With more people working from home, demand for office spaces dip
HONOLULU, Hawaii (HawaiiNewsNow) - After a decade long slump, Honolulu’s office market was showing signs of recovery. Then, the pandemic hit.
According to Colliers International, office vacancy rates dropped from from a high of about 14 percent in the years after the 2007-2009 Great Recession to just below ten percent at the end of 2019.
But Mike Hamasu, the company’s director of research and consulting, now says he expects the vacancy rate to jump back up to 12 percent by the end of the year.
“In our market we’re about 17 million square feet, two percent is a loss about 340,000 square feet of occupancy,” he said.
“Although it’s just a couple of percentage points, it’s a loss of a lot of square footage.”
The pandemic recession -- “businesses closing or or downsizing or consolidating" -- is a major factor, he said.
But Hamasu also said that the stay-at-home order has also proven that more people can work from home. Combine that with social distancing requirements at the workplace will mean less demand for office space, he said.
“The fact that you have a six-foot distance for social distancing, two people per elevator ... you have half as many people in your office,” he said.
But some large landowners see opportunity in the sluggish office market.
For instance, Douglas Emmett is converting the 1132 Bishop Street highrise into condos.
Kevin Crummy, the company’s Chief Investment Officer, recently told City Council members that the project will add 500 workforce housing units at a cost of $80 million to $100 million.
Two other developer are planning similar conversions, which may soft the pandemic’s impact on Honolulu’s office market, Hamasu said.
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