The below article via Pacific Business News:
The Howard Hughes Corp., which is in the midst of developing luxury residential towers as part of its 60-acre Ward Village in Kakaako, recognizes that the market may be slowing down, especially in the luxury residential segment, its CEO said Wednesday in a public filing.
The Texas-based developer is currently building its first phase of Ward Village, which includes its Anaha, Waiea and Aeo towers. Its planned Gateway Cylinder tower for the current Ward Warehouse site is in pre-sales.
“While we are proud of another strong year, we recognize that the market is not the same as it was two years ago when we launched our first phase,” said David Weinreb, CEO of The Howard Hughes Corp., in a letter to shareholders. “The sales success of Waiea and Anaha demonstrated sufficient pent-up demand for new condominiums in Honolulu, particularly at the high end of the market. As this demand was absorbed by Ward Village and other competing projects, the depth of the luxury residential market has shown signs of moderating.”
One sign of the market shift was The MacNaughton Group and Kobayashi Group’s cancellation of its Vida at 888 Ala Moana luxury high-rise condo project due to poor sales. Vida was part of Kamehameha Schools’ Our Kakaako neighborhood, located near Ward Village.
“The recent announcement [regarding Vida] shows that demand for luxury condominiums in Honolulu, like any market, has limits,” Weinreb said. “We believe that market disruptions create opportunities for Ward Village to take a long-term approach and continue delivering the right mix of product to the market. Unlike most competitors, Ward Village has more than one million square feet of income-producing property that does not need to be taken out of operation until we have reached sufficient pre-sales for condominium construction.”
Additionally, the developer has an approved master plan to guide it in getting project specific approvals, and most importantly, it already owns the land, he said.
To date, Howard Hughes has contracted to sell more than 650 homes totaling more than $1.1 billion of revenue of the $1.7 billion worth currently under construction.
Ward Village currently comprises 1.3 million square feet of retail, industrial and office space and generated $26 million in net operating income in 2015.
At full build-out, the developer, which also controls the lease for the nearby Kewalo Basin Harbor, is expected to develop more than 4,000 homes in the area.