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The Benefits of Commercial Real Estate Investing in Hawaii

Hawaii is one of the world’s most popular tourist destinations, attracting millions of people each year with its world-famous, pure white-sand beaches and near-perfect year-round weather. In a recent post, you looked at some of the particular obstacles of investing in Hawaii commercial real estate; in this one, we’ll look at some of the advantages.

In certain circumstances, the advantages and disadvantages are linked. The obstacles that investors experience when constructing commercial real estate in Hawaii, for example, contribute to a shortage of assets on the market, which drives up the value of existing properties or developable land. The following are some of the advantages of investing in commercial real estate in Hawaii:

Substantial Appreciation

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While total commercial real estate sales volume in Hawaii fell to $1.2 billion in 2020, the lowest level since the Great Recession, one megadeal stood out: Amazon’s $125 million purchase of the 14.5-acre old Servco Pacific car lot near the Daniel K. Inouye Honolulu International Airport. The sale turned out to be profitable for Servco Pacific, as the auto dealer recognized for its Toyota brand earned more than $106 million in appreciation. According to public records, Servco Pacific paid only $18.9 million for the industrial-zoned land in 1987.

Marked Scarcity

One of the key reasons for Amazon’s high price tag for the Servco property was that there were basically no other viable alternatives near the Honolulu airport, which is a critical site for the retailer’s distribution and logistics platform. For quite some time, the Seattle-based e-commerce behemoth had been looking for a location in Hawaii to aid with its distribution operations. When the Servco Pacific lot went on the market in early 2020, Amazon was one of the first buyers to look into it, and the deal was completed just a few months later.

Significant Stability

The commercial real estate market in Hawaii is one of the most stable in the nation. The main reason for this is that there is still an undersupply of properties in the state. The difficulty of constructing assets in the state, combined with the high demand for existing properties, keeps the state stable. Visit Kohala ranch homes for sale.

The higher average rental rates in Hawaii make many properties ideal acquisitions for investors, partially because the higher rentals often cover the property’s carrying costs, allowing an investor to hold on to it indefinitely while it appreciates.