CRE Development and Rail System Bringing Changes to Oahu

Hawaii is bustling with building cranes and an explosion of new opportunity. The Department of Business, Economic Development and Tourism released analysis suggesting that Hawaii’s economic condition should remain stable well into the next few years, with a projected growth rate of 1.5 percent. A healthy overall economy, one of the lowest unemployment rates in the nation, and a thriving tourism industry are the results of Hawaii just now recovering in full from the Great Recession. With that projected prosperity comes construction and a commercial real estate development boom.

No area is more emblematic of the overall growth than Oahu, which is experiencing its biggest urban growth spurt since the 1990s. The Kakaako District, a formerly industrial district across from Waikiki Beach, is now attracting young professionals and retirees alike through high-end development, retail, experiential mixed-use centers, and a sleek, upscale urban lifestyle.

Some of these ambitious development projects have been recently completed while others, such as expanding affordable housing, are just getting started. Collectively, the effect of the development boom will bring about big changes – a bustling, thriving new urban landscape and with it, the attraction of more businesses and elite workforce to Hawaii. Honolulu will cement its reputation as a metropolis in the middle of the Pacific. If you are interested in investing in Hawaii, now might be a good time to do it, especially in the areas mentioned below.

There are three areas of Oahu which have completed or begun some big commercial real estate development projects. West Oahu will see the construction of a beautiful new luxury Atlantis Resort, the revitalization of older, mostly industrial neighborhoods, federal funding for harbor redevelopment, and the announcement of a $300 Million retail/water activity resort in Wai Kai. The Ka’akako neighborhood in Honolulu will be home to several large residential towers as well as smaller retail redevelopments. Finally, Waikiki saw the completion of the retail and dining mecca International Marketplace last year, as well as a commitment to redevelop the Food Pantry, the oldest food market in Waikiki. Additionally, several Oahu hotels have had huge renovations in recent years, including the Hilton Garden Ohana West, for which Partner monitored the construction loan.

Linking these robust development projects is the continuation of a mass transit elevated rail project in Honolulu that proposes 21 stations, with Phase I (East Kapolei to Aloha Stadium) opening in 2020, and Phase II (Aloha Stadium to Ala Moana Center) opening in 2025. The project has admittedly faced many cost increases and schedule delays, causing angst and irritation among local residents. However, the Honolulu Authority for Rapid Transportation (HART) recently released a recovery plan that will provide additional local funding to ensure completion of the first phase of the project. From an urban planning standpoint, as CRE development continues to expand in Oahu, access to mass transportation will ease traffic congestion and facilitate faster access to locations on different parts of the island.

Change is happening on Oahu, whether people like it or not. Based on some of the recently completed projects (International Market Place, Ala Moana Center expansion, Kamakana Alili Mall, Kapolei Commons, redevelopment of Haleiwa shopping center, SALT shopping center, and the Ward Village), it looks like this change is mostly positive. Nevertheless, it is also important to recognize public concerns and the effects that such change will have on a population with deeply ingrained social and cultural customs.

I went to a luncheon lecture recently presented by a Hawaiian cultural consultant from DTL, a Hawaiian strategy studio that helps businesses, governments, organizations, and communities navigate change. With so much rapid change happening on the island, along with unfettered construction and development, it is critical to balance big development with proper integration into Hawaiian culture. Businesses are recognizing this, and pouring extra money into making sure that projects don’t disrupt Hawaiian life and cultural customs. Despite some road bumps and delays, the future for Hawaii has never looked brighter.