Hawaii Shopping Center sells for near 10% return

Recently the Kele Center, located on the island of Maui in the city of Kahalui, sold. The Shopping center is approximately 14,820-sq. ft. and sold at a price of $4,925,000. Anchored by Denny's Restaurants, Super Cuts, Rent-A-Center, and Edward Jones, this well-located community center was a great investment for the new owners. The property is located just outside of the airport and down the road from Borders, Sports Authority, Lowe's, and Costco. The property sits on a land area of approximately one acre. This Hawaii commercial investment will provide a nearly 10% return to the new owners of this property.

This is another example of a substantially higher rate of return (CAP Rate) than was achievable by investors just a short 24 months ago. While it did take a large equity investment in today's financing environment, the owners will be rewarded for making a move at this time in the marketplace.

I believe 2009 and 2010 will be looked at as low points in the Commercial Real Estate cycle for Hawaii.

The Pearlridge shopping center and mall is the second largest shopping center in the State of Hawaii. This property has a great tenant mix and is well suited for the trade area it serves. Over the years, the owners and management have done a very good job of juggling tenants and providing an environment where tenants can thrive. The sales per square foot of the center are very high for similar and comparable centers. The mall is anchored by Macy's, Sears, and a new Bed, Bath & Beyond store (the first one in Hawaii), as well as numerous restaurants.

This shopping center will sell in today's market. It is located on a ground lease that will deter some investors in the marketplace because of the potential uncertainties of the long-term land tenure.

The past success of the center, the current tenant mix, and the strong, stable performance will attract a new owner to this property.

It is likely that that owner will reinvest in the property, as its last major renovation was over a decade ago.

With the lack of capital in the marketplace we expect that the buyer will demand a high rate of return and feel that at this low point in the market it will be rewarded handsomely.

Mark Bratton is President of Bratton Realty Advisers, Ltd., and exclusively contracted with Colliers Monroe Friedlander, Inc., Hawaii commercial real estate organization. Specializes in the sale of Hawaii investment properties . Visit http://markbratton.com for more info.