MAUI COMMERCIAL REAL ESTATE
SEPTEMBER 30, 2020
SALES: Investors held their breath during the second quarter of the year, waiting to see what the Covid 19 fall out would be. Owner-Users accounted for a large portion of sales as businesses try to take advantage of the market breather or simply completing transactions that were already in escrow prior to the March shut down.
Commercial appraiser, Robert W Spangler, MAI, said that valuations that had been done pre-pandemic are being re-examined for income/value deterioration and income projection adjustments. The estimated timeframe for stabilization and future stabilized value has been very difficult due to the general lack of lease and sale price discovery to due significantly diminished transaction volume.
Historically low interest rates are a stabilizing market factor says Spangler. As of today, Loopnet (Loopnet.com) shows there are currently 36 commercial properties for sale. The price range is $ 295,000 to $ 17,025,000. According to the Maui MLS, there are 85 commercial properties for sale ranging from $ 279,500 to $ 16,416,000. Of those listings, 53 are listed at under $ 1,000,000.
On the leasing side, I have seen continued activity in Healthcare and Construction sectors and a fair amount of downsizing from those tenants whose leases allowed them to move. There has also been an upsurge in leasing activity from new business startups similar to that which we saw in 2008.
Most landlords waived or deferred at lease some rent during the second quarter and into the third quarter. According to Spangler, even high quality well managed Commercial properties have experienced a decline of 20% or more in rent collections between first and second quarters of 2020. Many landlords are questioning how long they can continue this help and are watching to see what the October 15th opening brings. The big question for them is how long will it take before tenants can pay full rent again. The next 30 days are make or break for a lot of Tenants. Check back for my 4th Quarter 2020 recap in December.