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.