Oʻahu industrial market: 5 takeaways every property owner should know from Q3 2026

1. Vacancy remains extremely low, but leasing activity is slowing

Oʻahu's industrial vacancy rate held steady at 1.43%, compared with approximately 7% nationally. Net absorption improved from negative 10,080 square feet in Q2 to negative 2,906 square feet in Q3, suggesting that occupancy is stabilizing after several quarters of modest declines.

This isn't a market experiencing widespread oversupply. Industrial inventory remains constrained, particularly in established Honolulu submarkets where available space is scarce.

What it means for owners: Low vacancy continues to support property values and landlord negotiating leverage, but owners shouldn't assume every available space will lease immediately. Competitive positioning, realistic pricing, and an understanding of tenant requirements are increasingly important.

2. Asking rents have eased, but that doesn't mean the market is declining

The weighted average asking base rent declined from $1.66 to $1.58 per square foot per month during Q3.

At first glance, that might suggest softening rental conditions. However, the report attributes much of the decline to changes in the mix of available properties rather than broad-based rent reductions.

Newer industrial buildings continue to command approximately $1.70 to $1.90 per square foot per month, with select urban infill properties exceeding $2.00.

What it means for owners: Market averages don't necessarily reflect what your individual property can achieve. Location, loading, clear height, yard space, power, and overall functionality can create substantial differences in achievable rents. Owners should evaluate comparable properties carefully rather than relying on islandwide averages.

3. Operating costs are becoming a bigger part of the leasing equation

Average industrial operating expenses reached $0.59 per square foot per month, approximately 48% higher than in 2022.

Although expense growth has moderated, insurance, utilities, property taxes, and maintenance continue to increase the total cost of occupancy. At the same time, tenants are contending with higher fuel, freight, and financing costs.

This means tenants are looking beyond base rent when evaluating their options.

What it means for owners: A competitive lease is about more than the asking rate. Property efficiency, maintenance planning, expense transparency, and lease structure can influence tenant retention and leasing decisions. Owners who understand and manage their operating costs may be better positioned to compete.

4. New development will expand options, but supply constraints aren't going away

Nearly 498,000 square feet of industrial space is under construction, with development concentrated in West Oʻahu.

Projects in Kapolei and surrounding areas will provide additional options for businesses seeking modern distribution and warehouse facilities. However, limited industrial land, development costs, and the displacement of industrial uses from urban Honolulu continue to constrain the overall market.

Meanwhile, construction permitting declined 21.8% year over year through August, raising questions about the pace of future development.

What it means for owners: New inventory may create competition for certain properties, particularly larger or less functional facilities. But it also reinforces the importance of location. Established industrial properties with access to Honolulu Harbor, the airport, and major population centers retain advantages that cannot easily be replicated.

5. Tenant quality and long-term planning matter more than ever

The report forecasts continued market stability through the end of 2026, with vacancy projected near 1.39%. However, economic uncertainty, rising costs, and slower growth may lengthen leasing decisions and increase pressure on tenants.

For owners, this creates an important distinction between securing occupancy and securing sustainable occupancy.

A tenant offering the highest rent isn't necessarily the strongest long-term choice if its business faces significant financial pressure. Likewise, an expiring lease represents an opportunity to evaluate the property's competitive position, capital needs, and future tenant mix.

What it means for owners: Now is the time to review upcoming lease expirations, evaluate tenant credit, identify potential property improvements, and establish realistic leasing strategies before vacancies occur.

The bottom line: A tight market still requires a smart strategy

Oʻahu's industrial fundamentals remain strong. Limited supply continues to favor property owners, but economic pressures are creating a more selective leasing environment.

The opportunity is to be proactive rather than reactive. We help owners understand how market conditions translate into decisions for their individual properties, from evaluating rental rates and tenant retention to repositioning assets and planning for future vacancies.

If you’re considering a lease renewal, upcoming vacancy, or change in property strategy, let's discuss what the latest market conditions mean for your property and identify realistic options for moving forward.

Source: Colliers Q3 2026 Oʻahu Industrial Market Report. Market statistics and forecasts reflect conditions and projections at the time of publication.