Jack Tyrrell specializes in Kakaako, Honolulu, Hawaii luxury condo projects.

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Honolulu construction costs 4th highest in the world, RLB report shows

Photo Credit: Jack Tyrrell and Company. Pictured above is Honolulu’s flagship Whole Foods Market and Aeʻo, which were both completed in 2018.

Honolulu construction costs continue to be some of the highest in the world. According to Rider Levett Bucknall (RLB), Honolulu’s construction costs in 2018 were the 4th highest in the world. Despite the high costs, market trends do not show a slow down in construction. In Ward Village alone, two residential towers are planned for completion in 2019.

Read more from Pacific Business News, below:

Honolulu’s construction cost increases over the last year were the lowest in the nation, but the costs to build make Hawaii’s largest city the fourth-highest in the world, according to recent reports by Rider Levett Bucknall.

Oslo, Norway, topped RLB’s global construction cost relativity index in its construction cost report for the fourth quarter, and was followed by San Francisco, New York, Honolulu, then Paris.

RLB bases its index on the local costs of standard building models or basket of goods, using the same quantities and specifications in local currencies.

In its fourth quarter report for North America, RLB noted that construction-put-in-place in the United States in October was estimated at a seasonally adjusted annual rate of $1.3 billion, which was 4.9 percent higher than the October 2017 estimate of $1.247 billion.

Honolulu had the lowest rate of change among 12 U.S. cities at 1.92 percent for RLB’s comparative construction costs, which track the true cost of construction, including labor, materials, contractor overhead costs and sales and use taxes.

Chicago had the largest increase at 7.22 percent, followed by Phoenix at 6.63 percent and Portland, Oregon, at 6.62 percent. Those two cities had the third- and fourth-lowest costs in the nation; Las Vegas had the lowest costs, followed by Denver.

Meanwhile, Ride Levett Bucknall’s crane index report for January found the number of construction cranes in Honolulu has dropped by nearly one half since last spring, ranking the city 10th among 11 U.S. cities.

Honolulu had six tower cranes in operation as of November, compared to 11 in May when the city also ranked at No. 10, on the biannual index released last week. Phoenix once again had the fewest cranes at five, which Seattle came in at No. 1 with 59, which was a decrease from 65 cranes last summer.

RLB attributed the drop to the number of projects marking completion during the second half of 2018, which included The Howard Hughes Corp.’s Aeo, Sam Koo’s Kapiolani Residence and The Ritz-Carlton Residences Waikiki Beach.

The report also noted that because of changes at the City and County of Honolulu’s Department of Planning and Permitting, “hotel owners and developers and pushing their planned projects forward to accommodate the longer processing time, which may lead to an increase in the crane count towards the end of 2019.”

Honolulu’s crane count has steadily declined from a high of 22 on the July 2015 index, according to RLB. However, several high-rise projects getting set to start vertical construction this year, including Brookfield Properties’ Lilia Waikiki and ProsPac Holdings’ Azure Ala Moana, could boost the count by next summer.

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Industry News: Howard Hughes Corp. turns a profit as it recognizes condo revenue

Photo: BRUCE ASATO / BASATO@STARADVERTISER.COM   The   Ae‘o   tower at Queen and Kamakee streets will have a Whole Foods Market on its ground floor. The complex is 32 percent built and slated for completion late next year.

Photo: BRUCE ASATO / BASATO@STARADVERTISER.COM

The Ae‘o tower at Queen and Kamakee streets will have a Whole Foods Market on its ground floor. The complex is 32 percent built and slated for completion late next year.

The Howard Hughes Corporation has reported its Second Quarter 2017 results, which show an overall profit and approximately $150 million in condo sales revenue. The company sold an additional 35 units at Ward Village in Honolulu, increasing the percentage of total units closed or under contract at our four projects under construction to 85.1% as of June 30, 2017.

This past May, American investor Bill Ackman pitched The Howard Hughes Corp. at the annual Sohn Investment Conference, calling it one of the most attractive times in the history of the company to invest.

Read the Honolulu Star-Advertiser's report, below:

Close to $150 million in condominium sales revenue from four towers in Kakaako helped the developer of Ward Village turn a profit in the second quarter.

Howard Hughes Corp. also reported on Monday that it sold 35 more Ward Village condos in the April-June period.

David Weinreb, the company’s CEO, said in a statement that the sales results show “strong momentum” at Ward Village, where Hughes Corp. expects to begin building a new luxury tower called Gateway Cylinder later this year and start sales for a more moderately priced tower called A‘ali‘i this month.

Texas-based Hughes Corp. completed its first Ward Village tower, Waiea, in November and has three under construction — Anaha, Ae‘o, and Ke Kilohana.

Most of the additional sales in the second quarter were at Ae‘o, where a Whole Foods Market will be the anchor retail tenant. Since April 18, there were 29 more units sold in the building, bringing total sales to 321 out of 466 units. Ae‘o is 32 percent built and projected for completion in late 2018.

At Anaha, a tower to be anchored by a Peter Merriman restaurant, there was one more sale since April 18. Of 317 units, 302 have been sold. This tower is 91 percent complete and slated to open by the end of the year.

There were two more sales at Waiea, bringing the total number of units sold to 165 out of 174.

At Ke Kilohana, a tower with mostly below-market prices that broke ground in October, there were no new sales in the second quarter. All 375 below-market units were sold last year at auction. There also are 49 market-priced units being made available in increments. Of these units, 12 were previously sold and eight are available now from the $860,000s. Ke Kilohana is 21 percent complete and slated for completion in 2019.

Ward Village condo sale revenue in the second quarter totaled $148 million, but that isn’t wholly or only from the 35 recent sales. Hughes Corp. recognizes a portion of revenue from all pending condo sales in relation to how much of a tower has been built. Such sales won’t actually be completed with customers paying the developer, beyond initial deposits, until a tower is finished.

Hughes Corp. did not break down revenue by project, but noted that the second quarter was the first time the company recognized any revenue from Ae‘o. Starting next year, Hughes Corp. will discontinue this accounting practice known as “percentage of completion” and shift to recognizing condo sale revenue only when a tower is completed and sales close.

The company’s total revenue in the quarter was $309 million, up from $274 million a year earlier. Profit for Hughes Corp. was $3.1 million in the second quarter, down from $7 million a year earlier.

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Ward Village Update: Howard Hughes wins approval for 751-unit Aalii tower in Kakaako

Photo: Ward Village, Howard Hughes

Photo: Ward Village, Howard Hughes

Howard Hughes continues to make progress in shaping the Ward Village community in Honolulu's Kakaako.  With Waiea completed at the end of 2016, upcoming projects include Anaha (2017), Aeo (2018), and Ke Kilohana (2019).  The latest to join be announced by Howard Hughes is Aalii.  Aalii will target locals, and will have at least 100 reserved housing units.  The project was approved by the HCDA last week. 

Read more from Pacific Business News' Duane Shimogawa, below:

Hawaii regulators have approved The Howard Hughes Corp.’s plan to develop a 42-story, 751-unit mixed-use condominium high-rise project, the sixth project announced for the Texas developer's Ward Village in the Honolulu neighborhood of Kakaako.

On Wednesday, the Hawaii Community Development Authority, which regulates developments in Kakaako, approved the developer’s Aalii project, which will be located on the route of the Honolulu rail transit project along Halekauwila Street.

“We are excited to bring Aalii to life,” Todd Apo, vice president of community development for The Howard Hughes Corp. (NYSE: HHC), told PBN in a statement late Wednesday evening. “Aalii is an outstanding opportunity for kamaaina to make Ward Village their home. We appreciate the strong public input and overwhelming community support for this project throughout the process. Aalii is a vital step in addressing the critical housing shortage on Oahu.”

The project is the latest condo project to be unveiled by Howard Hughes as part of its 60-acre Ward Village master-planned community. Aalii will join the next door Aeo project that includes the state’s flagship Whole Foods Market, Waiea, Anaha, Ke Kilohana and Gateway Towers that would replace the Ward Warehouse retail complex.

A couple of warehouses near Ward Entertainment Center have been demolished to make way for the project, which will include at least 100 reserved housing units and studio, one- and two-bedroom units, 19,000 square feet of open space and 15,000 square feet of retail space. Residential units will range from about 300 square feet to 900 square feet. There will be no penthouses in this project.

The tower, which was designed by San Francisco’s Solomon Cordwell Buenzwith local partner Ferraro Choi and Associates Ltd., will be built parallel to Ward Avenue and aimed at preserving mauka-to-makai views. Solomon Cordwell Buenz also designed the developer’s Anaha mixed-use tower. No general contractor has been selected for Aalii just yet.

Amenities will include barbecue areas, a pool, fitness centers, private rooms and lounges, some of which will be located on the 42nd floor of the tower. Other amenities will be located atop a podium that’s part of the building. Howard Hughes plans to start sales on Aalii this year, with construction starting later this year or in 2018, and completed in 24 months. The developer did not specify a cost to develop the project.

Howard Hughes asked the HCDA for a variance to raise the tower’s podium height from 45 feet to 75 feet, which will add more parking and accommodate retail spaces below.

Howard Hughes also plans to develop a second mixed-use high-rise project next to Aalii at a later time. This project would replace a vacant lot and a warehouse in the area, including the popular Marukai Market Place. The developer said demand will ultimately dictate the timing of this project.

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BIA-Hawaii leader's forecast for home construction in 2017

Photo: Free stock photo courtesy of pexels.com

Photo: Free stock photo courtesy of pexels.com

2016 was a huge year for residential construction in Hawaii, so will it slow down in 2017?  According to Building Industry Association of Hawaii President, Evan Fujimoto, it might slow down, but it is still growing, especially in home renovations and remodeling.  Read the article on Pacific Business News, below: 

Residential construction industry in Hawaii will continue to grow — albeit at a slower rate — in the new year, but there will be an increase in home renovations and remodeling, as opposed to new buildings, in 2017, according to the Building Industry of Hawaii's new president, Evan Fujimoto.

“The construction boom that we have been experiencing in the past five years is at a peak because of all of the major projects near completion, so things will start to slow down,” said Fujimoto, president of Graham Builders. “With the high cost of home prices, people are going to stay put and remodel their home instead of losing money by moving into a more expensive home.”

Graham Builders President Evan Fujimoto is the 2017 president of the Building Industry Association of Hawaii.

Fujimoto, who was installed as president of BIA-Hawaii last month, said renovations and remodels will carry the housing industry forward, as the large stock of older homes in Honolulu will be rebuilt in 2017.

“There is a steady volume of demand for that kind of work,” Fujimoto said.

According to a Tuesday report by the U.S. Census Bureau, construction spending hit a 10-year high in November, with solid gains in residential, commercial and government construction activity pushing construction spending to a seasonally adjusted annual rate of $1.18 trillion.

Fujimoto said the national growth is a good sign for Hawaii, and will have a positive effect on Hawaii’s greatest economic sector: tourism.

“As long as the Mainland is strong, and the economy is growing, then tourism will grow as well, providing a rationale for investing more in upgrades to buildings, specifically hotels,” Fujimoto said.

While the national surge is a positive indicator, the slow permitting process and high costs in Hawaii have disabled supply from catching up with demand. Hawaii’s inventory issue is a closely examined and much-discussed local topic, earning it a cover story in the Dec. 9 print edition of Pacific Business News.

According to the Department of Business, Economic Development and Tourism, Hawaii needs approximately 65,000 new housing units by 2025 to keep up with demand, which Fujimoto says is the biggest challenge facing the local housing market.

According to Fujimoto, housing at all price points is needed.

“The high-end projects, like those done by Howard Hughes, get a lot of attention and people think they are for foreigners, but a lot of the units are being bought by locals,” Fujimoto said. “People are selling their homes and buying an apartment to be closer to town and closer to entertainment, which then opens up the opportunity for others to buy their home. That’s how the housing ladder works.”

Katie Murar covers tourism, restaurants, retail and residential real estate for Pacific Business News.

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Construction Update: Waiea, Anaha, and now Aeʻo!

Photo credit:  Ward Village, Howard Hughes

Photo credit:  Ward Village, Howard Hughes

Take a walk around Ward Village, and you will see that construction is everywhere.  Ward Village provided a short update on the construction, below:

At the Aeʻo site, demolition is underway to remove the previous Nordstrom Rack and Office Depot structure. The majority of this demolition debris will be recycled! At Anaha, the 24th level has been poured with almost 30,000 cubic yards of concrete. And at Waiea, the penthouse roof on the 37th level has been poured and over 3,700 glass panels have been installed.

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Real Estate News: Brookfield Hawaii to build 40-home subdivision in Kailua-Kona

Image: Brookefield Hawaii

Today, December 10, 2015, Pacific Business News shared the news that Brookefield Residential Hawaii will begin construction next month on a 40-home development on the beautiful island of the Big Island. The gated subdivision, called Holua Kai at Keauhou, is being built near the Wyndham Mauna Loa Village. Prices will range from $800,000 to $1.7 million. With success on Oahu at Ko Olina, this is sure to be an interesting project on our island neighbor, the Big Island. Contact me for more information!

Excerpts from the article by Darin Moriki at Pacific Business News, below: 

"We continue to maintain interest in these branded master planned communities, such as Ko Olina, Princeville, Poipu and Mauna Lani, which are all communities that we've built in," Brookfield Residential Hawaii President Jeff Prostor told PBN on Wednesday. "We came upon and have been tracking this site for several years and we were able to come together on a purchase of the property."

The plantation-style, single-family, detached homes will range in size from 1,800 to 2,700 square feet and include up to four bedrooms. The gated community, surrounded by the Kona Country Club golf course, will also include a clubhouse, gazebo and pool with an integrated spa.

Sales on the first of three phases in the subdivision are to begin by end of the month, with construction beginning in January.

Elite Pacific Properties is the co-listor on the project and will open an onsite Big Island office within the next two months, the brokerage firm confirmed to PBN.

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HCDA sets new date regarding decision on Symphony Honolulu condo glass

Photo courtesy of Pacific Business News

September 2, 2015 - The HCDA has  delayed its decision regarding the tower glass of Symphony Honolulu for the third time. The new date for a hearing is now set for Wednesday, September 16 at 1 p.m, 547 Queen Street, 2nd Floor. 

Find the article from Pacific Business News below: 

Hawaii regulators — for the third time — delayed making a decision on a “glass rule” for Kakaako high-rise projects regarding an issue with developerOliverMcMillan’s Symphony Honolulu mixed-use condominium tower, a spokeswoman for the developer confirmed to PBN.

On Wednesday, members of the Hawaii Community Development Authorityboard, which already delayed making a decision on the issue twice before, came out of a three-hour executive session noting that the board will be deferring making a decision once again.

A decision-making hearing is now scheduled for Sept. 16 at 1 p.m.

On Wednesday, the HCDA heard from a consultant from OliverMcMillan and even took more public comments.

Sharon Moriwake, a Kakaako resident, said that the developer should not have been allowed to not follow the rules.

“The developer has to know the rules and abide by them,” she said. “When you look at this petition, it should be denied. They should change the windows out.”

Symphony Honolulu is currently being built at the corner of Ward Avenue and Kapiolani Boulevard across from the Neal S. Blaisdell Center, and is expected to be completed in less than a year.

San Diego-based OliverMcMillan is requesting that the HCDA waive or permanently suspend the existing glass rule as it pertains to its Symphony project, as well as suspend the rule for Kakaako in general. The glass rule requires that current condo projects in Kakaako have a measured visible light transmission level of at least 50 percent.

Symphony is being built with windows that have a visible light transmission level of less than 50 percent. The project’s development permit was approved for the current glass that is being installed, although the HCDA did not take into account the area’s glass rule.

The developer said that the implementation of the glass rule has resulted in an unfortunate set of circumstances preventing development projects from satisfying HCDA-mandated minimum energy savings under the current set of rules.

OliverMcMillan said that the glass rule makes it impossible for a project with a window-wall design, such as Symphony Honolulu, to meet both the glass rule and the required LEED minimum.

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New Luxury Condo Project: Aloha Kai will start construction in early 2016

Yet another new condo project is coming Honolulu. This time a new project has been announced on the former YMCA Honolulu central site on Atikinson Drive across from Ala Moana Center. Construction is set to begin in early 2016, and is expected to take two years to complete. Though prices are still being determined, they are expected to start at $1,400 per square foot.

Here is the project website:  http://www.alohakaihonolulu.com/index.html

The article from Pacific Business News

The 117-unit, 37-story “Aloha Kai” condominium project planned for the site of the YMCA of Honolulu Central branch on Atkinson Drive across from Ala Moana Center is expected to start construction by early 2016, the developer of the project confirmed to PBN Tuesday.

California-based MB Property Acquisitions LLC has partnered with the Japanese firm Tama Home on the development.

Michael Blumenthal, president of MB Property Acquisitions, told PBN that the project, which will include a new 30,000-square-foot YMCA Central branch with no residential units, a swimming pool and a sophisticated aqua facility that will cater to seniors, will have five levels of parking, with units being built atop those levels of parking.

Aloha Kai encountered a delay after the developer asked for a zoning change that included increasing the its height limit to 350 feet from 150 feet.

“It has taken a while, but we are moving forward,” Blumenthal said, noting that the demolition of the YMCA Central branch should begin in about five months. “It took a little more than a year to get the zone change, but that enhanced the economics of the deal.”

He also pointed out that the focus of the entire project has been on dealing with the YMCA Central branch at first, which will be redeveloped into a three-story, 30,000-square-foot facility.

“The plans for the YMCA [are] 95 percent complete, in terms of the working drawings,” Blumenthal said. “We really focused on designing the YMCA before jumping into the condo tower.”

The conceptual drawings for the condo tower are nearly complete, withArchitects Hawaii Ltd., Swinerton Builders and Locations LLC working on the project.

The project, which will encompass about 150,000-square-feet of net saleable square footage, will have four units per floor, with a boutique-like, very private type of feel, according to Blumenthal.

The pricing of the project is still being determined, although he said it is probably going to be around $1,400 per square foot, meaning that a one-bedroom unit of roughly 600 square feet unit would be priced around $840,000. Aloha Kai also will have a rooftop pool and all units will include lanais that overlook the ocean. There will be no commercial units in the project.

Blumenthal said he was one of the few bidders of the YMCA site to have given the nonprofit organization a portion of the site to build a new branch.

A little more than three years ago, MB Property Acquisitions announced its purchase of about 1.5 acres of the YMCA’s 1.77-acre lot for an undisclosed amount. Blumenthal said he expects to close on the purchase in about three months.

“We have substantial approvals,” he said. “We worked hard to provide a nice facility for the Y.”

The condo part of the project is expected to be completed in about two years.

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