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WAIKIKI OAHU HAWAI’I
MARKET REPORTSecond Quarter 2020
WAIKIKI MARKET REPORT Q1 2
WAIKIKI MARKET REPORT Q2
WAIKIKI RETAIL MARKET DURING COVID-19
Due to the Covid-19 outbreak, the projectionsthat were made at the beginning of 2020 onthe Hawai’i retail market have changed from“strong and growing” to “unpredictable yethopeful.”Predictions about the retail market for theupcoming year are hard to make due to theconstantly changing number of Covid-19cases. Even though Hawai’i has seen a smallspike in Covid-19 cases towards the end of thisquarter, it is working on reopening the state.The health situation in the rest of the UnitedStates and world varies and this may negativelyor positively impact the return of visitors toHawai’i.
This report provides a summary of the researchon Covid-19 related to the Waikiki retail marketand the potential impact of this pandemic onthe future of Waikiki’s commercial real estate.
The report starts with a market summary andresearch of Kalakaua’s inventory, through thesecond quarter of 2020 and the change overthe first quarter.
THE BEALL COVID-19 WEEKLY UPDATES
Learn more on the Hawai’i Retail & Resort marketsregarding Covid-19 news, stats and openings.
Click here for Covid -19 Reports on Waikiki, Kauai,Big Island & Maui
TO RECEIVE THE WEEKLY COVID-19 UPDATES & OTHER TBC NEWS, SIGN UP HERE.
The report ends with research on Covid-19 inHawai’i.
Stay tuned for future market reports from TheBeall Corporation to ensure that you are currenton Hawai'i market conditions.
Empty intersection Kalakaua Avenue & Lewers street during Q2
Landlords will need to continue working withtheir tenants on rent relief initiatives.
Lenders will need to continue working withproperty owners and retailers on loanpayment and interest rate relief initiatives.
The recovery of tourism will be slow throughthe end of the year, due to travel restrictionsand uncertainty world-wide.
TBC expects that Hawai’i will once againbecome a premier visitor destination, due inpart to the low number of Covid-19 cases.
To successfully bring visitors back to Hawai’i,the State has to define the details of the pre-travel testing program.
WAIKIKI 2020 DEMOGRAPHICS
WAIKIKI MARKET REPORT Q1 3
WAIKIKI MARKET REPORT Q2
26,195POPULATION
19,790HOUSING UNITS
23,000+HOTEL ROOMS
7,000+VISITOR LODGING UNITS
1,700,000SF OF RETAIL GLA
15,481HOUSEHOLDS
MARKET SUMMARY
CURRENT CONDITIONSPre Covid-19 Hawai’i arrivals averaged 30,000passengers daily. Most of these visitors stayedin Waikiki, which has over 23,000 hotel rooms.Waikiki accounted for almost half of thestatewide visitor expenditures of $17 billion in2019. Daily passenger arrivals have droppedto less than 1,000 passengers per day, due tothe governor’s instituted 14-day mandatoryself-quarantine for all arriving trans-Pacificpassengers. This has impacted the Waikikiretail market dramatically. With just a fewvisitor arrivals per day, most hotels and retailstores in Waikiki have temporarily closed.Waikiki, one of the most traveled shoppingdestinations in the world, with KalakauaAvenue as a top urban high street, has beenon-hold for the second quarter of 2020. Hotels will prepare to reopen when the pre-
travel testing program officially starts. Out ofstate visitors with a negative Covid-19 testcan then bypass the quarantine period.
The initial start of August 1, has beenpushed back to September 1, 2020.
Most U.S. consumers are comfortablereturning to physical stores and restaurants.1
LONG-TERM CONDITIONSThe long-term impact of this pandemic is yetto be determined. The current downturn in our economy is
concerning and federal, state and countygovernments need to look at new stimulusprograms to relieve financial stress on localbusiness.
RETAIL ON KALAKAUA AVENUE 2
STREETFRONT SF
TOTAL SF
SPACES
VACANCY
720,8511,720,731
70116%
1. ICSC survey June 19-21 2020. https://www.icsc.com/news-and-views/icsc-exchange
2. The research of Kalakaua’s inventory in this report is based on the known vacancy and availability at the time of publication. The arcuate vacancy and availability might differ. Due to closure of retailers an exact number of vacancy couldn't be researched.
3. TBC has decided to refrain from reporting rents, due to the uncertainty in the market caused by Covid-19.
4. Street front spaces are, ground floor spaces with a door on Kalakaua Avenue. And upper level spaces that are directly accessible through a staircase or elevator from Kalakaua Avenue or through the ground floor space if the retailers has both a ground floor space and upper level space(s).
5. Shopping Centers included in this Market Inventory Research are T-Galleria by DSF, Waikiki Shopping Plaza, International Marketplace and Royal Hawaiian Center. The inventory “In Shopping Center” is excluding the spaces in these centers that are defined as Kalakaua Avenue Street Front spaces.
6. Maria Sicola, Commercial Real Estate Definitions and Terms , (San Francisco, NAIPOP Research Foundation , 2017), p.10.
WAIKIKI MARKET REPORT Q1 4
WAIKIKI MARKET REPORT Q2
KALAKAUA RETAIL INVENTORY BY SUBMARKET
GROUND FLOOR TOTAL
GROUND FLOOR TOTAL
GROUND FLOOR TOTAL
GROUND FLOOR TOTAL
GROUND FLOOR TOTAL
KALAKAUA AVE STREET FRONT 4
Kalakaua Far West (Ala Wai Blvd-Kalaimoku St) 66,391 70,337 24 25 8% 13% 1% 1% (922) (922) Kalakaua West (Kalaimoku St-Lewers) 131,773 206,921 46 62 22% 23% 19% 17% 0 0Kalakaua Central (Lewers-Kaiulani) 189,350 303,363 57 77 2% 15% 10% 20% (2,247) (3,852) Kalakaua East (Kaiulani-Kapahulu) 99,375 140,230 54 59 3% 2% 4% 3% (721) (721) Total 486,889 720,851 181 223 9% 15% 10% 14% (3,890) (5,495) TOTAL ON KALAKAUAKalakaua Far West (Ala Wai Blvd-Kalaimoku St) 74,561 154,036 25 40 7% 47% 1% 1% (922) (922) Kalakaua West (Kalaimoku St-Lewers) 139,594 232,535 54 76 21% 24% 17% 21% 0 0Kalakaua Central (Lewers-Kaiulani) 465,747 1,103,593 214 452 6% 12% 10% 17% (10,687) (38,224) Kalakaua East (Kaiulani-Kapahulu) 145,678 230,567 98 133 3% 2% 4% 2% (721) (721) Total 825,580 1,720,731 391 701 8% 16% 10% 14% (12,330) (39,867) IN SHOPPING CENTER 5
T-Galleria by DSF 53,800 112,482 25 98 0% 1% 0% 0% 0 0Waikiki Shopping Plaza 14,656 94,846 17 42 1% 9% 27% 13% 0 (1,170) International Marketplace 123,925 332,900 53 107 15% 12% 15% 14% (7,218) (7,908) Royal Hawaiian Center 41,534 159,686 34 92 9% 10% 12% 27% 0 (1,722) Total 233,915 699,914 129 339 9% 9% 12% 15% (7,218) (10,800)
NET ABSORPTION (SF) Q2 2020
RETAIL SPACES ON KALAKAUA AVENUE Q2 2020 3
GLA (SF) SPACES (NUMBER) VACANCY (%) AVAILABILITY (%) 6
WAIKIKI MARKET REPORT Q1 5
WAIKIKI MARKET REPORT Q2
LEASING
The Beall Corporation tracks approximately 1.7million square feet of gross leasable area(GLA) within Waikiki. Currently the vacancy rateis 16%, a 3% increase from quarter 1. The impact of Covid-19 on Hawai’i’s
economy is unavoidable. We know thefollowing will be true going forward
Vacancy and availability rates willincrease
Market rents will decrease The vacancy increase and market rent
decrease will potentially open-up theWaikiki market to a wider variety of retailers.
It is expected that new retailers entering themarket are more likely to sign short termleases going forward.
TBC foresees the upcoming trend of pop-upstores in the Waikiki market. These shortterm leases benefit both the retailer andlandlord;
Landlords can enhance theiroccupancy rates near term.
Retailers can test the market withlimited risk.
INVESTMENT SALES
Investment sales have slowed down during thesecond quarter of this year, but this decreasehas been less extreme than leasing activity,due to the longer-term character of thesetransactions. Below are key sales transactionsfrom the first and second quarter of this year.
VACANCY RATE AVAILABILITY RATE
16% 14%
CHANGE Q1 – Q2 2020+ 3% + 2%
Waikiki Beach Walk
2300 Kalakaua Avenue
KEY SALES TRANSACTIONS Q1-Q2 2020PROPERTY SUBMARKET SF PRICE SOLD PRICE/PSF TENURE DATE SOLD King Kalakaua Plaza Waikiki West 78,113 75,500,000$ 966.55$ Fee Simple 1/9/20202260 & 2256 Kuhio Avenue Waikiki Central 13,963 15,000,000$ 1,074.27$ Fee Simple 3/4/20202229 Kuhio Avenue Waikiki Central 2,920 9,392,080$ 3,216.47$ Leased Fee Interest 3/16/20202229 Kuhio Avenue Waikiki Central 3,515 2,078,565$ 591.34$ Leasehold Interest 3/31/2020355 Royal Hawaiian Avenue Waikiki Central 3,520 9,621,435$ 2,733.36$ Fee Simple 3/31/2020
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7. TBC represented buyer
8. TBC represented seller
Departure hall Daniel K. Inouye International Airport.
WAIKIKI MARKET REPORT Q1 6
WAIKIKI MARKET REPORT Q2
Data source :https://www.hawaiitourismauthority.org/research/
Data source :https://www.hawaiitourismauthority.org/research/
Photo by Hawaii National Guard. Screening departing passengers at the Daniel K. Inouye International Airport.
COVID-19 IN HAWAI’I
Hawai’i’s mandatory 14-day quarantine forarriving passengers has been extendedthrough the end of August due to anincrease in coronavirus cases in Hawai’i, anda significant increase in many mainlandstates.
The pre-travel test program will now starton September 1. Then passengers withapproved negative COVID-19 tests takenwithin 72 hours of their trip to Hawai’i maybypass the state’s mandatory 14-day self-quarantine.
Hawai’i officials have pointed out that thestate has stepped up screening and contacttracing and is prepared to handle apotential increase of covid-19 cases.
Despite the mandatory 14-day quarantinethe out of state visitor arrivals show amoderate upward trend. In April less then100 daily visitor arrivals, between 200 to400 daily arrivals in May and in June a dailyvisitor arrival between 350 and 700 people.
Hawai’i has the lowest number of covid-19cases per 100,000 people in the country.9
Covid-19 cases have spiked, but the totalcases in Hawai’i have stayed under 1,000over the second quarter of this year. Thestatewide deaths caused by Covid-19 was
18 by the end of quarter 2.10 The number ofactive cases at the end of the second quarterfor the state of Hawai’i was 145.
9. Excluding U.S. territories. CDC, 7/7/2020 https://www.cdc.gov/covid-data-tracker/#cases
10. 6/30/2020 https://health.hawaii.gov/coronavirusdisease2019/
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This document has been prepared by The Beall Corporation for general informative purposes only. Whilst every effort has been made to ensure its accuracy, The Beall Corporation makes no guarantees, representations or warranties of any kind, expressed or implied, regarding the information including, but not limited to, warranties of content, accuracy and reliability. Any interested party should undertake their own inquiries as to the accuracy of the information. The Beall Corporation excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from. This publication is the copyrighted property of The Beall Corporation and/or its licensor(s). © Copyright 2019, All rights reserved.
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CONTACT US FOR MORE INFORMATION
MANAGEMENT
Cory Beall (B)[email protected]
Darren Lake (B)*[email protected]
Roger Lyons (B)[email protected]
*Lake Pacific Realty Corp. is exclusively contracted to The Beall Corporation.
RESEARCH
Lis de Vries (S)Research & Valuation [email protected]
LEASING
Chris Yaris (S)[email protected]
Julia Matsuura (S)[email protected]
ABOUT THE BEALL CORPORATION
The Beall Corporation (“TBC”) is a Hawai’ibased firm with global connectionsspecializing in retail real estate. We provideinstitutional quality services with boutiquelevel attention to client needs. We leverageour comprehensive Hawai’i retail real estateexperience, market knowledge andrelationships to add value for our clients. Ourdedicated team specializes in propertymanagement, consulting, investment sales,project leasing, and development ofcommercial properties in the Hawaii market.
WAIKIKI MARKET REPORT Q2
We are fully operational, with team membersable to work remotely and ready to execute onany commercial real estate requirements. Ourprimary responsibility is to ensure the safety,health and well-being of our staff, our clients,our tenants and the communities we serve.We are here to assist you, contact us with anyquestions or concerns.
