In Hawaii, commercial landlords have immense freedom to structure and increase rent over the life of a tenancy. The strict 45-day notice period mandated for month-to-month residential rent increases essentially does not exist in the same way for commercial properties.

No Commercial Rent Control The

State of Hawaii does not impose any form of commercial rent control. A landlord can legally increase the base rent to whatever rate the market will bear once a commercial lease expires and is up for renegotiation.

Rent Increases During a Fixed-Term Lease

During an active, fixed-term commercial lease, a landlord cannot increase the base rent unless a specific escalation provision was negotiated into the signed contract.

In Hawaii, commercial leases typically ensure steadily rising income through built-in escalation clauses. Common methods include:

1. Step-Up Escalations: Pre-determined fixed increases taking effect on the anniversary of the lease (e.g., "$10,000/month in Year 1, $10,500/month in Year 2").
2. Index-Tied Escalations (CPI): Rent increases are tied directly to the Honolulu Consumer Price Index or another inflation metric.
3. Percentage Leases: Extremely common in Oahu's high-traffic retail centers (like Waikiki), the landlord charges a lower base rent, plus a significant percentage of the tenant's gross sales over a certain "natural breakpoint."

Notice Periods for Increasing Rent

Because Hawaii law assumes commercial parties are sophisticated, statutes do not prescribe a specific notice period for raising rent.

• During the Lease: If the lease contains a pre-scheduled step-up clause, the rent legally increases on that exact date. While sending a courtesy 30-day reminder is a best practice, failing to do so does not invalidate the increase.
• Month-to-Month Conversions: If a commercial lease expires, most well-drafted contracts include a "holdover" clause specifying that the rent immediately doubles (e.g., 150% or 200% of base rent) if the tenant refuses to vacate. If the lease simply converts to month-to-month by mutual agreement without a holdover penalty, the lease terms govern the required notice to raise the rent.
• Lease Renewals: The landlord negotiates the new rent rate as part of the new lease offer.

The General Excise Tax (GET) Factor

Unique to Hawaii is the General Excise Tax (GET). Because GET is assessed on gross business income, virtually all commercial leases require the tenant to pay their base rent plus the GET.

If the State of Hawaii or the specific County raises its GET surcharge percentage during a commercial lease term, the tenant's total monthly payment will effectively increase, because the lease requires them to cover the tax burden. Landlords must accurately monitor and apply the correct GET rates across different islands (e.g., Maui vs. Oahu vs. Big Island).

Operating Expense Increases (CAM)

Under highly utilized Triple-Net (NNN) leases, commercial tenants must also absorb the landlord's rising operating costs, primarily property taxes, building insurance, and Common Area Maintenance (CAM).

• Reconciliation: The landlord typically charges estimated CAM expenses monthly. At the end of the fiscal year, an audit is performed. If actual costs were higher than estimated, the tenant is billed for the difference (an effective rent increase for that month).

Best Practices for Commercial Landlords

• Automate CPI Calculations: If your lease utilizes a CPI-escalator, the math can be challenging and entirely forgotten. Use property management software to automatically calculate out these index increases on the correct anniversary dates.
• Track the GET: Ensure your accounting software automatically calculates the GET as a dynamic line item based on the property's zip code, rather than baking a flat tax amount into the base rent, to protect yourself if the county raises the tax rate.

How Landager Helps

Landager tracks lease terms, ensures timely notices, and maintains secure compliance records - making it easy to stay compliant with Hawaii regulations.

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