Second Hawaii Commercial Rent Survey

October 2020 2nd Hawaiʻi Commercial Rent Survey
4
Profile of Survey Respondents
1,234 total business respondents broken down into 18 primary
industries.
Nearly one-third (29.7%) are in the Food Services and Retail
Trade industries. (N=1,234)
68.5% earned less than $1 million in estimated annual revenue
in 2019. (N=1,145)
90.4% employed under 50 full-time equivalent employees as of
the end of 2019. (N=1,191)
0.4%
0.6%
1.1%
1.1%
1.2%
1.9%
2.9%
3.2%
4.1%
4.5%
4.7%
5.0%
7.5%
9.4%
10.1%
12.6%
13.1%
16.6%
Management of Companies and Enterprises
Agriculture, Forestry, Fishing and Hunting
Administrative and Support and Waste Management and…
Information
Accommodation
Transportation and Warehousing
Educational Services
Wholesale Trade
Finance and Insurance
Construction
Manufacturing
Art, Entertainment, and Recreation
Real Estate Rental and Leasing
Other Services
Professional, Scientific, and Technical Services
Health Care and Social Assistance
Retail Trade
Food Services
1
October 2020
ND
2
HAWAIʻI
Commercial
RentSurvey

4
industries.
in 2019. (N=1,145)
the end of 2019. (N=1,191)
0.4%
0.6%
1.1%
1.1%
1.2%
1.9%
2.9%
3.2%
4.1%
4.5%
4.7%
5.0%
7.5%
9.4%
10.1%
12.6%
13.1%
16.6%
Information
Accommodation
Wholesale Trade
Construction
Manufacturing
Other Services
Retail Trade
Food Services
2
Mahalo
to our partners for making this survey possible

4
industries.
in 2019. (N=1,145)
the end of 2019. (N=1,191)
0.4%
0.6%
1.1%
1.1%
1.2%
1.9%
2.9%
3.2%
4.1%
4.5%
4.7%
5.0%
7.5%
9.4%
10.1%
12.6%
13.1%
16.6%
Information
Accommodation
Wholesale Trade
Construction
Manufacturing
Other Services
Retail Trade
Food Services
3
Aloha,
We conducted this, The Second Hawai’i Commercial Rent Survey, because we recognize a need in our
community, and we want to help. It’s a collection of data from 1,474 Hawaii business owners, and they’re
telling us what we already know: it’s tough out there.
We found in this survey that the consecutive government shutdowns are debilitating a number of sectors
- and they’re suffering disproportionately. For example, nearly all businesses in retail, entertainment,
food services, and hospitality, along with their supply chains, were forced to close. Over half of those
businesses say they won’t be able to pay rent - from now through the end of the year.
As disheartening as that is, there’s a silver lining to all this dismal data. We’re going to take this to elected
officials so they can make more informed decisions on how to utilize federal funds appropriately. They’ll
be able to see exactly where the need is in our community: Which sectors are hurt most? What counties
are they located in? What other kind of federal, state, county, and private financial aid programs (including
loan deferral) are they getting? How much more relief do they need to keep their doors open?
The second survey shows only 11% of businesses got a rent reduction from their landlords. Only 5% have
been able to restructure their leases. How much longer can these business owners hang on? Rescuing
businesses with commercial rent relief will provide jobs for people to return to. These jobs pay taxes and
can prop up government budgets for years to come.
Thank you for reading this - and thank you, also, to the people who took the time to fill out the survey, as well
as our partner organizations who supported it in various ways. I’m grateful to everyone’s cooperation. Mary
Kawena Pūkuʻi put it best with her proverb that points out, if everybody pitches in, the work is quickly done.
E lauhoe mai na wa‘a; i ke ka, i ka hoe; i ka hoe, i ke ka; pae aku i ka ‘aina.
Everybody paddle the canoes together; bail and paddle, paddle and bail, and the shore will be reached.
Please contact me if you have any questions or concerns.
Sincerely,
Ryan Tanaka
President
Island Business Management, LLC
ryan@ibmhawaii.com

4
industries.
in 2019. (N=1,145)
the end of 2019. (N=1,191)
0.4%
0.6%
1.1%
1.1%
1.2%
1.9%
2.9%
3.2%
4.1%
4.5%
4.7%
5.0%
7.5%
9.4%
10.1%
12.6%
13.1%
16.6%
Information
Accommodation
Wholesale Trade
Construction
Manufacturing
Other Services
Retail Trade
Food Services
4
4
Q3 Survey Respondents
1,474 total business respondents over the 4 counties in Hawaiʻi
broken down into 19 primary industries.
One-third (33.6%) are in the Food Services and Retail Trade
industries. (N=1,474)
in 2019. (N=1,386)
0.2%
0.3%
0.5%
0.8%
0.9%
1.8%
2.0%
2.3%
2.4%
3.2%
3.3%
5.6%
6.4%
7.4%
9.2%
10.0%
10.3%
14.0%
19.6%
Utilities
Information
Administrative and Support and Waste…
Accommodation
Wholesale Trade
Manufacturing
Construction
Other Servies
Retail Trade
Food Services
1,037 respondents are
located in Honolulu
County. (N=1,434)

4
industries.
in 2019. (N=1,145)
the end of 2019. (N=1,191)
0.4%
0.6%
1.1%
1.1%
1.2%
1.9%
2.9%
3.2%
4.1%
4.5%
4.7%
5.0%
7.5%
9.4%
10.1%
12.6%
13.1%
16.6%
Information
Accommodation
Wholesale Trade
Construction
Manufacturing
Other Services
Retail Trade
Food Services
5
5
the end of 2019. (N=1,424)
82.0% are tenants in buildings whose property owner is located
within the State of Hawaiʻi. (N=1,313)
74.6% do not pay percentage rent above their base rent. (N=1,269)
42.1% report >25% of their revenue comes from tourism. (N=1,310)
31.8%
22.7%
20.7%
8.6%
4.8%
2.3%
9.2%
Less than $3,000
$3,001 - $5,000
$5,001 - $10,000
$10,001 - $15,000
$15,001 - $20,000
$20,001 - $25,000
Over $25,000
Revenue will not increase to previous levels until tourism
and operational capacity returns. Businesses need
financial relief to mitigate lost revenues.
75.2% have monthly
base-rent payments less
than or equal to $10,000.
(N=1,272)

4
industries.
in 2019. (N=1,145)
the end of 2019. (N=1,191)
0.4%
0.6%
1.1%
1.1%
1.2%
1.9%
2.9%
3.2%
4.1%
4.5%
4.7%
5.0%
7.5%
9.4%
10.1%
12.6%
13.1%
16.6%
Information
Accommodation
Wholesale Trade
Construction
Manufacturing
Other Services
Retail Trade
Food Services
6
6
From April through September 2020, businesses reported
whether they paid for rent in full, partially, or not at all.
Q3 Rent: COVID-19 Impact & Relief
The statewide estimated total rent owed per month is $62
million in Q3 (vs. $59 million in Q2). (N=1,272)
$37 million in partially unpaid rent (assuming 50% of
rent was paid).
$25 million in fully unpaid rent.
59.7%
30.8%
9.4%
Paid for rent in full Partially Not at all
-5.3% +6.2% -1.0%
The two industries that owed the most rent per month, in terms
of rent partially paid and not paid at all, are Food Services
($11.5 million) and Retail Trade ($15.6 million), comprising
43.7% of unpaid rent across all industries. (N=1,272)
%Δ from Q2 Survey Respondents
48.2%
51.4%
69.4%
61.1%
59.7%
Maui
Kauai
Hawaiʻi
Honolulu
State

4
industries.
in 2019. (N=1,145)
the end of 2019. (N=1,191)
0.4%
0.6%
1.1%
1.1%
1.2%
1.9%
2.9%
3.2%
4.1%
4.5%
4.7%
5.0%
7.5%
9.4%
10.1%
12.6%
13.1%
16.6%
Information
Accommodation
Wholesale Trade
Construction
Manufacturing
Other Services
Retail Trade
Food Services
7
7
45.9%that have not paid rent at all are currently closed. (N=1,293)
58.3% have not received any rental assistance at all from their
landlord. Rent deferral was the most common form of rental
assistance over rent reduction and rent restructure. (N=1,255)
Only 5.4% of rental agreements have been restructured as
businesses enter the new normal. (N=1,255)
16.6%
32.6%
45.9%
18.0%
17.3%
6.6%
16.8%
27.3%
20.5%
48.6%
22.8%
27.0%
Paid in full
Paid partially
Not paid at all
Business is currently closed Business closed but is now reopened
Business closed but is now partially reopened Business never closed
5.4%
11.2%
25.0%
58.3%
Rent Restructure Rent Reduction Rent Deferral No assistance at all
New Normal
+3.2% +2.4% -2.4% -3.2%
%Δ from Q2 Survey Respondents
44.7%
44.3%
63.2%
60.9%
58.3%
Maui
Kauai
Hawaiʻi
Honolulu
State

4
industries.
in 2019. (N=1,145)
the end of 2019. (N=1,191)
0.4%
0.6%
1.1%
1.1%
1.2%
1.9%
2.9%
3.2%
4.1%
4.5%
4.7%
5.0%
7.5%
9.4%
10.1%
12.6%
13.1%
16.6%
Information
Accommodation
Wholesale Trade
Construction
Manufacturing
Other Services
Retail Trade
Food Services
8
8
Current Business Assistance
47.4%
21.4%
11.7%
19.5%
$0 to $1,000
$1,001 to $3,000
$3,001 to $5,000
>$5,000
Businesses expected to miss rent payments through year-end:
2 3
Entertainment
2 3
Retail
7 10
Restaurants
received financial support from PPP and/or the
Small Business Administration relief programs.
(N=1,236)
85.6%
% received assistance from the City & County of
Honolulu’s grant to small businesses. (N=1,226)
41.2%
received loan deferrals from their bank.(N=1,227)
19.7%
Of businesses that
received rent
assistance from their
landlord, 68.8%
received less than
$3,000. (N=420)
in in in

4
industries.
in 2019. (N=1,145)
the end of 2019. (N=1,191)
0.4%
0.6%
1.1%
1.1%
1.2%
1.9%
2.9%
3.2%
4.1%
4.5%
4.7%
5.0%
7.5%
9.4%
10.1%
12.6%
13.1%
16.6%
Information
Accommodation
Wholesale Trade
Construction
Manufacturing
Other Services
Retail Trade
Food Services
9
9
Q3 Impact of COVID-19 on Revenue &
Operations
Majority of business (60.9%) closed due to COVID-19, and
44.4% remain closed or have only partially reopened. (N=1,321)
39.1% did not close.
16.6% closed but have now reopened.
20.3% closed but have now partially reopened.
24.1% closed and remain closed.
No Hardship at All = 100% able to pay; Minimal Hardship = greater than 90% probability of being able to pay; Medium
Hardship = 75-89% probability of being able to pay; Extreme Hardship = less than 75% probability of being able to pay
8.6%
17.1%
37.5%
36.7%
11.8%
17.4%
30.8%
40.0%
10.1%
16.5%
30.4%
43.0%
No Hardship at All
Minimal Hardship
Medium Hardship
Extreme Hardship
Rent Employees Operating Expense
1 in 3 businesses
reported extreme
hardship.
(Rent: N=1,215, Employees:
N=1,164, Operating Expenses:
N=1,204)
Majority of businesses reported some degree of hardship
imposed by COVID-19 on their ability to pay rent (89.9%),
employees (88.2%), and operating expenses (91.4%).

4
industries.
in 2019. (N=1,145)
the end of 2019. (N=1,191)
0.4%
0.6%
1.1%
1.1%
1.2%
1.9%
2.9%
3.2%
4.1%
4.5%
4.7%
5.0%
7.5%
9.4%
10.1%
12.6%
13.1%
16.6%
Information
Accommodation
Wholesale Trade
Construction
Manufacturing
Other Services
Retail Trade
Food Services
10
10
expect their annual revenue
to decrease in 2020.(N=1,316)
Q3 Business Outlook: New Normal
3 in 4 expect a decline in revenue of over 20% in 2020, including
90.6% of Food Services and 84.0% of Retail Trade. (N=1,316)
7 in 10 expect a decline in revenue of over 20% in 2021,
including 83.1% of Food Services and 74.2% of Retail
Trade. (N=1,052)
-(1 - 20%) -(21 - 30%) -(31 - 50%) >-(50%)
+(1 - 20%) +(21 - 30%) +(31 - 50%) >+(50%)
No
change
11.9% 13.4% 19.9% 41.2%
5.7% 0.8% 0.7% 2.1%
4.4%
41.2% expect revenue
to decline more than
50% in 2020. (N=1,316)
86.4%

4
industries.
in 2019. (N=1,145)
the end of 2019. (N=1,191)
0.4%
0.6%
1.1%
1.1%
1.2%
1.9%
2.9%
3.2%
4.1%
4.5%
4.7%
5.0%
7.5%
9.4%
10.1%
12.6%
13.1%
16.6%
Information
Accommodation
Wholesale Trade
Construction
Manufacturing
Other Services
Retail Trade
Food Services
11
11
Q3 Rent Outlook: New Normal
In the July 2020 Q2 Hawaiʻi Commercial Rent Survey, nearly half of businesses
expected to miss rent payments through December 2020. The local economy had
reopened and plans were set for the welcoming of transpacific travelers. Since then, a
second stay-at-home order and multiple delays to transpacific travel have pushed
businesses closer to the edge and increased the need for rent assistance.
Half of businesses respondents expect to miss rent payments
between October and December 2020 based on the expected
market conditions in the new normal. (N=1,233)
29.8%
57.8%
41.3%
73.9%
7.6%
8.7%
10.0%
4.8%
16.2%
15.0%
11.2%
8.7%
46.3%
18.4%
37.5%
12.6%
Business is currently closed
Business closed but is now reopened
Business closed but is now partially reopened
Business never closed
Will not miss rent payment Will miss 1 month Will miss 2 months Will miss 3 months
7 in 10 businesses that are
currently closed will miss a
rent payment between
October and December 2020.
(N=1,232)

4
industries.
in 2019. (N=1,145)
the end of 2019. (N=1,191)
0.4%
0.6%
1.1%
1.1%
1.2%
1.9%
2.9%
3.2%
4.1%
4.5%
4.7%
5.0%
7.5%
9.4%
10.1%
12.6%
13.1%
16.6%
Information
Accommodation
Wholesale Trade
Construction
Manufacturing
Other Services
Retail Trade
Food Services
12
12
Of businesses that expect to miss rent payments,
58.3% expect to be unable to pay 3 months of
rent in full between October to December 2020.
(N=566)
25.0%
37.9%
5.4%
19.0%
25.0%
18.2%
20.2%
11.8%
40.0%
4.5%
9.1%
13.3%
12.1%
14.3%
50.0%
17.2%
48.6%
34.5%
25.0%
50.0%
27.3%
24.6%
29.4%
31.8%
27.3%
22.2%
21.4%
14.3%
25.0%
44.8%
45.9%
46.6%
50.0%
50.0%
54.5%
55.3%
58.8%
60.0%
63.6%
63.6%
64.4%
66.5%
71.4%
Professional, Scientiﬁc, and Technical Services
Other Servies
Information
Retail Trade
Construction
Accommodation
Manufacturing
Food Services
Wholesale Trade
Will miss 1 month of rent Will miss 2 months of rent Will miss 3 months of rent
55.3% of retail businesses that expect to miss
rent, expect to miss 3 months of rent. (N=566)

4
industries.
in 2019. (N=1,145)
the end of 2019. (N=1,191)
0.4%
0.6%
1.1%
1.1%
1.2%
1.9%
2.9%
3.2%
4.1%
4.5%
4.7%
5.0%
7.5%
9.4%
10.1%
12.6%
13.1%
16.6%
Information
Accommodation
Wholesale Trade
Construction
Manufacturing
Other Services
Retail Trade
Food Services
13
13
Conclusion
Businesses looked forward to government’s plans to further reopen the economy and
prepared for it by spending monies to provide protective equipment, rehire employees,
and purchase inventory. The September stay-at-home order and transpacific travel
delays have increased permanent business closures and have many businesses
asking whether they will be able to continue.
Businesses have not been able to pay rent, have accumulated months of rent
burden, and are expecting to miss further rent payments. As tourism is expected to
be below pre-COVID-19 levels in the new normal (over the next three years)1
and with
safety regulations affecting business capacity and service, businesses already
operating with thin margins will struggle to break even before accounting for repayment
of accumulated rent. Landlords have provided more rent restructuring for tenants since
the July Hawaiʻi Commercial Rent Survey, and more is needed, but landlords also
have their own expenses to pay for.
Commercial Rent relief will be necessary for many businesses to survive, and
lease restructuring would allow landlords and tenants to redefine lease terms,
accommodating market conditions in the new normal. Financial aid for landowners
would help incentivize them to do so.
1
“UHERO State Forecast Update: Hawaii in early stages of recovery, then a setback” UHERO, September 25. 2020
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
Jan 01 Jan 21 Feb 10 Mar 01 Mar 21 Apr 10 Apr 30 May 20 Jun 09 Jun 29 Jul 19 Aug 08 Aug 28 Sep 17 Oct 07 Oct 27 Nov 16 Dec 06 Dec 26
DailyPassengerCount
Pre-COVID-19 Establishing New
Normal
COVID-19
Mar 25: "Stay at Home"
and "Work from Home"
orders begin; closure of
non-essential businesses
May 7: "Safer at
Home" order begins;
phase 1 reopening of
businesses
May 18: "Act With Care"
order begins; reopening of
medium-risk businesses
Mar 31 to Jun 16:
quarantine requirement for
inter-island travelers in effect
Mar 21 to Oct 15: quarantine requirement
for travelers entering the State of Hawaiʻi in
effect; scheduled to end with restrictions
Aug 27 to Sep 24: Second stay at
home order in effect, again forcing
non-essential busineses to close.

4
industries.
in 2019. (N=1,145)
the end of 2019. (N=1,191)
0.4%
0.6%
1.1%
1.1%
1.2%
1.9%
2.9%
3.2%
4.1%
4.5%
4.7%
5.0%
7.5%
9.4%
10.1%
12.6%
13.1%
16.6%
Information
Accommodation
Wholesale Trade
Construction
Manufacturing
Other Services
Retail Trade
Food Services
142nd
Hawai’i CommercialRentSurvey• October Update © 2020 Island Business ManagementLLC

Second Hawaii Commercial Rent Survey

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