Condo proposal gets green light
A rendering of the Keola La‘i, expected to be completed in early 2008. In return for building above the area’s 45-foot height limit, developer A&B Properties will sell 63 units at below-market prices.
Local developer A&B Properties yesterday received approval to move ahead with building a planned 42-story residential condominium on a 2.7-acre site in Kaka'ako between Emily and South streets.
The state Hawai'i Community Development Authority board approved terms for A&B to develop the 352-unit project, including the sale of several units at below-market prices and contributing $1.3 million to help pay for public facilities.
A&B said it plans to begin sales through Coldwell Banker Pacific Properties later this month, and start construction early next year. The tower, named Keola La'i, is projected to be completed in early 2008.
If started as expected, Keola La'i will become the sixth residential high-rise under construction in Kaka'ako, the present hotbed of condo construction on O'ahu. At least two more towers are also planned in the area.
Stanley Kuriyama, A&B Properties chief executive officer, said the company is excited to participate in the development of "Honolulu's new urban village."
Keola La'i prices are expected to start at about $340,000 for one-bedroom units, $445,000 for two-bedroom units and $695,000 for three-bedroom units — on up to the mid-$800,000s for the most expensive three-bedroom unit.
The tower, to be clad in an exterior of bronze glass and metal panels, is designed atop a four-story podium with 687 parking spaces, recreational amenities and 10,000 square feet of retail and commercial street-front space.
Under rules of the state agency that governs redevelopment in Kaka'ako, A&B sought to build above the area's normal 45-foot height limit in return for providing below-market units or cash for the state to build more affordable housing in the area.
A&B also will pay about $1.3 million to the agency to pay for public facilities such as parks and public parking in the area. That sum is derived from an agency formula based on the size of A&B's project.
The below-market housing rule requires A&B to provide 20 percent of units at below-market prices, or an equivalent in cash.
A&B agreed to sell 49 two-bedroom units for an average of $358,317 and 14 one-bedroom units for an average of $290,643, representing a 19 percent discount from comparable units at market prices.
In lieu of providing another seven below-market units, A&B will pay $1.2 million to the agency, which uses impact fee assessments to develop affordable housing projects.
The below-market condos will be available to qualified buyers who have not owned a home in the past three years and earn less than 140 percent of the Honolulu median annual income for a family of four, or $94,850.
Qualified buyers also cannot sell the unit for two years, and must share proceeds from a sale anytime thereafter with the agency under another formula.
The below-market housing provision is part of the agency's stated aim to provide housing for a "gap" group of people who make too much to qualify for government assistance but not enough to qualify for a loan for an at-market home.
A&B initially proposed offering 70 mostly one-bedroom units at below-market prices, over which agency staff negotiated a settlement for more two-bedroom units and at lower prices.
Agency board member Stanley Shiraki, deputy director of the state Budget & Finance Department, withheld his approval of Keola La'i's development permit because he wanted more information on how below-market housing terms were negotiated.
There also was some concern raised by member Paul Kimura of City Fender and Body Service over loss of private parking spaces currently leased on the otherwise undeveloped lot, but agency staff said it is working to add public parking throughout Kaka'ako.
Kimura also withheld his support, and Keola La'i was approved by a 7-2 vote.
A&B Properties, a subsidiary of Alexander & Baldwin Inc., acquired the site bordered by South, Queen, Kawaiaha'o and Emily streets last August for $14 million from a subsidiary of Japan-based Motoi Kosan, according to property records.
A&B announced its general idea to build a condo on the site at the time, more than a decade after Motoi Kosan's plan to build a high-rise condo on the site fell through.
Motoi Kosan bought the block in 1989 near the height of the Japanese investment bubble, but during foundation construction in 1992, the speculative real estate bubble popped and the project was abandoned.
A&B said it will build its tower on 1,300 concrete piles already in the ground.
Keola La'i will be A&B's third condo tower in Honolulu in the past few years. The company has sold out its 100-unit Lanikea project under construction in Waikiki, and is also a partner in the Hokua luxury tower in Kaka'ako that is nearly sold out.
New Kapi'olani high-rise planned
The developer of the twin-tower Moana Pacific condominium on Kapi'olani Boulevard is proposing to build another residential high-rise about a block away, adding to the condo building rush that's helping feed Hawai'i's hot housing market.
KC Rainbow Development seeks to build the high-rise at the vacant Kapi'olani site that once was home to the Flamingo Chuckwagon restaurant and more recently envisioned for a $25 million home furnishing and design center.
The plan is part of a proposed three-way agreement with the Chuckwagon site owner and the state in which the home furnishing and design center would relocate to Moana Pacific's high-rise while the state gets parking for the public and small businesses that are losing valuable street parking at the diamondhead end of Queen Street.
The proposal is scheduled to be reviewed today by the board of the Hawai'i Community Development Authority, the state agency guiding redevelopment in Kaka'ako.
The development agency's staff is recommending the board approve the plan.
Daniel Dinell, agency executive director, called the proposal a "win-win" solution that helps fulfill a previous request from board members to include more pedestrian-friendly businesses in ground-level commercial space at Moana Pacific.
The agency board previously encouraged Moana Pacific developer KC Rainbow to include commercial tenants more attractive to passers-by, but agency development rules prohibited retail uses. Only light-industrial use was permitted and could have resulted in tenants such as food catering and copy shops.
KC Rainbow previously said its twin-tower condo, which is under construction, might include an 80,000-square-foot light-industrial component as an optional future phase, though it was uncertain whether appropriate tenants could be found that fit well with the condo.
In May the agency changed its rules to allow Kaka'ako property owners to transfer allowed uses between unconnected sites.
To take advantage of the rule change, KC Rainbow proposes to purchase the Chuckwagon site from the owner of INspiration Furniture, Thomas Sorensen, who planned to develop the design center anchored by an INspiration store.
KC Rainbow would be allowed to transfer the retail use of the Chuckwagon site to its Moana Pacific project. It would provide public parking, a qualified industrial use, on the Chuckwagon site.
Under terms of the agreement, Sorensen would develop the commercial component of the Moana Pacific project. He could not be reached for comment to say whether the plan for the design center would significantly change.
As initially envisioned, the design center was to feature a flagship INspiration store along with other retailers selling home and office products. Project backers tried to interest Crate & Barrel, Pottery Barn and Williams-Sonoma, but no tenant announcements were made.
Foundation construction began in 2002, but was halted, and the project previously expected to be finished in 2003 was suspended.
Allen Leong, operations director for KC Rainbow, said a design center addition to Moana Pacific would create more interaction between the public and the project. "It'll make our block more attractive," he said.
Leong said details are still being worked out for the proposed residential tower. "We're still closely watching the market to see where the buyers still are," he said, indicating that pricing units under $500,000 is attractive but will depend on construction costs.
Obviously, it's a good location, but we really don't know how it's going to shape up yet, Leong said.
KC Rainbow proposes to turn a portion of the Sorensen property into a 100-stall parking lot by Sept. 1, and lease 80 stalls to the state so it can provide public parking in part to replace stalls being lost by improving the diamondhead end of Queen Street.
If KC Rainbow develops the residential condo as envisioned, the state would have an option to purchase or lease 100 stalls in the project's parking structure for long-term use.
Condos planned for site of Wave Waikiki
Architect Paul Thoryk has bought a 2.2-acre parcel where he plans to build 280 luxury residential units
After 25 years at its Waikiki home, the popular Wave Waikiki nightclub faces the prospect of closing to make way for a condominium development in Waikiki.
A San Diego architect has bought one of Waikiki's last large land parcels and plans to build a 28-story condominium and retail tower on the site, which includes the popular Wave Waikiki nightclub.
The 2.2-acre triangular lot fronting Kalakaua Avenue, which contains a parking lot, two empty low-rise buildings and the Wave, has been the site of much speculation since it was listed last summer for $17.5 million.
It seems like everyone that has a project going in Hawaii has contacted me about this property, said Joel LaPinta, the Hilo-based commercial Realtor who marketed the site for Los Angeles-based owner Oaktree Capital Management LLC. "I'm still getting calls."
Redevelopment and renovation projects in Waikiki combined with intense demand for condos in Honolulu and prevailing low interest rates to make the site ideal for a residential developer.
It's a good location and the site is large enough to do a project with enough size to be economically feasible, LaPinta said.
The property was under contract last fall to be sold to another developer, but plans fell through because the site, which is zoned for residential use, didn't fit the business model, he said.
The buyer, Paul Thoryk has sent tentative plans to the Waikiki Neighborhood Board and is slated to present his concept to the board on July 12. Thoryk could not be reached for comment.
According to Thoryk's prospectus, plans include a 280-unit luxury condominium tower, called the Puaena, which will sit atop a base containing six levels of covered parking, a street-level lobby and an amenities floor, which will include a health spa, day lounge, multimedia theater, cocktail lounge, game room and business/conference center.
Also on the site will be 10,000 square feet of retail space, an 8,000-square-foot restaurant, a tiki village containing small shops and carts, and a tropical zen garden, with waterfalls, koi ponds and pools.
Robert Finley, chairman of the Waikiki Neighborhood Board, said he'll be sad to see the Wave, a Waikiki mainstay, go. However, Finley said he welcomes revitalization of the tourist corridor.
As you drive into Waikiki, one of the first things that you see are abandoned buildings. Replacing them with a beautifully landscaped property would an improvement, Finley said.
In the past, the board has gotten complaints about vagrants and drug users sneaking into the empty buildings on the site, he said.
The project, which is in the development and financing stages, is projected to open in fall 2007.
It's not yet clear when the Wave nightclub will close.
Jack Law, a part-owner of the Wave, said the club, which has spent 25 years on the site, has been on a month-to-month lease for about a year and a half.
We're one of the last remaining late-night, free-standing nightclubs in Waikiki, Law said.
I think the Wave is responsible for many babies being born, who are adults now.
The Wave also serves as a haven for artists, who decorate the interior walls every six weeks, he said. Law is nostalgic about the club's long run at its Kalakaua Avenue home, but said he'll attempt to relocate in Waikiki, a prospect that has proven difficult for many other nightclub owners, as leasing costs have risen along with the value of the land.
About seven years ago, Law had to find another location for Hula's Bar & Lei Stand after a developer evicted the establishment from its spot on Kuhio Avenue after 23 years.
I was holding my butt with both hands when searching for a place for Hula's, but business there now is better than ever, Law said. "If nightclubs can open in Manhattan, we can open one more in Waikiki."
