Land drives rebound in Hawaii’s commercial real estate market
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An expected rebound materialized in the Hawaiian commercial real estate investment market in the first half of this year.
Brokerage firm Colliers International said in a new report that investors spent $ 970 million nationwide on retail space, hotels, vacant lots, office buildings, and other commercial real estate from January to June, up from $ 510 million in the same period last year.
The mid-year rebound, Colliers noted, wasn’t hard to come by as the comparable number was a decade low last year that was hit hard by a local economic crash amid early COVID-19 restrictions.
Looking ahead, Colliers predicts the positive acquisition momentum will continue through the end of the year, with the grand total of $ 1.2 billion more than doubling in 2020 and revenue of $ 2.6 billion in 2019 is exceeded.
There are some caveats to this forecast, including continued low interest rates and no new, economy-shattering coronavirus restrictions imposed by state and county leaders struggling to contain rising COVID-19 infections.
“There are a lot of ifs and buts,” said Mike Hamasu, director of advice and research at the Honolulu-based company.
Hamasu also said that it is fairly confident that a significant number of upcoming direct sales will be completed over the next few months and will result in this year’s total commercial property sales exceeding 2019.
In the first half of that year, the largest purchase was made by a California real estate investment trust, which paid $ 116 million for the land under 22 Hawaii gas stations owned by Par Pacific Holdings Inc Land.
The second largest was the $ 93 million sale of the Residence Inn Maui Wailea hotel.
Other notable deals in the report, which has sales of over $ 1 million, include a $ 24 million deal for a former Meadow Gold milk processing facility on Oahu, a $ 28 million deal for the Kaanapali golf courses Kai and Royal Kaanapali on Maui and a $ 50 million deal for 600 acres of Kauai land purchased from Facebook CEO Mark Zuckerberg to expand a huge personal estate.
Historically, resort and retail properties made up the largest volume of transactions in the Hawaiian commercial real estate market, but this year through June, land sales were the largest category of revenue at $ 293 million.
The volume of land sales reflected 42 transactions, or an average of $ 7 million.
The retail volume was $ 254 million, followed by resort properties at $ 149 million.
It also spent $ 122 million on commercial real estate, $ 117 million on apartment buildings, and $ 31 million on office buildings.
Colliers said most of the buyers are local, representing 116 deals totaling $ 310 million. There were fewer mainland buyers, 63, but their acquisitions averaged larger, averaging $ 620 million. The report also found that only five purchases totaling $ 35 million were made by overseas investors, which were subdued due to coronavirus travel restrictions.
“The inability to travel due to the pandemic has likely hampered the consideration of potential home purchases and ultimately dampened the desire of overseas investors to purchase real estate in Hawaii,” the report said.