came on, they built liquid capital and credit lines to make strategic and opportunistic buys while the market was in the lower range of its natural variations.

We expect to see continued strong interest for quality office buildings in Honolulu that do come to market.  There are two other office complexes under contract at this time on Oahu that will be major indicators of current value in the marketplace.

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Posted in Articles, Hawaii Economy, Hawaii Office Properties, Investments, Recent Investment Sales Tags: , , ,

Great Small Office Building for Sale in Hawaii

July 16th, 2010 No Comments

If you would like further information, click here and feel free to give me a call to discuss further.

A small office building recently came on the market that I really like.  This property, at approximately 10,000-sq. ft., is located one block from Ala Moana Shopping Center, has great parking, and will offer the buyer a great term of ownership.  This property is listed by another firm, but I believe it’s a great buy and it will sell in the near future. I thought it would be worth sharing with you to keep up on good buys in the marketplace.

If you would like more information, click here and feel free to give me a call at 808-523-9708 to discuss further.

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Posted in Articles, Hawaii Economy, Hawaii Office Properties Tags: , , ,

Who is the most active real estate developer in Hawaii today?

June 30th, 2010 No Comments

With construction starts slow across the state at this point in the market, a group of saviors has come out of the dust and is prepared to invest heavily in our state.  The attached article goes into detail regarding eight stores that Safeway is planning within Hawaii and nine more stores that Walgreen’s is planning.  In addition to this, Best Buy, Lowe’s, and Long’s Drugstores are actively seeking development opportunities.

The interesting part of this is that these are retailers funding bricks and mortar construction out of their own pockets.  Some of the developers, like Safeway, are building much larger centers than they need for their own use, but use this opportunity to control locations.  If they are patient, they will make some money on the development with a sale three to seven years down the road.

Safeway, Walgreens bulk up in islands

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Posted in Articles, Development, Hawaii Economy, Welcome

Hawaii commercial real estate loans vary greatly

June 7th, 2010 No Comments

In recent weeks, we have had mortgage brokers and lenders pricing and refinancing loans that we are working on in the Hawaii commercial real estate marketplace.  It has become very clear that these lenders are placing a lot of weight on longer term leases.  The properties that have average leases of at least five years are garnering excellent loan rates and quotes.  The  situation for a lender seems to be 10 years or more on leases, and Tenants with rated credit.

As the lease expirations get shorter, lenders are pricing a lot of risk and expense into the turnover of Tenants.

We have seen a very dramatic difference in pricing for the loan and rates from mainland and Hawaii lenders.  This spread shrank dramatically during the boom years 2005-2007.  In fact, shorter term leases were desirable, as buyers and lenders looked at those as opportunities to increase rates in a fast growing market.

Today’s reality is that shorter term leases are being penalized.  It may be advisable to prepare the property for sale and extend leases prior to any marketing of an investment property in Hawaii.

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Posted in Articles, Hawaii Economy Tags:

New Low Loan Rates for Commercial Real Estate in Hawaii

June 3rd, 2010 No Comments

This year we’ve seen a surge in owner/user financing for commercial real estate in Hawaii.  The Small Business Administration (SBA) is providing additional financing or second mortgages for owner/users here to once again obtain high rates of leverage that have not be seen over the past two years.  We have seen half a dozen deals recently completed with leverage up to 90% and with half of the money at rates as low as 2.89% for 10-years, fully amortized.

With this kind of financing back in the market, we are seeing an uptick in smaller investment property sales in Hawaii.  In particular, we’re seeing a surge in transactions for owner/users.

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Posted in Articles, Hawaii Economy Tags: ,

Hawaii Condos – Moana Vista Project

May 24th, 2010 No Comments
The Moana Vista was a partially constructed and failed condo project. This development was up to approximately the 20th Floor when constuction was halted. Reportedly, the developer had $65 Million dollars invetsed.  Oliver McMillan, a high rise developer, purchased the project for $36 million and is poised to restart constcution.
Hawaii has a high percentage of multi-family properties that are eventually converted to condominiums.
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Posted in Distressed Properties, Hawaii Economy, News Tags: , ,

Hawaii Shopping Center sells for near 10% return

May 17th, 2010 No Comments
Recently the Kele Center, located on the island of Maui in the city of Kahalui, sold.  The Shopping center is approximately 14,820-sq. ft. and sold at a price of $4,925,000.  Anchored by Denny’s Restaurants, Super Cuts, Rent-A-Center, and Edward Jones, this well-located community center was a great investment for the new owners.  The property is located just outside of the airport and down the road from Borders, Sports Authority, Lowe’s, and Costco.  The property sits on a land area of approximately one acre.  This Hawaii commercial investment will provide a nearly 10% return to the new owners of this property.

This is another example of a substantially higher rate of return (CAP Rate) than was achievable by investors just a short 24 months ago.  While it did take a large equity investment in today’s financing environment, the owners will be rewarded for making a move at this time in the marketplace.

I believe 2009 and 2010 will be looked at as low points in the Commercial Real Estate cycle for Hawaii.
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Posted in Articles, Hawaii Economy, Hawaii Shopping Centers, Investments, Recent Investment Sales Tags: , , , , , , ,

Commercial Real Estate Loans in Hawaii with 75% to 80% loan to values

May 12th, 2010 No Comments

Recently, we have seen the beginning signs of a more rational market in the commercial real estate industry.  In the past four weeks, we have seen loan-to-value ratios and debt coverage ratios return to a more fair and balanced level.  While these loans are available for better income-producing properties, at this point in the cycle, it signals to us a return to a more level playing field and a point in the cycle which we may see increased transactions activity.

Specifically, we are seeing loans done on improved property with strong income in place with loans at value ratios of 75% and debt coverage ratios back down to 1.25% on the mainland US.  With reports of these deals now starting to close and coming in for the past few weeks, we are looking for signs of similar availability with our local banks.

At this point in time, we are aware through our relationships of loans what will be offered for Hawaii properties.  Last week, I even received a quote of up to 80% loan-to-value ratio.  This will make a major difference in the numbers of potential buyers in the market place.

With lenders obtaining 25% equity investment before their debt investment, this seems like a safe bet for these lenders. Todays overall values are under written to tighter guidlines and will protect lenders adequately.

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Posted in Articles, Hawaii Economy, Investments Tags: , ,
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