In November 2019, the news media reported that, based on a report by Hawai’i Commercial Real Estate, there had been a seismic shift in the commercial real estate market. Vacancy rates were down, so landlords — not tenants — were suddenly gaining more power to write favorable deals.
Oh, how much difference a single year can make! By the end of 2020, economic conditions on the island had changed — and the rental market was already making landlords nervous.
What’s happening with the rental market in Hawai’i right now?
Basically, the national economy has been struggling in general, and specifically, Hawai’i’s own economy has also weakened. The lack of tourism over the last year has hurt the state, and many businesses have shuttered.
That’s having a ripple effect through the rental housing market that’s more than doubled the 3.9% vacancy rate to 9.2% in less than a year. People are moving back in with family members, doubling up to save money on housing or fleeing the islands altogether for places that have a lower cost-of-living.
Roughly half of the landlords and property managers surveyed in Oct. 2020 say that they’re not keeping their books in the black, and around 10% of landlords are considering selling.
Is that great news? No, of course not. However, if you’re a commercial property investor hoping to break into the Hawai’i residential rental market, you may realize that this is actually a good time to buy — as long as you can afford the short-term losses.
All commercial real estate investments come with risks, but there’s an old adage that you should invest in property when the numbers are bad and build up — and this could be a golden opportunity for certain investors.
Working with a local real estate attorney is the best way to evaluate your opportunities and get a dispassionate take on your plans. If you’re interested in commercial real estate investment, make sure that you reach out to an experienced advocate today.