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.
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.
Many investors are asking us today if we expect the economy to worsen in Hawaii. With a number of major indicators still soft in many mainland US cities, Hawaii’s economy, in particular the island of Oahu, is holding up well. I believe that in the office building marketplace, we are still bouncing along the bottom and there may be a small amount of additional office vacancy still to come. Most of the major structural changes in the Hawaiian economy have occurred and are playing their way through individuals, businesses, and enterprises. So, with the vacancy rate increasing a little bit through the end of 2010 and the first few months of 2011, we see light at the end of the tunnel. We expect in 2011 to again start seeing small amounts of job growth and increases in occupancy.
The office building investment markets are still showing strength, with the recent announcement of the Bishop Square office complex going under contract, reportedly to be sold to Douglas Emmett at a significant price, upholding values. In our own experience in selling office buildings in Hawaii, we are still seeing a number of investors looking at replacement costs, looking at alternative investments like the stock market, and then making strong offers on properties even during this dip in the marketplace. So, though the market for office building buyers is not as deep as it once was, there is still a small percentage of investors, families, and partnerships that see the long-term value in owning this type of stable commercial real estate in Hawaii