No Walk In The Park

Outrigger’s Beach Walk project is the biggest in Waikiki in two decades. It won’t be easy

September, 2004

Soon, the unofficial state bird, the construction crane, will rise over the Outrigger Resort’s audacious Beach Walk project, the biggest building effort in the resort area in more than two decades. Outrigger is planning to convert a down-market, 8-acre section bounded by Lewers and Saratoga into upgraded accommodations, which will bring copious open space, lush foliage, spaces for performers and a trendy retail arcade, aimed at both locals and upscale tourists. As part of the $350-million project, Outrigger will demolish three older hotels, convert existing rooms to timeshares and condominiums, renovate other hotel rooms and build one new hotel, an 890-room high-rise.

The project is something of a bellwether for Waikiki. Many other properties in the resort area are nearing the end of their useful lives. Newer, more attractive resort hotels on the Neighbor Islands make Waikiki appear dated and boring.

Other hotel operators, however, are more than happy to let Outrigger dive in first. That’s because building in Waikiki is an onerous task, particularly for hotels with high room densities and numerous governmental permitting requirements. “It’s a process that, frankly, from conception to construction, has taken far longer than any of us here had anticipated. If we had known how hard it would be, I am not so sure we would have done it,” admits Eric Masutomi, Outrigger’s vice president of planning.

The Waikiki visitor industry got a glimpse of that difficulty early on, when Outrigger struggled to assemble the entitlements to the 8-acre project site by getting partial owners of five separate properties to sign on the dotted line. That required a threat of condemnation from the Honolulu City Council and Mayor Jeremy Harris.

Assembling the land, however, may prove a picnic compared to the permitting process. All development on Oahu must comply with the city’s Land Use Ordinance (LUO). In most cases, if a development complies with county zoning codes and meets the requirements for density, setback, parking and sewage, it can quickly secure building permits for the project, says Masutomi.

In Waikiki, LUO compliance is only the beginning. A developer may also need to file a State Environmental Impact Statement, pass a design review by the city, and even clear the project with the Waikiki Neighborhood Board. The permitting process of a building in Waikiki can cost 30 percent to 50 percent more than building elsewhere on Oahu. That can easily amount to millions of dollars.

Aside from a more expensive permitting process, building in Waikiki costs more because it requires great care. At the end of the 19th century, more than 80 percent of Waikiki was wetland. In fact, the water table is only five feet below the land surface. Anytime a construction project digs more than five feet into the ground, it must engage in expensive “dewatering.” This is risky, because “… any disruption to the water table has the potential of affecting the geology and structural integrity of other properties in the vicinity of the project,” explains Masutomi.

It’s also difficult to keep the neighbors happy. The Halekulani Hotel, the Waikiki Parc and the Royal Hawaiian Shopping Center all rely on unfettered access to Kalia Road and Saratoga Street for truck deliveries and guest arrivals and departures. Outrigger will somehow have to allow traffic through Kalia and Saratoga while, at the same time, demolishing buildings and doing heavy construction.

The payoff for Outrigger running this gauntlet could be a model for what Waikiki will need to become. Karl Kim, a professor of urban and regional planning at the University of Hawaii at Manoa, says, “Stepping up to the plate in this way shows quite clearly that this company is concerned about the future and the long-term prospects for tourism in Waikiki. Hopefully, it will show the way for other companies. I think all eyes will be on Outrigger.”

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Hawaii Business magazine