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What had been one of urban Honolulu’s hottest spots for condominium tower construction in recent years, an Ala Moana transit-oriented development zone, has become pretty cold. For the first time in about a decade, construction cranes helping put up new high-rise buildings no longer stand in the area, after the most recent addition to the district — a two-tower complex called The Park on Keeaumoku — opened in September. One developer remains bullish on the region and anticipates beginning construction on a tower next year followed by more. But at least six high-rise projects, most of which received city development approvals in recent years, have been stalled. By comparison, condo tower development in adjacent Kakaako remains humming with several active projects. Dennis Lowery, who for the past two years has been running the Hula Dog Hawaiian Style Hot Dogs lunch wagon on Kapiolani Boulevard across from a defaced construction barrier for a planned $650 million residential and hotel condo tower called Mana‘olana Place, chronicled the activity on the site where the start of construction was announced in late 2022. “It’s just been a wall,” he said, referring to the eyesore barrier. “Nothing’s been done. Nothing’s been done. Nothing’s been done.” The construction barrier, initially decorated with a mural painted by local artist Mark “Devour” Visay but now entirely marred by graffiti, rings 1.2 acres of largely undisturbed land on the corner of Kapiolani and Atkinson Drive across the Hawai‘i Convention Center. The developer of Mana-‘olana Place, an affiliate of California-based Salem Partners that planned to produce 99 luxury residential condos and 125 hotel units managed under the Mandarin Oriental hotel brand, said on Friday that the project will be “moving forward” early next year. TOD magnet A wave of activity by developers to erect towers in the area beginning about a decade ago was largely driven by then-new city zoning rules allowing extra tower height and density for new buildings within a half-mile of what was then slated to be the busiest of 21 city rail stations, a terminus station at Ala Moana Center, Hawaii’s largest shopping mall. “There are more projects on the Kapiolani-Ala Moana corridor than anywhere else on Oahu, and that includes Kakaako,” Steve Sombrero, president of local commercial real estate firm Cushman & Wakefield ChaneyBrooks, said in 2018. “It’s an exciting time.” The crop of new glass-sided buildings in the Ala Moana transit-oriented development, or TOD, zone, largely concentrated around Kapiolani between Piikoi Street and Kalakaua Avenue, included the opening in 2018 of the 485-unit Kapiolani Residence tower produced by an affiliate of Korea--based SamKoo Development. SamKoo also developed a 512-unit tower on Kapiolani called The Central Ala Moana that opened in 2021. Another tower that opened in 2021 nearby on a corner of Keeaumoku and Makaloa streets, Azure Ala Moana, had sold all but one of its 330 units upon completion at prices ranging from $550,000 to $2.2 million. Azure, developed by ProsPac Holdings Group LLC, a firm with ties to China, also included 78 moderate-priced rental apartments. Other tower projects in the works at the time included Sky Ala Moana and The Park on Keeaumoku, which were completed as well. Yet several other planned towers in the area haven’t risen for a mix of reasons despite approvals granted years ago. Local housing market analyst Ricky Cassiday said high mortgage interest rates, construction cost increases, competition from well-established Kakaako condo developers, and little rebound in visitors from Japan after a Hawaii tourism shutdown in 2020 due to COVID-19 are among major factors hindering projects from proceeding in the Ala Moana TOD zone. The city also indefinitely suspended development of the Ala Moana rail station due to budget constraints, but Cassiday believes that isn’t a factor in stalled tower plans. One planned Kakaako station also was cut. Stalled plans Reasons why some of the tower projects in the area have been stifled also include difficulties with financing. Two stalled projects, Hawaii Ocean Plaza and Hawaii City Plaza, were caught up in litigation with foreign investors who alleged in lawsuits that their money was misused by the California-based developer, a firm led by Johnson Fang. Construction began on Hawaii City Plaza in early 2019 ahead of unit sales but ceased after little work was done at the site on Sheridan Street next to Walmart and Sam’s Club. Another project that hasn’t progressed after city approvals is a 40-story rental tower slated for 550 units adjacent to Ala Moana Center. The owner of the mall, Brookfield Properties, obtained a development permit in 2021 for the project called Ala Moana Plaza. Brookfield did not provide a requested update on the status of the project. Salem Partners, the developer of the stalled Mana‘olana Place project, also obtained approvals for a second project, a 444-unit condo--hotel tower at 1500 Kapiolani Blvd. on the site of a former Heald College building. This project, which also included 78 rental apartments for seniors on an adjacent site atop a former Walgreens parking garage converted to an automobile dealership, hasn’t been built, though Salem Partners President William Witte said it will move forward later this year. Next to the Mana‘olana Place site, a firm led by Hawaii technology entrepreneurs Fred and Annie Chan, which built the twin-tower Moana Pacific condo in Kakaako, pursued development of a 631-unit residential tower that stalled last year after efforts to obtain city approval. The city Department of Planning and Permitting recommended approval about a year ago subject to changes that included more affordable housing and different tower positioning. But KCR Development let its application expire. Allen Leong, a KCR representative, said the project was put on hold because of high interest rates deterring homebuyers and uncertain construction costs threatened by federal tariffs on foreign materials. “It’s on hold,” he said. Bullish position One developer actively pushing ahead with a tower project in the area despite challenging conditions is JL Capital, which developed Sky Ala Moana, featuring two towers with a mix of residential and hotel units. JL in May began selling about half of the 315 units in the planned tower, Muse Honolulu, which is to be built on Kapiolani next to the former Heald College building where the Salem Partners project is stalled. Prices for Muse units range from $709,000 for a studio to $5.9 million for a penthouse that has been sold. In July, sales began for the other Muse units made exclusively available to Hawaii resident owner--occupant buyers for an initial 30-day period. Mark Berkowitz, a JL vice president, declined to share specific sales results, but said interest has improved over the past two months. “We see an uptick in interest,” he said. “We feel strong.” To unlock financing to build Muse, JL needs to sell at least 65% of units, a level company officials anticipate reaching next year. JL also is converting an office building nearby into 64 rental apartments, and plans to build another 37 rental apartments on Kalakaua to satisfy a city affordable-housing requirement. Oahu’s housing market is in somewhat of a lukewarm place compared with a few years ago when some of the then-new Ala Moana area towers opened, such as Azure, with nearly sold-out inventory. The Park on Keeaumoku, which opened in September after launching sales in 2021, has about 150 unsold units among 972 units in the two towers, at prices from $349,147 to $1.6 million. Cassiday said demand for condos in Honolulu has definitely weakened among buyers from Asia but remains stronger among local residents and mainland buyers. He said Kakaako is better positioned for development given better proximity to the ocean and more established developers, but Cassidy also believes much potential remains for the Ala Moana TOD area. “It’s got a future, he said. Earlier this month, JL announced that it paid $36 million to buy 1.3 acres along Kapiolani, which includes a corner of Sheridan partly occupied by a Runners Route store, for future tower development. “This acquisition reflects our long-term vision for the Kapiolani corridor as a vibrant, high-density neighborhood within the Ala Moana neighborhood,” Tim Lee, JL CEO, said in a statement. “With this site, we’re excited to continue shaping and improving the existing corridor with a thoughtfully planned and connected project that will elevate the experience of living in urban Honolulu.”
