August 2010

Hawaii’s Legacy Land Conservation Program helping secure 752 acres

The Hawaii Department of Land and Natural Resources’ Legacy Land Conservation Program is giving part of the money that will be used to purchase more than 750 acres of land deemed to have significant natural resources.

The Legacy Land Conservation Program will give $3.3 million to acquire lands that are valued for archeological, cultural and natural resources. Each dollar from the state will be matched with $3 in federal, private and county funds for a total of another $9.5 million, according to a statement from the Department of Land and Natural Resources.

The approximately 752 acres of land include areas on Oahu, Kauai, Molokai and the Big Island.

Established in 2005, the Legacy Land Conservation Program provides grants to local agencies and organizations that purchase and protect lands that contain valuable resources.

Source: PBN

Castle & Cooke sells prime site with long term lease to Home Depot

Texas company buys prime site from Castle & Cooke

Castle & Cooke Hawaii quietly sold a prime plot of land in Honolulu — specifically, the nine acres on which sits the Home Depot store in Iwilei — to a Texas company for $23.2 million this summer.

The buyer, identified in the deed as HD Hawaii 421 Partnership Ltd. of Houston, is said to have been interested in buying the property for several years.

Castle & Cooke marketed the property several years ago, and ultimately sold the land at 421 Alakawa St. fee simple to the HD Hawaii partnership, whose president is Howard B. Chapman.

No word on how interested Home Depot might have been in buying the land underneath its Iwilei store, which opened in 1999. Home Depot’s long-term lease on the property runs through Jan. 31, 2025, according to the deed. No real estate brokerage firm represented the seller or buyer.

At $23.2 million, the sale ranked No. 7 on PBN’s commercial real estate transactions list, which listed the biggest deals closed between July 1, 2009, and June 30, 2010.

“It’s a really big deal because there just hasn’t been much out there and my guess, though not knowing the buyers, they probably own some other Home Depots on the Mainland or felt comfortable with the tenant to make the deal,” said Steve Sofos, president and CEO of Sofos Realty Corp., who was not involved in the sale. “I think [the sale] is surprising because I always thought that for Castle & Cooke, that was one of their crown jewels.”

Source: PBN

Amerasian Land Co Inc. Sells Pepper Tree Apartments

Pearl Dragon LLC has purchased the Pepper Tree Apartments from Amerasian Land Co. Inc. for $5 million.

The Aiea apartment complex consists of 40 two-bedroom units and eight one-bedroom units that are 95 percent occupied, according to Doug Davis Realty, which represented the buyer.

Sale of Pepper Tree Apartments closed on July 30.

Source: PBN

Hawaii Commercial real estate market shows signs recovery

Oahu’s commercial real estate market is showing signs of recovery, but it could take at least another year before it is back on firm footing.

That’s the assessment of leaders of three large Hawaii commercial real estate companies as the industry moves into the final five months of the year. With commercial real estate taking a beating as Hawaii and the rest of the world struggled to survive the global recession, industry leaders here believe that the worst is likely over and recovery is on the horizon.

The impact of the financial crisis is evident in the dramatic decline in commercial real estate transactions over the past four years. In the first quarter of 2006, there was $1.4 billion in transaction activity, 88 percent higher than the first quarter of this year, said Mike Hamasu, consulting and research director at Colliers Monroe Friedlander.

“Financing is the lifeblood of the investment market,” Hamasu said. “If you can’t get money to purchase or develop your properties, it makes it very difficult to move forward on hardly anything.”

But he said there are signs that the commercial real estate industry is improving.

The industrial and retail markets are stabilizing, with retail vacancy rates hovering around 3 percent. Hamasu said there appears to be increased interest in real estate investment, but office market vacancy remains about 4 percentage points higher than it was two years ago.

Hamasu said he’s optimistic that the worst is over, but said it will take a while before the recovery is complete.

“We’re starting to see a slow transition from a market that’s been fairly devastated to one that’s starting to consider real estate as an opportunity,” he said. “The optimistic people are saying the bottom has hit, but the pessimistic ones are saying we haven’t had enough proof yet to say that.”

Steve Sofos, CEO of Sofos Realty, agreed that commercial real estate activity picked up in the latter part of 2009 into early 2010, but he said the market is still flat. He said he believes this trend will continue through 2011 because of the long-lasting impact of the recession.

“The problem is there is no pent-up demand in the office market, there’s no pent-up demand in the industrial market, there’s no pent-up demand in the retail market,” he said.

He said one solution would be for landlords to adjust their lease rents to make them more affordable and attractive to small businesses. He said owners need to decide if they want to maintain rents, but deal with vacant property, or lower rents and have an income from their tenants.

“The smart landlords are wheeling and dealing to get tenants,” Sofos said. “The bad ones are sitting there and holding their prices.”

Joseph Haas, president and senior managing director of CB Richard Ellis, said the commercial real estate market in Hawaii is “fundamentally strong.” He said there still is some softening in the office market sector in Honolulu, but that the retail market is tightening and the industrial market has bottomed out.

Haas said he believes the worst is over for the industry, although he acknowledged there still is a lot of uncertainty. The key, he said, is the need for marked improvement in the Hawaii job market.

“We haven’t had job growth, which directly affects commercial real estate,” he said. “You don’t need to expand your office if you’re not bringing new people on. We won’t know we’re out of the woods for sure until we see positive job growth.”

He added that one positive sign that commercial real estate is on the rebound is the recent purchase of Bishop Square by Douglas Emmett Inc. The California-based real estate investment trust bought the downtown property for almost $230 million.

“If you want to make a statement that the commercial real estate industry is strong in Hawaii, that’s putting your money where your mouth is,” Haas said. “There’s only one Bishop Square, unfortunately. But they are a Mainland real estate investment trust who believes in our market and the future of our market.”

Source: PBN