Hawaii Real Estate and Economy: February 2013

Thursday, February 28, 2013

Section 8 Rental Housing Vouchers May Be Cut

The United States Department of Housing and Urban Development manages Section 8, a federally funded rent assistance program which helps approximately 3.1 million low-income households across the country. However, due to the federal “sequester” which is scheduled to kick in on Friday, if Congress is unable to come to some sort of agreement it is quite possible that significant cuts would be made to Section 8 funding. In anticipation of this possibility, 3,585 families and 1,365 landlords on the island of Oahu received a letter stating that rental housing subsidies may be reduced or terminated effective May 1, 2013. Section 8 is available to families whose income does not exceed 50 percent of the median area income. For the City and County of Honolulu, that means that a family of four must earn less than $48,950 to qualify. The family must then spend 30 percent of their gross income on rent and federal Section 8 vouchers can pay for the rest.

Source: Honolulu Star Advertiser, 2-28-2013, www.staradvertiser.com
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Hawaii Residents are Happiest and Healthiest in Nation

According to the 2012 Gallup Healthways Well-Being Index, Hawaii ranked as the happiest and healthiest state in the nation for the fourth year in a row. The state ranked number one in terms of satisfaction with life, emotional health and work environment and came in second in the country terms of healthy behavior and physical health. Hawaii had an overall score of 71.1 out of 100, which was an increase from the 70.2 score that the state received in 2011. The other top states included Colorado, Minnesota, Utah and Vermont. Ranking at the bottom were West Virginia, Kentucky, Mississippi, Tennessee and Arkansas.

Wednesday, February 27, 2013

Bill To Remove Tents and Items from Sidewalks Is Given Preliminary Approval

Under current city law, items placed on a city sidewalk must be “tagged” by city officials for a 24-hour period before authorities are allowed to return the next day and seize them. However, under a new bill, Bill 7 (2013), the 24-hour notice before removal would not be necessary if the items are identified as nuisances. Property owners would still have up to 30 days to retrieve their items from city storage for a fee, though the fee could be waived if contested successfully. Bill 7 was given preliminary approval by the City Council’s Public Safety and Economic Development Committee. However, some object to the bill as they feel that Bill 7 criminalizes homelessness and stifles free speech.

City Councilman Ilaika Anderson, who co-authored the bill, stated, “Obviously there is an issue, with our public areas being blocked and certain members of the public being denied access because other members of the public are deciding to occupy our sidewalks for whatever reason. I’ve long believed that this Council owes it to the public to ensure equal access to our public spaces to all members of the public, and not to allow for any one particular group or any one particular person to utilize public space at the expense of the general public.”

Source: Honolulu Star Advertiser, 2-27-2013, www.staradvertiser.com
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Island Air Owned By Larry Ellison

Island Air has confirmed that billionaire Larry Ellison has completed a deal to purchase their company. Paul Marinelli, a representative of Ellison, stated, “Make no mistake about it, the airline will be increasing service to all the islands, not just Lanai. It goes without saying that Island Air is critical to the island of Lanai, and that certainly was the impetus for beginning discussion. But as we got into it, what we realized is there’s an incredible market opportunity here for all the islands, and we fully intend to engage that opportunity.”

Island Air currently has approximately 5 percent of the state’s inter-island market. President of Island Air, Les Murashige, stated, “Mr. Ellison has already demonstrated a strong commitment to Hawaii, and we are proud to have an owner with the resources and desire to facilitate our expansion plan. This is a very exciting day for the Island Air ohana as well as the entire state of Hawaii. Mr. Ellison brings resources to build the airline, so we plan to service all the communities of Hawaii, which we feel will benefit both kamaaina and visitors alike.” It was also announced that Murashige will remain as President of Island Air.

Larry Ellison is the CEO and co-founder of Oracle Corporation, and is the third-richest man in the United States. Ellison made headlines in 2012, when he purchase 97 percent of the island of Lanai.

Tuesday, February 26, 2013

Foreclosure Cases Increase in January 2013

According to a report released by the state Judiciary, there were a total of 364 new foreclosure cases initiated in the state court system during the month of January 2013. However, most industry experts are not surprised by this turn of events, as there have been a backlog of cases building due to new foreclosure laws that the Hawaii State Legislature passed in 2011 and 2012. The stricter laws required that attorneys would be responsible for affirming the accuracy of all case documents submitted by lenders, which brought the number of new cases filed to a trickle. However, now that lenders and their attorneys have become used to this change, they are beginning to quickly process the backlog in the judicial foreclosure system.

Source: State Judiciary

January 2013 – 364 foreclosure cases
December 2012 – 341 foreclosure cases
November 2012 – 327 foreclosure cases
October 2012 – 196 foreclosure cases
September 2012 – 58 foreclosure cases
August 2012 – 59 foreclosure cases
July 2012 – 75 foreclosure cases
June 2012 – 458 foreclosure cases
May 2012 – 397 foreclosure cases
April 2012 – 382 foreclosure cases
March 2012 – 404 foreclosure cases
February 2012 – 345 foreclosure cases
January 2012 – 285 foreclosure cases

Source: Honolulu Star Advertiser, 2-26-2013, www.staradvertiser.com
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Mayor Wants $150 Million to Repair Roads

Honolulu Mayor Kirk Caldwell is asking the City Council for a total of $150 million over the next fiscal year to repair damaged and neglected city streets on the island of Oahu. Caldwell’s long term plan call for the repaving of approximately 1,520 lane-miles of city streets over the next five years. Caldwell stated, “This is an enormous increase in the amount of work done. It is certainly something that I will fight for and I will encourage my colleagues to fight for as well. Road repaving is not real sexy. People want to talk about new things, new buildings and new parks, redesigning Waikiki. But it’s the everyday things that a city is about. It’s about sewage, it’s about water, garbage pickup, and it’s about road repaving. People feel the difference when you address the need.”

Final Hotel Occupancy Rates for 2012 Released

In a report released by Hospitality Advisors LLC, the island of Oahu had the highest hotel occupancy rate in the state at 84.7 percent. In comparison, the record for the island of Oahu was set in 2005 at 85.3 percent. Maui had a hotel occupancy rate of 72.6 percent. Kauai had a hotel occupancy rate of 68.9 percent. The Big Island of Hawaii had a hotel occupancy rate of 62 percent. Statewide, the average daily rate (ADR) was $204.15 and the revenue per available room (RevPAR) was $156.99.

Monday, February 25, 2013

Honolulu Mayor Offers Five Year Plan to Fix Roads

Honolulu Mayor Kirk Caldwell is scheduled to present a new five year plan to fix and repave all of the city roads that are in need of repair across the island of Oahu. In his planned conference, Caldwell announce that his administration will repave 290 lane-miles of road in 2013 and another 310 lane-miles in 2014 and 2015. There are more than 3,000 road segments that have been identified and are slated for repaving over the next five years. However the Department Facility Maintenance and the Department of Design and Construction, which jointly handles road maintenance and repair for Honolulu, note that the cost to slurry-seal (temporary fix) a lane-mile of road is about $50,000 and to completely repave a lane-mile of road is about $250,000.

Mayor Caldwell had made fixing potholes and damaged roads one of his major campaign promises in the last election. A recent survey of Hawaii roads noted that only 57 percent of Oahu’s city roads were in good or adequate condition, while 16 percent were in degraded condition and 28 percent were in unsatisfactory condition, the worst category. State transportation officials would be required to fix state-operated roads like the three freeways, Kamehameha High Way, Farrington Highway, Likelike Highway, Kalanianole Highway and the Pali Highway.

Source: Honolulu Star Advertiser, 2-25-2013, www.staradvertiser.com
Posted by Jeff Uyemura-Reyes, Broker-in-Charge, Realtor®
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Sunday, February 24, 2013

Potential New Condo Behind Ala Moana YMCA

Aloha Kai Development LLC currently has an agreement with the YMCA of Honolulu facility, which is located across from the Ala Moana Shopping Center on Atkinson Drive. In exchange for spending approximately $9 million to completely rebuild the YMCA facility, the Aloha Kai would be allowed to build a condominium tower on the back portion of the 1.8 acre site. However, the current zoning for the land is “medium density” which has a height restriction of 150 feet. Aloha Kai would like to have the city rezone the property as “high density” which would allow a 350-foot tower to be built. In a statement to the public, Aloha Kai Development LLC wrote, “The developer is hopeful the neighborhood will appreciate and support its efforts to create more elegance and less mass. The developer believes the community will be pleased and proud of the new YMCA and the overall development.” Tentatively plans call for a 156 units in a 39-story tower with 282 parking stalls.

The Ala Moana Neighborhood Board chairman, Larry Hurst, opposes the developer’s plan and stated that building a high rise condominium would create too much traffic on the already busy Atkinson Drive. Hurst stated, “Their traffic study says there’s problems. Increasing the density there is not a good idea. There’s a reason the zoning is A-2 (medium density).”

Source: Honolulu Star Advertiser, 2-24-2013, www.staradvertiser.com
Posted by Jeff Uyemura-Reyes, Broker-in-Charge, Realtor®
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Saturday, February 23, 2013

Sequestration Will Slow Hawaii’s Economic Growth

According to a report released by Eugene Tian, the state’s chief economist, sequestration, if enacted, would slow Hawaii’s economic growth to 2.6 percent in 2013, as opposed to the 3.4 percent predicted if no mandatory spending reductions are enforced. Tian noted that military spending accounts for 9.6 percent of Hawaii’s gross domestic product and federal civilian workers adds another 5.8 percent. If sequestration occurs, jobs cuts would be made and remain jobs may be furloughed. This would have a significant effect to Hawaii’s economy.

Source: Honolulu Star Advertiser, 2-23-2013, www.staradvertiser.com
Posted by Jeff Uyemura-Reyes, Broker-in-Charge, Realtor®
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Federal Spending Cuts May Lead to Flight Delays

Members of the United States Congress are currently working against the clock to come up with an acceptable national budget. If they are unable to come to an agreement, a process known as sequestration will kick in and provide automatic federal spending cuts of approximately $1.2 trillion over the next ten years. Since Hawaii’s economy is heavily dependent on the military and civilian Department of Defense sectors, there is a serious concern as to how Hawaii’s economic rebound will be effected by these potential cuts.

One area which is being overlooked is the fact that air-traffic control personnel would be effected by sequestration. U.S. Transportation Secretary, Ray LaHood, noted that there may be major flight delays around the country as the Federal Aviation Administration would have to furlough staff at air-traffic control facilities. LaHood stated, “It’s going to be very painful for the flying public. This is going to have an enormous impact. Once airlines see the potential impact of these furloughs, we expect that they will change their schedules and cancel flights. It’s not possible to continue the same schedules with less people.”

Hawaii Tourism Authority’s vice president of brand management, David Uchiyama, stated, “It would have a huge impact if airports were closed, but my understanding is that it wouldn’t get to that. I think it affects us more with air traffic controllers. At this point, fortunately because we’re not a business destination as much as we’d like to be and more people are here on leisure, I don’t think the impact will be as great. That’s going to create major adjustments people will have to make to compensate for the delays, which I think over time they can adjust for. But for us a good portion of our business is leisure, and I think there’s a little more flexibility. But it does affect the traveler’s experience, and that’s something we’re very sensitive to.”

Friday, February 22, 2013

350 Pearl Harbor Shipyard Workers Might Be Laid Off

BAE Systems has issued a nationwide notice to their “ship repair team” that more than 3,500 production, management and administrative staff may be laid off due to the budget stalemate facing the U.S. Congress. For the state of Hawaii, this would mean that approximately 350 Pearl Harbor shipyard workers would be laid off, since the Navy would be forced to cancel all surface ship maintenance scheduled at private shipyards to make their budgetary requirements. President of the Ship Repair Association of Hawaii, Iain Wood, commented, “Obviously those folks work here, live here, eat here, spend their money here, pay their taxes here, so that will have an impact on the economy.”

If Congress is unable to act before March 1, 2013, sequestration would occur for the U.S. Armed Services, which would mean $500 billion in defense cuts and $500 billion in non-defense cuts over the next 10 years. U.S. Senator Mazie Hirono commented that if sequestration occurs, approximately 18,000 defense workers in Hawaii would be effected through either furlough days or job loss. In terms of a dollar amount, sequestration would cost the state of Hawaii approximately $2.3 billion per year.

Source: Honolulu Star Advertiser, 2-22-2013, www.staradvertiser.com
Posted by Jeff Uyemura-Reyes, Broker-in-Charge, Realtor®
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Commercial Real Estate Market Rebounds in 2012

According to a report released by Colliers International, commercial real estate sales reached over $2.21 billion in 2012. This was the first time in five years that commercial real estate sales surpassed $2 billion, and represented an 81 percent increase from the $1.22 billion of sales recorded in 2011. The report stated, “Since the depth of the recession in 2009, Hawaii commercial real estate sales volume has more than tripled, marking a return to levels seen prior to the Great Recession. With the current low interest-rate environment and volatile stock market conditions, many investors sought out real estate as a source to diversify and strengthen their investment portfolios. Investment interest should continue to remain strong for the near term as offshore institutional investors continue to covet prime Hawaii properties.”

Thursday, February 21, 2013

North Shore Real Estate – Canoe Hale and Park Proposed for City Land in Haleiwa

Honolulu City Council Chairman Ernest Martin is proposing that a total of 3.4 acres of land in Haleiwa on the North Shore of Oahu be set aside to become part of the Haleiwa Beach Park. Martin added that the location would be a great spot to build a canoe hale (house) and additional parking for visitors and residents.

Over the past few years, these 3.4 acres of land have been highly contested and sought after by various groups. Developer D.G. Andy Anderson had previously hoped to construct an 80-room boutique hotel on the site. Kamehameha Schools also expressed interest in acquiring the land to build a cultural park for it’s nearby Loko Ea Fishpond. Finally, the Save Haleiwa Beach Coalition opposed the city from selling the parcels and demanded that the land be zoned as preservation land. The Save Haleiwa Beach Coalition has filed a lawsuit against the city to stop them from selling the land.

Larry McElheny, a member of the Save Haleiwa Beach Coalition, stated that he supports Councilman Martin’s proposal. McElheny stated, “As the island becomes more and more populated, we’re going to need more parks, not fewer. Let’s do what we can to enhance the public parks so residents and tourists alike can enjoy the special qualities of Oahu’s North Shore and Koo-lauloa (the island’s northeastern district).”

Source: Honolulu Star Advertiser, 2-21-2013, www.staradvertiser.com
Posted by Jeff Uyemura-Reyes, Broker-in-Charge, Realtor®
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Wednesday, February 20, 2013

125 Civilians at Schofield Barracks Furloughed for 30 Days

A total of 125 BAE Systems Hawaii workers at Schofield Barracks were notified that their jobs would be furloughed for the next 30 days. These workers included mechanics, welders and painters who work on various Army vehicles. According to the company’s director of public relations, Alan Hayashi, the furloughs are in “direct response” to the Pentagon budget cuts.

United States Senator Mazie Hirono warned last week that federal cuts could cost Hawaii as many as 11,000 jobs and result in furlough days for 18,000 civilian Department of Defense workers. Hirono stated, “My heart goes out to these (BAE) workers and their families. But if sequestration goes into effect, these furloughs will be just the first impacts on Hawaii families and the isles’ economy.” Hirono warned that Congress needs to take action by March 1, 2013 to avert sequestration, or automatic federal spending cuts. If enacted, sequestration would equate to approximately $500 billion in Department of Defense cuts and $500 billion in non defense reductions over the next 10 years.

Source: Honolulu Star Advertiser, 2-20-2013, www.staradvertiser.com
Posted by Jeff Uyemura-Reyes, Broker-in-Charge, Realtor®
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Honolulu Festival Fosters Pacific Harmony

The Honolulu Festival is a three day event taking place from March 1st to March 3rd in Waikiki. Founded in 1995 to foster Pacific harmony, the event is expected draw between 10,000 and 15,000 people each day. Approximately 4,500 visitors will come to Hawaii specifically for the Honolulu Festival and it is estimated that they will spend about $11 million. President and CEO of the Hawaii Tourism Authority, Mike McCartney, commented, “The Honolulu Festival helps us bridge cultural bonds and share our people, place and culture.” Please visit www.honolulufestival.com for additional information.

Alexander and Baldwin to Build Another Condominium Tower in Kakaako

Alexander and Baldwin Inc. has announced that they will be building a new condominium tower in Kakaako at the site of the former CompUSA store at the corner of South Street and Ala Moana Boulevard. The company plans to start marketing units for sale later this year. President and Chief Operating Officer for Alexander and Baldwin, Chris Benjamin, stated, “There is no doubt that demand for urban Honolulu (housing) is very strong.”

Sears Ala Moana to Close Six Months Ahead of Schedule

General Growth Properties Inc., the owner of the Ala Moana Shopping Center, had announced that they will be closing the Sears store on June 2, 2013, approximately six months earlier then previously estimated. General Growth plans to demolish the three-level 340,000 sq ft department store and will spend about 30 months redeveloping the Ewa (West) end of the mall. The redevelopment will double the amount of retail space and would add a new anchor tenant as well as several midsize and smaller retailers. General Growth plans to spend $572.4 million in this project and hopes to be completed during the forth quarter of 2015.

While the move caught Sears employees by surprise, real estate experts agreed with General Growth’s move. Mike Hamasu, the director of consulting and research for Colliers International, stated, “It makes total sense because they’re (General Growth) capitalizing on the improvement in the local economy, also the boom occurring amongst the tourism sector because those are your primary consumer markets. You have the upswing in the economy, you have the boom in tourism, favorable exchange rates, which all support additional retail spending. Sales per square foot for Sears is definitely below what they could accomplish by (demolishing) the space and bringing in newer tenants. They’re updating not only the facade, but also the type of retailers they’re attracting into the center.”

Tuesday, February 19, 2013

Concern Rising at Pearl Harbor Navy Shipyard

The United States Navy has recently announced that they will be forced to cancel planned repairs on at least 24 ships around the country due to the fact that Congress has not approved an appropriation bill for the 2013 fiscal year. This directly affects the Pearl Harbor Navy Shipyard which was slated to do a $200 million modernization of the USS Russell and a $35 million repair on the USS Chafee. There is a significant concern as to how many jobs would be lost at the Navy Shipyard if Congress does not act quickly.

Source: Honolulu Star Advertiser, 2-19-2013, www.staradvertiser.com
Posted by Jeff Uyemura-Reyes, Broker-in-Charge, Realtor®
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Monday, February 18, 2013

“Artist Housing” Proposed for Kakaako Neighborhood

The Artspace Organization and the Pa’i Foundation has proposed a joint venture to create of a nine-story “artist housing” building at 1025 Waimanu Street in Kakaako. The concept would be to create approximately 80 lofts where artist can live, work and showcase their art in one location. Units would be rented to artists earning 50 to 60 percent of Honolulu’s median income, which equates to approximately $40,000 for a single person and $61,800 for a family of four. Rents would be between $965 per month to $1390 per month for a one or two bedroom unit with a large loft space for working. The project has been tentatively named Ola ka ‘Ilima Artspace Lofts.

Vice president for Artspace, Cathryn Vandenbrink, stated, “Kakaako is going to go through a tremendous amount of change in the coming years. It would be wonderful for artists to have a permanent seat at the center of the community. We will work to assemble financing for the project while engaging with the creative community to refine the building program. Artspace is very excited to be working in Honolulu to create permanently affordable space for artists and their families in Kakaako.” Kumu hula and executive director for the Pa’i Foundation, Vicky Holt Takamine, added, “I expect that our presence in Kakaako will enrich the community and contribute to a vibrant, exciting artistic and culturally grounded sense of place.”

Artspace is a national non-profit organization founded in 1979. Since then, the non-profit has helped to create a total of 32 similar projects as the one they are proposing in Kakaako in 14 different states around the country. Approximately 1,000 artists live and work in these “artist housing” buildings. In most cases, Artspace will transform a hotel, school warehouse, hospital or department store into rental lofts for artists.

Source: Honolulu Star Advertiser, 2-18-2013, www.staradvertiser.com
Posted by Jeff Uyemura-Reyes, Broker-in-Charge, Realtor®
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Sunday, February 17, 2013

State Unsure About Renovating Former Royal Brewery Building

The former Royal Brewery building, located on Queen Street in downtown Honolulu, is a historic brick building built in 1900 and is owned by the state of Hawaii and managed by the Hawaii Community Development Authority. In 1996, the building started to undergo a renovation project, but the flooring that was installed started to emit noxious fumes. The former Royal Brewery has been vacant since then and the state is now deciding if they should spend $5 million to fix the problem and make the building habitable again. If they are able to renovate the building, the Hawaii Community Development Authority would move their offices into it, saving their state agency approximately $180,000 in rent for the space that they lease in a converted warehouse several blocks away in Kakaako.

According to state records, the fumes were caused from a termite treatment that was used on beams and flooring installed as part of the 1996 renovation project. The state sued the contractors and materials suppliers in 2004 and eventually settled the case for $1 million in 2011. In 2012, the state obtained new bids to replace the flooring, and the best offer was $4.9 million. The Hawaii Community Development Authority hopes to get $6.1 million from the state of Hawaii to renovated the former Royal Brewery building. HCDA’s executive director, Anthony Ching, commented, “It’s not an inexpensive move. It’s a very agonizing decision. This is something we would have preferred be done right the first time. Do we let (the building) go vacant for another 15 years?”

Source: Honolulu Star Advertiser, 2-17-2013, www.staradvertiser.com
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Saturday, February 16, 2013

North Shore Real Estate – Longs Drugs to Open Store in Hauula

Longs Drugs Store has announced that they will be opening a new store in Hauula, a small community located between the North Shore of Oahu and the Windward Coastline, in July 2013. The store, located at the Hauula Kai Shopping Center, was once occupied by Pay’n Save Drug store, and will be approximately 26,500 sq ft in size. Spokesman for Longs and CVS Caremark Corp, Mike DeAngelis, stated, “We look forward to returning pharmacy services to this location in order to serve the community.”

Source: Honolulu Star Advertiser, 2-16-2013, www.staradvertiser.com
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Friday, February 15, 2013

Waikiki Trade Center Purchased By Investment Firm

The Waikiki Trade Center, located on the corner of Seaside and Kuhio Avenue in Waikiki, has been purchased by Seaside Equity LLC, an investment firm, for $8.2 Million Leasehold. According to a statement made by the property management company, CBRE Inc., Seaside Equity will be spending additional resources to upgrade the property and hopes to improve relationships with their current tenants as well as secure new ones.

Source: Honolulu Star Advertiser, 2-15-2013, www.staradvertiser.com
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Hawaiian Airline to Offer Service to Sendai, Japan

Hawaiian Airlines has announced that starting June 25, 2013, their airlines will be offering flights three days a week between Sendai, Japan and Honolulu International Airport. President and CEO of Hawaiian Airlines, Mark Dunkerley, stated, “We have been interested in providing service to Honolulu from Sendai for some time. The city’s airport draws travelers from throughout the Tohoku region, and its peak travel periods complement those of Sapporo to the north. Our new service will take advantage of these fluctuations by offering each market the majority of available seats when local demand for travel to Hawaii is highest. This allows us to make the most efficient use of our fleet.”

Two Bills Proposed to Remove Tents and Belongings from Sidewalks

The Honolulu City Council has proposed two bills, Bill 6 (2013) and Bill 7 (2013), which are designed to clear Oahu’s sidewalks of tents and other belongings. Bill 6 (2013) would ban tents from public sidewalks and malls without a permit and could lead to arrest and the seizure of tents and other items. Bill 7 (2013) would prohibit not just tents, but also other objects “deemed to be public nuisances, hazardous to the health, safety and welcome of residents of the city.” More importantly, Bill 7 would allow the city to remove items immediately, as compared to the current law which states that city officials must give 24 hour notice prior to removal. City Councilman Ikaika Anderson stated, “It’s not about going after the homeless. The City Council is bent on ensuring equal access to public spaces by all members of the public.”

The American Civil Liberties Union of Hawaii has stated that they will testify against both bills and would take the matter to court if necessary. Senior staff attorney for the ACLU Hawaii, Daniel Gluck, stated, “We intend to oppose it vigorously. If it is implemented, the ACLU will be forced to bring a lawsuit in federal court.” Gluck argued that the bill “would criminalize free speech and would allow the government to seize people’s personal property in ways that are clearly unlawful.”

UHERO Releases Economic Forecast

The University of Hawaii Economic Research Organization (UHERO) has released their latest economic forecast today, and titled their report as “Expansion Shifts Into Higher Gear”. According to their economists predictions, Hawaii’s economy is set to grow at its fasted pace since 2005, due to a strong visitor market and a turnaround in the construction industry. UHERO forecasts that the state’s inflation-adjusted gross domestic product would grow by 3.5 percent in 2013. Executive Director of UHERO, Carl Bonham, stated, “Our overall forecast for 2013 is reasonably robust — a little above the long-term average. It’s not as strong as the last boom in 2005-2006, but we’re getting close to that. Tourism is booming and it’s not just arrivals. There are expectations of continue rising room rates that will contribute to high spending. Also, construction and government jobs are no longer negative factors pulling down GDP growth.”

The UHERO team cautioned, however, that one major uncertainty with regards to their forecast is what is happening in Washington DC with the federal spending cuts. According to the report, the country, “still faces a series of fiscal speed bumps in the months ahead and longer-term budgetary challenges. For Hawaii there is the added uncertainty of how the passing of Sen. Daniel Inouye could affect the level of federal spending in the islands. Having said that we think it extremely unlikely that the sequester will be allowed to occur. Instead Congress will probably enact further extensions and more measured cuts that, while weighing on economic activity, will not derail the current recovery.”

Thursday, February 14, 2013

Honolulu Rail Project - Anti-Rail Group Appeals Federal Judge’s Ruling

A group of Honolulu citizens are appealing a ruling made by Judge A. Wallace Tashima on December 27, 2012, which allowed the city to continue with the $5.26 billion project. Judge Tashima ruled in favor of the anti-rail group’s claims that the project placed certain public parks and historic sites at risk, and required the city to do additional studies on the impact that the rail project would have on Mother Waldron Park in Kakaako and the feasibility of creating an alternative downtown route by means of a tunnel under Beretania Street. However, Tashima also stated that he would allow the city to continue with construction of the project and would not halt the project while these additional studies were being made. The anti rail group has submitted their appeal to the 9th U.S. Circuit Court of Appeals.

Currently construction has been halted as a result of a ruling made by the Hawaii Supreme Court which stated that an archaeological survey of the entire rail route must be completed before construction could resume. Rail officials are confident that the survey will be finished by September of 2013 and approval to resume construction would be given.

Source: Honolulu Star Advertiser, 2-14-2013, www.staradvertiser.com
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Wednesday, February 13, 2013

Hawaii Has 3rd Highest Mortgage Debt Per Borrower in Country

According to a report released by TransUnion, Hawaii residents carried the third highest mortgage debt ratio per borrower. The data, collected for the fourth quarter of 2012, stated that the average mortgage debt was $315,721. This was significantly higher then the national average of $186,785. On a positive note, however, the average delinquency rate for the Hawaiian Islands decreased from 4.8 percent to 4.66 percent. This was better then the national average delinquency rate of 5.19 percent.

Vice President of U.S. Housing for TransUnion, Tim Martin, stated, “The national mortgage delinquency rate experienced its largest yearly decline since the conclusion of the recession, though we still remain far above normal levels. The elevated delinquency levels that we still are experiencing are a result of older vintage loans — borrowers who haven’t been making their payments for a rather long time that are still in the system, inflating the overall rate. It’s not clear yet, but recently announced regulatory rules related to mortgage servicing may tend to slow down this process further.”

Washington D.C. had the highest average mortgage debt at $375,353 followed by California at $324,867. West Virginia had the lowest average mortgage debt at $104,143.

Source: Honolulu Star Advertiser, 2-13-2013, www.staradvertiser.com
Posted by Jeff Uyemura-Reyes, Broker-in-Charge, Realtor®
Global Executive Realty, LLC
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Developer Jeff Stone Plans to Build Two Homes in Aina Haina

Real estate developer Jeff Stone would like to construct two single family homes at 1055 and 1057 Hao Street in Aina Hiana on the island of Oahu. Each home will be two stories tall and the Planning Department has already issued building and grading permits for these two houses. However, members of the Aina Haina Community Association have raised a series of objections and concerns including fears that additional homes would be building on the 9.5 acres of land that Jeff Stone owns. Community Association members note that there are some soil concerns in the area and that building new homes may also nursery the neighborhood’s drainage system.

The City Planning Department believes that these objections are not enough to warrant a delay in the project. Acting planning director, Jiro Sumada, stated, “These permits are ministerial in nature. As long as they meet the requirements and codes for the city, we will issue a building permit. If there are any measures to be taken to minimize and eliminate any soil conditions, that will be taken care of by the on-site inspector.”

Hawaiian Airlines Wins Most Punctual Carrier Award for 9th Year in a Row

According to a report released by the U.S. Department of Transportation, Hawaiian Airlines was the most punctual United States carrier in 2012. This was the ninth straight year that the Hawaii based airline had won the award. The report stated that 93.4 percent of their flights were on-time last year. In comparison, the industry average was just 81.9 percent. Hawaiian Airlines’ officials stated that they were proud to maintain their title, and are continuing to work to improve their service and efficiency.

Public Unhappy About the Ritz-Carlton Residences Waikiki Beach Plan

The city of Honolulu’s Department of Planning and Permitting hosted their first public hearing yesterday in regards to 2121 Kuhio Avenue, also known as the Ritz-Carlton Residences Waikiki Beach. The session was heavily attended and the public expressed their displeasure and frustration against the $180 million condominium-hotel project plan. Concerns were raised that the building appeared to be “tombstone like” and was visually an “ugly wall”, a “sore thumb” and a “monstrosity”. Most importantly, members of the community were furious that the tower was positioned with its long axis being parallel to the mountains and ocean. This orientation meant that that all 361 units of the Ritz-Carlton Residences would have expansive ocean views, but would violates the Waikiki Special District Design guidelines which call for a perpendicular orientation to preserve mountain views and natural ventilation.

According to the developer, PACREP, the units would be sold to investors at an average price of $654,000. To obtain this high average, the building must be parallel to the ocean to maximize views. The only party that spoke in favor of the proposed building’s orientation was Kika Bukoski, the executive director of the Hawaii Building and Construction Trades Council. Bukoski stated, “The guidelines are just that. They are guidelines. They are not mandates.”

The Department of Planning and Permitting will meet on March 19th to decide if the permit to start building would be granted. If so, construction is expected to begin in June 2013 and the building would take two years to complete.

Tuesday, February 12, 2013

Huge Increase in Chinese Tourism Market in 2012

According to a report released by the Hawaii Tourism Authority, approximately 115,927 Chinese visitors arrived in the Hawaiian Islands in 2012 and spent a total of $273.3 million. This represented a 41.8 percent increase in visitor arrivals and a 53.4 percent increase in spending as compared to 2011. Furthermore, each Chinese visitor spent an average of $392.40 per day, which is the highest daily amount of any visitor source market. The Hawaii Tourism Authority hopes to see an additional 39.7 percent increase in visitor arrivals from China in 2013 and targets to have 162,027 visitors by the end of the year.

Source: Honolulu Star Advertiser, 2-12-2013, www.staradvertiser.com
Posted by Jeff Uyemura-Reyes, Broker-in-Charge, Realtor®
Global Executive Realty, LLC
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Lawson Inc to Open Up to 35 Convenience Stores on Oahu

Tokyo-based Lawson Inc. has announced that they will be opening as many as 35 additional convenience stores on the island of Oahu. Currently, Lawson have two stores in Waikiki at the Moana Surfrider and the Sheraton Waikiki. President and CEO of Lawson, Takeshi Niinami, stated that their stores would generate an estimated 700 jobs, not including support positions. Niinami commented, “A lot of money is needed. We’re going to go out of the hotel areas. We have more than 20 to 25 (potential sites) in Hawaii. We have to select from that. Not every one is suitable. We esteem local producers and suppliers very much. That’s our philosophy, to live with local society. In Hawaii that’s a prerequisite. We want to be local. We want to bring in new, innovative ideas, service and product offerings here to local customers. That’s the main goal. We want to be regarded as a very creative store brand.”

Lawson would be in direct competition with the ABC Stores, which currently has approximately 40 locations in the Waikiki and Ala Moana neighborhoods. Niinami added, “We respect ABC a lot. We just want to learn from them. ABC sells a lot of souvenirs. I don’t think we can copy it because that’s their strength, so we just want to stay with the Lawson way, which is that we manufacture products fit for local customers. We want to learn much more about local needs.” Lawson currently has over 11,000 convenience stores in Japan, China, Indonesia and Hawaii.

Monday, February 11, 2013

Hotel Industry Revenue Sets Records in 2012

According to a report released by Hospitality Advisors LLC, the statewide hotel occupancy increased by 3.7 percent in 2012 to 76.9 percent. More importantly the average daily rate (ADR) for a hotel room had increased by 7.5 percent to $204.15 and the revenue per available room (revPAR) increased by 13 percent to $156.99. This equated to a total revenue for the hotel industry of $4.81 billion, an increase of 13.8 percent from a year prior. President and Chief Executive Officer for Hospitality Advisors, Joe Toy, was very optimistic about the coming year and stated, “I think we’ll set some additional records in 2013. Still, I don’t think that we’ll see an even distribution of occupancy and revPAR until 2014. The Big Island has to come back first.”

Source: Honolulu Star Advertiser, 2-11-2013, www.staradvertiser.com
Posted by Jeff Uyemura-Reyes, Broker-in-Charge, Realtor®
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Sunday, February 10, 2013

Tourism Industry Would Like to Increase Number of Visitors from India

The Hawaii Tourism Authority and other members of the tourism industry would love to see an increase in the number of visitors from India to the Hawaiian Islands. Currently, India represents a very small percentage of the tourism economy in Hawaii, but a recent boom in Indian weddings in Hawaii has suddenly placed Hawaii on the country’s radar. It should be noted that Indian wedding are typically much more extravagant, can last for several days, and have more guest then destination wedding groups from other countries. General Manager for the Sheraton Waikiki, Kelly Sanders, noted, “We average 33 guests for a destination wedding, but Indian weddings tend to range from 50 to 150 guests. One event even brought 500 guests.”

President and CEO of the Hawaii Tourism Authority, Mike McCartney, stated, “As the second most populous country in the world, India has a growing middle class with disposable income and increasing demand to travel abroad.” McCartney noted that there are currently no direct flights from India to Hawaii, but hopes that will not be a deterrent that would limit future growth in that market.

Source: Honolulu Star Advertiser, 2-10-2013, www.staradvertiser.com
Posted by Jeff Uyemura-Reyes, Broker-in-Charge, Realtor®
Global Executive Realty, LLC
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Saturday, February 9, 2013

Molokai Real Estate – Commercial Wind Project Talks End

Molokai Properties Ltd., which owns the Molokai Ranch, has announced that talks with Molokai Renewable LLC, who was hoping to build a large commercial wind-energy project on the island, have ended. Chief Executive Officer for Molokai Properties, Clay Rumbaoa, stated, “After much consideration and discussions with Molokai Renewables, we made the decision not to renew the agreement for the proposed wind farm project on Molokai Ranch lands at this time. Our focus is currently on ensuring the success of our newly relaunched ranching operations and our efforts to reopen existing facilities, such as the Maunaloa Lodge, in an effort to create opportunities for the island. We have enjoyed working with Molokai Renewables and appreciate their commitment to smart and sustainable wind projects.”

Molokai Renewables had proposed building approximately 70 large wind turbines on Molokai which would generate 200-megawatts of energy. The electricity generated would then be sent to the island of Oahu via an undersea cable. Guy Kaulukukui with Molokai Renewables LLC, stated, “While we are disappointed with Molokai Properties’ decision not to move forward with our proposed wind farm project on Molokai Ranch lands, we respect their decision. We have enjoyed working with Molokai Properties and appreciate their commitment to Molokai. While we were still many years away from potentially building a wind farm, our initial research indicated that Molokai‘s residents would benefit from the kind of sustainable wind project we were proposing, one with unique benefits, commitments to restore and conserve the land, preserve Molokai‘s rich culture and way of life, and enhance the ocean resources and local food supply that Molokai depends on.”

Source: Honolulu Star Advertiser, 2-9-2013, www.staradvertiser.com
Posted by Jeff Uyemura-Reyes, Broker-in-Charge, Realtor®
Global Executive Realty, LLC
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Friday, February 8, 2013

Honolulu Rail Project – Archaeological Survey Fieldwork Complete

The Honolulu Authority for Rapid Transportation have announced that the fieldwork for the archaeological survey of the rail route has been completed. In total, there were seven human remain findings along the 20 mile proposed route, out of which two of them were deemed to be full burials. HART’s Executive Director and Chief Executive Officer, Daniel Grabauskas, stated, “We now know what we’re dealing with and we will be able to make any necessary design changes well in advance of construction in the urban Honolulu area. Assuming that we leave all these in place as burials and treat them that way, there would be no impact on the rail route or cost.”

An official report will now be compiled by the Honolulu Authority for Rapid Transportation and will be submitted to the State Historic Preservation Division. Once this report is approved, the $5.26 billion rail project will be allowed to proceed. Experts believe that this report preparation and approval process could take another few months. It is estimated that each month the project is delayed would cost the city between $7 and $10 million.

Source: Honolulu Star Advertiser, 2-8-2013, www.staradvertiser.com
Posted by Jeff Uyemura-Reyes, Broker-in-Charge, Realtor®
Global Executive Realty, LLC
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Thursday, February 7, 2013

Kakaako Real Estate – Fair Grounds Proposed for 3-Acre Parcel

Billy Balding is hoping to develop a 3-acre parcel located near the Kakaako Makai Gateway Park on Ala Moana Blvd and turn it into a fair ground and amusement center. In a presentation to the Hawaii Community Development Authority and members of the public, Balding outlined a $10 million plan which would include a activities such as zip lines, indoor skydiving, a bungee wall, skateboard park, rock climbing wall, miniature golf and kiddie carnival rides. The grounds would be open from 9:00 am to midnight and alcohol would not be served except for private parties. There would be 70 parking stalls on site.

Initial support for Balding’s plan has been very positive. Balding believes that he would be able to employ 45 people and begin partial operation as early as May 31, 2013. There are several hurdles that Balding has to overcome including finalizing a lease with Kamehameha Schools, which owns the land, and obtaining a special management area permit.

Source: Honolulu Star Advertiser, 2-7-2013, www.staradvertiser.com
Posted by Jeff Uyemura-Reyes, Broker-in-Charge, Realtor®
Global Executive Realty, LLC
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Governor Proposes Soda Tax

Governor Neil Abercrombie has proposed a new tax on all soda and other sugar-sweetened beverages. Under Abercrombie’s proposal, a fee of 1 cent per ounce would be levied and all of the money raised would be spent to help combat obesity and oral health problems across the state. Abercrombie’s administration believes that approximately $37 million would be raised through the “soda tax” on an annualized basis. In addition, it is believed that this added fee would reduce consumption of soda and sugar-sweetened beverages by 8 to 10 percent.

The Hawaii Restaurant Association, the Hawaii Food Industry Association, the International Longshore, and the Warehouse Union, as well as other businesses and labor groups, have openly opposed the Governor’s proposal and argue that the “soda tax” would create a loss of revenue and jobs. Executive Director for the Hawaii Restaurant Association, Roger Morey, stated, “My name is Roger and I drink sugary beverages. If you want to fight obesity, it shouldn’t start at the grocery store or the restaurant, it should start at home with the parents and the schools that educate their children on proper diet, proper exercise. And only if you start treating the cause, not the effect, will you become successful in fighting obesity in Hawaii,”

Waioli Tea Room and Bakery Lease to Expire in November

Brian Jahnke, the restaurant operator of the Waioli Tea Room and Bakery in Manoa Valley, has announced that he will not renew his lease with the Salvation Army after November 3, 2013. Jahnke commented, “The lease is up and I had a chance to renew, but decided not to. Gas, water and electric doubled,” he said. Utilities went up by $5,000 a month, and those expenses plus rent, maintenance and insurance make the operation “not profitable for me.” Jahnke reminisced, “I took over (in 2003) because it was my favorite restaurant and I’d heard that it was closing. (I called the Salvation Army to complain about the planned closure) and six weeks later I was running the place. You have to be careful what you complain about. It’s part of Hawaii’s history, like the last holdout of old Hawaii. It’s just been a great run for me.”

The land beneath the property is owned the the Salvation Army, and representatives of the non-profit organization have announced that they plan to keep operating a restaurant on the site, but have released no additional specific information. On possibility is that the Salvation Army will run the facilities themselves, which is something they did between 1922 and 2003.

Oahu Housing Sales Data for January 2013

Source: Honolulu Board of Realtors

Single Family Home Sales for the Island of Oahu
January 2013 – 227 Homes Sold – $595,000 Median Price
January 2012 – 175 Homes Sold – $618,900 Median Price

Condominium Sales for the Island of Oahu
January 2013 – 286 Condos Sold – $315,000 Median Price
January 2012 – 270 Condos Sold – $305,000 Median Price

Wednesday, February 6, 2013

Big Island Real Estate – Statistical Market Data for January 2013

Source: Hawaii Information Service

Single Family Home Sales for the Big Island of Hawaii
January 2013 – 105 Homes Sold – $265,000 Median Price
January 2013 – 97 Homes Sold – $231,000 Median Price

Condominium Sales for the Big Island of Hawaii
January 2013 – 44 Condos Sold – $205,006 Median Price
January 2012 – 38 Condos Sold – $182,500 Median Price

Source: Honolulu Star Advertiser, 2-6-2013, www.staradvertiser.com
Posted by Jeff Uyemura-Reyes, Broker-in-Charge, Realtor®
Global Executive Realty, LLC
www.myhawaiihomesearch.com
www.myhawaiicondo.com
www.myhawaiidreamhome.com

Kauai Real Estate – Statistical Market Data for January 2013

Source: Hawaii Information Service

Single Family Home Sales for the Island of Kauai
January 2013 – 28 Homes Sold – $447,500 Median Price
January 2012 – 30 Homes Sold – $402,500 Median Price

Condominium Sales for the Island of Kauai
January 2013 – 15 Condos Sold – $300,000 Median Price
January 2012 – 21 Condos Sold – $270,000 Median Price

Tuesday, February 5, 2013

Solar Photovoltaic Industry Booms, But Tax Credit to End

According to a recent report released by the Hawaiian Electic Company, more solar photovoltaic systems were installed by homeowners and businesses in Hawaii in 3012 than the previous six years combined. Industry experts credit this to huge tax incentives offered by the state government, but have expressed concern that once these credits end, so will the boom in business. Alex Tiller, the Chief Executive Officer for Sunetric, one of the state’s largest PV installers, commented, “We expect continued growth in 2013 for the residential solar business as a sector, but the industry as a whole in Hawaii will slow down dramatically. The sudden change in tax code stranded a number of large-scale projects that have long development cycles and complicated financing structures. These big solar farm deals will likely die on the vine as investors and lenders seek other solar opportunities with less incentive volatility in other markets.”

Source: Honolulu Star Advertiser, 2-5-2013, www.staradvertiser.com
Posted by Jeff Uyemura-Reyes, Broker-in-Charge, Realtor®
Global Executive Realty, LLC
www.myhawaiihomesearch.com
www.myhawaiicondo.com
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Monday, February 4, 2013

Kauai Real Estate – Grove Farm Company Requests Special Status for 11,000 Acres of Land

Grove Farm Company is the second largest private landowner on the island of Kauai. The company recently petitioned the state of Hawaii’s Land Use Commission and requested that the state designate approximately 11,000 acres of their land as “important agricultural land”. Under Act 183 passed in 2005, there are several major incentives for landowners who receive such a designation for their land. These include tax credits for investments in agriculture facilities, loan guarantees, placement of employee housing on prime farmland and expedited permitting for processing facilities.

However, it is being contended that approximately 4,000 acres of the land is not suitable for agriculture due to ravines and gulches. In addition, 6,000 acres of land were rated by the University of Hawaii as having “very poor” soil. As a result, the state Office of Planning believes that on 4,717 acres qualify for the designation. Grove Farm argues that they will eventually grow biofuel crops on this land underused land, but the Office of Planning notes that there is currently no commitment to such use. The Land Use Commission will be reviewing arguments as well as open up the discussion to the public before making their ruling.

Source: Honolulu Star Advertiser, 2-4-2013, www.staradvertiser.com
Posted by Jeff Uyemura-Reyes, Broker-in-Charge, Realtor®
Global Executive Realty, LLC
www.myhawaiihomesearch.com
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