Condo cancellation doesn’t mean Hawaii real estate cycle is ending, expert says

The planned Vida at 888 Ala Moana luxury condominium tower being developed by the Kobayashi Group and The MacNaughton Group received neighborhood board approval Tuesday night.

The planned Vida at 888 Ala Moana luxury condominium tower being developed by the Kobayashi Group and The MacNaughton Group received neighborhood board approval Tuesday night.

The two three-acre sites in Honolulu’s growing Kakaako neighborhood owned by Kamehameha Schools where a developer had planned to build at least one luxury condominium tower likely won’t be developed in this cycle’s real estate boom, but at least one expert tells Pacific Business News that the cancellation of plans to develop the parcels doesn’t mean the current boom cycle is coming to an end.

On Friday, Hawaii development firms Kobayashi Group and The MacNaughton Group confirmed to PBN that they were canceling plans to build the Vida 888 Ala Moana luxury high-rise condominium project and develop a neighboring parcel. The developers, citing slow sales in recent months for the cancellation of Vida, canceled a contract with landowner Kamehameha Schools to purchase the two lots encompassing about six acres in Kakaako.

BJ Kobayashi, co-founder and partner of Kobayashi Group, previously told PBN that plans to develop the block near Vida were also being shelved.

The two firms have developed a number of successful high-end projects in recent years, including the Hokua, built during the last cycle, ONE Ala Moana, and Park Lane Ala Moana, which is currently under construction.

“Vida was an awesome project and typical of the thoughtful kind of development that I have enjoyed from [The MacNaughton Group and Kobayashi Group],Trevor Benn, president of Honolulu-based Benn Pacific Group Inc., told PBN. “However, I think that its price points had too much similar inventory and options for a somewhat narrow buyer profile.”

Price points for Vida ranged from nearly $1 million to $20 million. Competition has been tough in the luxury market in Honolulu, especially with Texas-based developer The Howard Hughes Corp. (NYSE: HHC) building two luxury towers in the Kakaako area, with two more planned to replace the Ward Warehouse retail center.

San Diego-based developer OliverMcMillan’s Symphony Honolulu luxury condo tower near the Neal S. Blaisdell Center also added to the competition for these types of units.

Sales for luxury units moved swiftly just a few years ago, but those days seem to be gone, or at least moving in the direction where demand is no longer that high.

Duane Shimogawa
Reporter
Pacific Business News

Hawaii developers cancel plans to build luxury condo tower, develop neighboring parcel

The planned Vida at 888 Ala Moana luxury condominium tower being developed by the Kobayashi Group and The MacNaughton Group received neighborhood board approval Tuesday night.

The planned Vida at 888 Ala Moana luxury condominium tower being developed by the Kobayashi Group and The MacNaughton Group received neighborhood board approval Tuesday night.

The Kobayashi Group and The MacNaughton Group have canceled plans to build the Vida at 888 Ala Moana luxury high-rise condominium project and develop a neighboring parcel that would have added a total of 500 residential units to Honolulu’s growing Kakaako neighborhood, citing slow sales in recent months, executives from the two Hawaii developers confirmed to PBN Friday.

“Primarily, it was the fact that we got off to a good start with our pre-sales, but over the past three to four months, there was a real slowdown in the market for Vida,” BJ Kobayashi, co-founder and partner of Kobayashi Group, told PBN. “Construction costs rising was probably one of the other factors.”

Construction costs in Hawaii, which jumped by a staggering 13 percent in 2014 — the highest percentage in the United States and more than double the national average.

The developers have canceled a contract with landowner Kamehameha Schools to purchase the two lots encompassing about six acres in Kakaako.

Kobayashi told PBN that plans to develop the block near Vida are also being shelved.

“We were pursuing the larger of the two projects first, [which was] Vida and [the other project] we were going to pursue after Vida,” he said. “We weren’t working on two sites simultaneously.”

The developers have met with Kamehameha Schools to discuss their decision, and said that the state’s largest private landowner “respects and supports” their decision. PBN reached out to Kamehameha Schools for comment Friday afternoon.

“We informed our buyers today [Friday] that we will discontinue sales for Vida at 888 Ala Moana Boulevard,” the developers said in a joint statement. “Vida was a luxury condominium project which was to be located on Kamehameha Schools land at the corner of Ala Moana Boulevard and Koula Street. Although the initial launch of Vida was a success with over 40 percent of the units sold, sales for this project had slowed in recent months.”

The developers noted that despite strong marketing efforts, community outreach and education about the up-and-coming Kakaako community, the market feedback indicated that it was premature to proceed with the Vida project at this time.

Hawaii agency moves up hearings for Howard Hughes, MacNaughton-Kobayashi condo towers

The planned Vida at 888 Ala Moana luxury condominium tower being developed by the Kobayashi Group and The MacNaughton Group received neighborhood board approval Tuesday night.

The planned Vida at 888 Ala Moana luxury condominium tower being developed by the Kobayashi Group and The MacNaughton Group received neighborhood board approval Tuesday night.

The Hawaii Community Development Authority has rescheduled the decision-making public hearings for The Howard Hughes Corp.’s plan to replace Ward Warehouse and the Kobayashi Group and The MacNaughton Group’s Vida luxury condominium high-rise on a 3.5-acre site in the Honolulu neighborhood of Kakaako.

The state agency, which oversees the redevelopment of the fast-growing Honolulu neighborhood of Kakaako, originally scheduled the Howard Hughes hearing for Dec. 3, but has moved it to Nov. 25, the day before Thanksgiving. The presentation hearing for the Kobayashi-MacNaughton project, which is scheduled for Nov. 12 at 9:30 a.m. has not changed, but the new date for the decision-making hearing has also been moved to Nov. 25 at noon, from Dec. 17.

Both hearings will be held at 461 Cooke St. in the Makai Conference Room.

The HCDA already held two public hearings on The Howard Hughes Corp. (NYSE: HHC) project, which includes a total of 236 units in two towers, as well as commercial and recreation space on the site of the current Ward Warehouse.

The Howard Hughes Corp. is asking the HCDA for four modifications, including to increase the maximum platform height to 65 feet with an allowance of an additional 15 feet in height for 15 percent of the roof area that will be used for accessory uses.

MK Development, a joint venture of the Kobayashi Group and The MacNaughton Group, purchased six acres from Kamehameha Schools for an undisclosed price to develop two ultra-luxury mixed-use residential projects totaling about 500 units along the mauka side of Ala Moana Boulevard.

The 38-story Vida tower at 888 Ala Moana Blvd. will include 265 two- and three-bedroom units and will be designed by Los Angeles-based Arquitectonica and Honolulu-based Ben Woo Architects, which will be helping the project seek LEED certification with an energy-efficient design and features.

Amenities for the project include guest suites, movie theaters, dining rooms with a chef’s kitchen, children’s play areas, game rooms and a putting green.

Heyer & Associates LLC will be handling sales of the project.

The Kobayashi Group and The MacNaughton Group also developed the Hokua and Capitol Place mixed-use projects in Honolulu, and are also working on a project that includes seven ultra-luxury condominium towers planned for what is now a parking area of Ala Moana Center fronting Ala Moana Boulevard called Park Lane Ala Moana, with a development cost of about $300 million, according to public records.

Duane Shimogawa Reporter – Pacific Business News

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