A Piece of the Rock
More than 80 percent of the buyers for the Hokua luxury condominium are Hawaii
Last December, Karl Heyer slept in his Kakaako office in preparation for his big sale the next morning. Earlier that afternoon, customers had gathered outside his door and by midnight there was a crowd of approximately 70 people. By morning, the number had swelled to 300. The release day for the latest Harry Potter tome? Nope. Heyer, a Realtor, was selling units in Hokua, the 40-story luxury tower that will overlook Ala Moana Beach Park and the cool, blue Pacific beyond. The sought-after condos range from two-bedroom, 1,500-square-foot units that start at $535,000 to vast penthouses that are priced at more than $4.5 million.
Interestingly, when Hokua, which means “crest of the wave” in Hawaiian, breaks ground this month, Heyer will have sold more than 90 percent of the tower’s 247 units. Eighty percent of the buyers are Hawaii residents.
“Sales are somewhat reminiscent of what we experienced at Nauru Tower in 1988 and of Hawaiki in 1997,” says Heyer, who also served as sales agent for the two neighboring properties. “Nauru’s cycle started out strong and sort of petered out. Hawaiki started slow, but finished strong. Hokua kept on selling and selling and selling.”
The secret to Hokua’s success may be in a little local knowledge. The $210-million project was conceived by local developers specifically for local buyers and funded with local money, which includes $25 million from the state’s Employees’ Retirement System and $40 million from A&B Properties, the real estate subsidiary of Alexander & Baldwin Inc., the No. 10 wealthiest Hawaii landowner (See “Investing Back Home” on pg. 32).
It was Mitch D’Olier, former chief executive officer for Victoria Ward Ltd. (now part of General Growth Properties, the state’s No. 3 wealthiest landowner), who got the wave rolling. Several years ago, D’Olier was putting the finishing touches on the $40-million redevelopment of the 60-plus-year-old company’s retail real estate in busy Kakaako. With the 156,000-square-foot Ward Entertainment Center as its hub, D’Olier was building an urban shopping village, with Auahi Street as its “main street.” But what was a village without some villagers?
“I knew Mitch from his law practice, and we always talked about my background in residential real estate,” says one of Hokua’s developers, Duncan MacNaughton, chairman of the MacNaughton Group. “We talked about putting up a high-rise residential building around all the retail stores in Ward, so that customers were close at hand. Mitch went to his board and convinced them to sell some of their property, which was a very big change for them.”
Next came market research. MacNaughton, who has extensive retailing experience, wanted to target the world’s most potent consumer, the baby boomer. The leading edge of this huge, affluent group was entering into retirement, and he reasoned that these active people would want to downsize their homes, but keep things exciting.
“Rather than living on the slopes of Hawaii Kai and fighting traffic every day, you can move into town and have ocean views and you don’t need to get into the car every time you need something,” says MacNaughton. “We felt Victoria Ward had all the right elements, the ocean views, the shopping, the restaurants and the movie theaters.”
After numerous surveys and focus groups, the developers and their consultants discovered that their buyers wanted all that the Victoria Ward complex could offer them and more, specifically more space. The developers decided that they needed to create a “single-family home in the sky,” units with larger living areas, good-size kitchens, parking for two cars and laundry rooms, among many other amenities. The results speak for themselves.
“We don’t build things just because we think it is the right thing to do. We talk to the experts,” says MacNaugton. “Rather than a 1,100- or 1,200-square-foot apartment, buyers wanted a 1,600-square-foot apartment. They also wanted three bedrooms and three bathrooms and other features. The Realtors told us, ‘You give us that product and it will sell.’ We did and it did.”