With the cancellation of Vida at 888 Ala Moana luxury condo project, does that mean the development boom in Kakaako is slowing down? No, an industry expert told Pacific Business News. Find out why in the article below:
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.
But Benn pointed out that there are other options on the table, especially when developers build for lower price points, or at least a mix of price points.
“I don’t think this cycle is coming to an end so much as I think the developers need to consider a wider product mix to try and source units at lower price points,” Benn said.