Shoppers had many new stores to visit on Oahu last year, but they also passed a lot more vacant space at malls, according to a survey of the island’s retail real estate landscape.
The retail development boom delivered nearly
1.4 million square feet of new space for shops and restaurants last year, but roughly 600,000 square feet of that space was still empty at the end of last year.
The result was a vacancy rate for Oahu retail space shooting to 8.4 percent at the end of 2016 from 5.1 percent at the end of 2015. The vacancy rate was about double that of just two years ago and had not been above
8 percent since 2003, when department store chain J.C. Penney pulled out of Hawaii.
Commercial real estate firm Colliers International counted up the retail space changes in a report released for publication today.
The company said it expects the vacancy rate to drop to somewhere between 6 and 6.5 percent this year as more tenants fill many of the new spaces. Colliers projects that about 400,000 square feet will be filled this year, compared with about 500,000 square feet filled last year.
For shoppers, all the new retail development has provided more variety including new restaurants and retailers to Oahu, including Five Guys Burgers, Pieology Pizzeria, Johnny Rockets, Celine, Dolce &Gabbana, Jo Malone, Kiehl’s and Valentino.
And for retailers and restaurateurs, there were lots of opportunities to expand. Two new malls opened: International Market Place in Waikiki and Ka Makana Ali‘i on the Ewa Plain. The state’s largest mall, Ala Moana Center, also added a new wing.
“After years of tightened market conditions on Oahu, the surge in new development has given new and expanding tenants the opportunity to enter a market that had historically very little first generation space to lease,” Colliers said in its report. “The door will remain open for retailers to secure great opportunities at many of these new developments.”
It’s not unusual for large new malls to take time to fill up with tenants.
At Ka Makana only about half of the 100 spaces available opened last year in an initial phase of the mall containing 750,000 square feet. And the new International Market Place also opened with about half of its 345,000 square feet of space filled.
For the whole island, about 1.5 million square feet was vacant in 2016 out of 17.3 million square feet available. That compared with 831,131 square feet of vacant space out of 16.4 million square feet available the year before. The change in total space from 2015 to 2016 did not add up to
1.4 million square feet because some space was demolished or removed from leasable inventory.