Kakaako’s Building Boom

When the governor takes a meeting at the trendy Fresh Café in the midst of Kakaako’s gritty warren of body shops and warehouses, something big is cooking. When the meeting includes a major landowner and innovators from the community, you can bet what’s cooking is Kakaako itself.

Gov. Neil Abercrombie called that recent meeting to discuss what he calls the “Third City,” a live-work-and-play urban neighborhood of the near future with cafes, parks, lofts, preschools and senior centers, startups, stores, and high-rises with upscale and affordable housing.

Visions of a transformed Kakaako have been bandied about for three decades, but this time the landowners and state agencies are working together more closely, and dozens of projects are going forward in the next few years. If it comes together, it will be a multibillion-dollar investment that brings jobs, housing and new vitality to Honolulu’s core.

“We’re gearing up for a new day for Kakaako,” Abercrombie says. “We have a chance to initiate the next, exciting urban center in the country.”

In a rush of words, he describes a walkable community of high-rise condos and rentals, including the state’s tallest building, plus stores, innovative businesses, and sites for music, dance and artistic expression – all reflecting Hawaii’s culture and our Pacific location.

The big private landowners are generally in sync with this vision. “It’s the most exciting asset in our portfolio. We’re definitely moving forward,” says David M. Striph, senior VP-Hawaii for the Howard Hughes Corp., Kakaako’s largest private landowner with 60 acres, including the Ward Centers.

Of course, not all conflicts are over. The Hawaii Community Development Authority (HCDA), the state agency that oversees Kakaako’s development, and the Office of Hawaiian Affairs disagree over plans to upgrade Kewalo Basin, a small harbor now used mostly by tour companies. Other disputes are simmering, but, barring an economic catastrophe, a transformation of much of Kakaako’s 670 acres appears unstoppable.

It will happen with or without rail. But, if rail goes ahead, there will be two stations here: the first, called Civic Center, at Halekauwila near Keauhou Street; the second, called Kakaako Station, will be near where the Ross store is on Ward Avenue.

Once thought of as the ugly duckling of urban Honolulu, a place crowded with repair shops, warehouses and other low-rent businesses, Kakaako has had more than 40 projects and $200 million worth of infrastructure improvements completed since 1988 in preparation for its full emergence as Honolulu’s new swan. Here are some of the upcoming projects:

• The state’s half-billion-dollar transit-oriented development, called 690 Pohukaina, will include the state’s tallest building, at 650 feet, and a mix of affordable and market-priced residential units for sale and rent. Bids to plan, build and operate it were due by the end of August. The first phase is in the permit stage. (More details on page 32.)
• Howard Hughes Corp. plans next fall to open the Ward Village Shops Phase II on Auahi Street, next to the T.J. Maxx store, comprising 57,000 square feet of retail space over two floors.
• Kamehameha Schools, with 29 Kakaako acres mauka of Ala Moana boulevard, has three pending projects: 54 affordable loft-style apartments, with rents from $1,400 to $1,600 a month, will be available for rent starting this month or next in the repurposed building at 680 Ala Moana; a 400-foot residential tower and low-rise townhomes to be built by Alexander & Baldwin on the former CompUSA site with scheduled construction start date in 2014; and a low-rise gathering place with cafes, shops and open space just mauka of 680 Ala Moana, and bounded by Auahi, Coral and Keawe Streets (artist’s rendering on this page).

As part of that project, modifications of existing buildings on Auahi Street are scheduled to begin next year and finish in 2014, KS says. This $30-million urban square will be called Salt to commemorate the salt ponds that Hawaiians built in this area in the 1700s, says KS development manager Linda Schatz.

“This ingenuity has become a source of inspiration,” says Schatz. “It will be the outdoor living room for the residents and tenants in that area, a place where people can hang out, gather, bump into friends. It’s on a human scale.”

Howard Hughes Corp. has already spent $3.5 million renovating Ward Centre, the shopping center where a Bed Bath & Beyond store will open this fall in the space formerly occupied by Borders bookstore. HHC’s plans include a mixture of retail, residential and commercial construction projects over the next 12 years. More specifics should come in December, when the company says it hopes to announce “refinements” to the master plan created by General Growth Properties, former owners of Ward Centers. Almost daily, Striph says, he is in contact with KS, OHA, HCDA and other major players to coordinate efforts and “take a holistic view” of Kakaako.

“We’re trying to look at this as one whole area,” Striph says. “We want to make it the hottest, most vibrant residential community on Oahu. That’s our goal. We want to be really thoughtful and respectful of the community. We’re taking our time and want to do it right, reflecting the area’s history.”

KS’s master plan, completed in 2009, calls for seven residential towers, up to 400 feet high, with low-rise “podium” units surrounding them. The build-out spans 15 years but has begun with alacrity.

“We’ll have warm bodies in the lofts by the end of October,” says Bob Oda, KS senior project manager. It’s part of KS’s affordable housing commitment.

Contractors will build the market-price units in the residential towers, says Paul Quintiliani, KS commercial real estate director, while KS itself may build the rental units. “We need to hit multiple price points to create a mixed-income community.”

HCDA’s latest Kakaako master plan, just a year old, calls for mixed-density using both high-rise and low-rise residential and commercial buildings, plus parks and civic parking. The homes will potentially provide low-, medium- and market-price condos and rentals close to a range of jobs, including high-tech jobs at the John A. Burns School of Medicine, the Cancer Center of Hawaii, now under construction, and private businesses in bioscience.

So far, there have been 1,388 units built in Kakaako since 1988 that are either affordable rentals or affordable units for purchase, says HCDA. The already-built projects include three developments devoted to seniors. Another 187 affordable units are either permitted or under construction.

“In the early vision, it was the Blade Runner view,” says Anthony J.H. Ching, HCDA’s executive director. “We were going to be living in the stars and sky, with superblock condos connected by elevated walkways. The next permutation was mixed-use to accommodate small businesses, but still a high-rise community. But now, with (new urban-planning) rules emphasizing an active street scene, we’re back down to the street. We want people to be able to walk along, to look into the windows, to engage.

“It will be like the Whole Foods corner in Kailua – there’s a sidewalk, a living wall that softens the building, and you can walk out into the trellis area and just sit there though you’re not far away from a four-lane road. But it’s softened with a landscaped median and you feel comfortable enough to engage in a conversation. It’s casual. It encourages people to interact. Imagine if you have that kind of environment in Kakaako?”

This vision for the future includes a cultural overlay from projects envisioned by OHA on 30 acres of newly acquired state land makai of Ala Moana boulevard. The agreement, finalized July 1, transferring 10 parcels worth $200 million, largely settles the longstanding dispute between OHA and the state over shared revenues for the use of Public Land Trust lands. It sets the stage for OHA to develop affordable rental housing, a cultural center to celebrate Native Hawaiian arts, an ocean-side promenade with a string of stores, and a high-rise up to 200 feet high at 919 Ala Moana to provide space for Native Hawaiian service organizations. Additionally OHA wants perpetual access to the ocean at Kewalo Basin.

A master plan will be developed for OHA’s 10 parcels, says OHA chairwoman Colette Machado, and it’s expected to be complete within two years.

OHA has asked HCDA to pull back on plans to develop two loading dock piers in front of Fisherman’s Wharf in order to keep that waterfront open. “We want that place free, to be able to house the Hokulea and other canoes,” Machado says. “… This is a no-brainer for Hawaiians. We want unimpeded access to the shoreline. That’s why Kakaako is so important to the trustees. It’s the last valuable shoreline in Honolulu.”

However, according to Stu Glauberman, compliance assurance and community outreach officer for HCDA, Kewalo Basin’s harbor remains within the purview of HCDA. “Plans for harbor improvements have not changed nor been put on hold,” he says. Current plans call for KB Marine L.P., which has a 50-year lease, to build two wave-abatement fences and 100 mooring slips at a cost to KB of $20 million. Plans for the loading docks at Fisherman’s Wharf call for them to be built with harbor revenues and $3 million from the state revolving fund, but there’s no set timeline in place.

The final details of Kakaako’s transformation will change and be debated over the coming two decades, but the broad strokes seem guided by a vision that the major landowners share with the governor.

“What I want to see,” Abercrombie says, “is a contem-porary Hawaiian version of organic architecture in a context of urban growth, where high density in the core can be transposed into community life that reflects Hawaii and its basic values.

“If you go high, then you can disperse your density at street level, where people live, and prevent urban sprawl. It will emphasize walking, open space, view-plane corridors. You’ll see it like a village.”

Projects Underway or Planned

Biggest Project

This month, the Hawaii Community Development Authority will begin evaluating bids from local, mainland and foreign developers who want to create the state’s signature project at 690 Pohukaina St.

The 650-foot tower alone, on a lot also bounded by Keawe and Halekauwila streets, will include hotel rooms, market-price condos, offices and street-level shops. Construction of the total development, estimated to cost a half-billion dollars and designed to create 1,000 new housing units – half of them affordable – is projected by the state to generate 1,500 jobs over the next seven years.

Anthony J. H. Ching, executive director of HCDA, says the state agency will absorb more than a half-million dollars in upfront costs to incentivize developers.

“We are truly participating as a partner and some of our activities will reduce risk for the developer,” says Ching. “What we’ve done is say, ‘Not only do we have a piece of land that we think can be built out in this way, but we’re going to deliver entitlements. We’ll do the environmental due diligence that takes costs and risks out of the developer’s hands.’”

Ching expects HCDA to commission an environmental study in the next few months to consider the impact of the project’s increased height and density on infrastructure.

Gov. Neil Abercrombie says the tower – expected to be 221 feet taller than Hawaii’s current tallest building, the 30-story First Hawaiian Center at Bishop and King streets – will be designed to reflect Hawaii themes, such as graceful hula or ocean waves.

Developers throughout Kakaako are required to set aside 20 percent of their residential projects as affordable housing. Ching says HCDA generally defines this housing as affordable for those making between 100 and 140 percent of the area’s median income. (AMI guidelines are issued annually by the U.S. Department of Housing and Urban Development.) HCDA considers Kakaako’s AMI as $82,700 a year for a family of four; 140 percent of that is $115,780 a year. (In Honolulu overall, median household income is $70,093 a year, and, statewide, it is $66,420, according to the U.S. Census Bureau.)

However, Abercrombie has already promised that half the new housing units at 690 Pohukaina will be affordable.

For instance, according to Ching, monthly rents in Phase I at Halekauwila Place will target families who make 60 percent of AMI. Rent for a:

• studio apartment will be about $1,042
• one-bedroom apartment $1,116
• two-bedroom $1,339; and
• three-bedroom $1,548.

Affordable for-sale units at 690 Pohukaina will target families that make 100 to 140 percent of AMI, Ching says. Units will cost between $372,500 and $521,400; that means a family in that income range will spend about 28 percent of their income on housing, assuming a 5 percent down payment and a 5 percent interest rate on their mortgage.

Abercrombie says that the state will be able to keep the prices relatively low on half of the units because of the tower. “The 650-foot high-rise will enable a developer to sell enough at market prices to be able to build an equal number of affordable units and still make a profit,” he says.

Here’s HCDA’s three-phase building plan:

Phase I: 204 affordable rental units and 282 parking stalls.

Phase II: 300 affordable units, 500 market-price units, 25,000 square feet of civic space primarily to replace the current library sorting center next to Mother Waldron Park, and 10,000 square feet of rental space that could meet community needs, such as daycare operations and meeting rooms.

Phase III: 30,000 square feet intended as a high-tech business-incubator and innovation space, 30,000 square feet for other commercial uses, and 810 parking stalls.

Other Plans for Kakaako

A green belt along Cooke Street connecting Mother Waldron Park with Gateway Park.

HCDA has launched studies on $2 million in upgrades to the grassy Waterfront Park Amphitheater to make it more viable for revenue-producing concerts.

A hula mound for outdoor shows, similar to one at Moanalua Gardens and costing an estimated $500,000. It is a partnership between HCDA and the Levitt Foundation, and is expected to be completed by mid-2013.

Kewalo Keiki Fishing Conservancy already has a fish-tagging operation at Kewalo Basin and plans to use $2.3 million in state money authorized by the 2012 Legislature to addeducational programs for children.

Gov. Neil Abercrombie envisions a research center in Kakaako that honors President Obama and is devoted to East-West collaboration.

Kakaako Investments

mid-1980s to 2010

$225 million Public investment in infrastructure
$2.2 billion Private developments
$528.9 million Public-sector development

Source: HCDA

Street Life and Creativity Already Humming

Kakaako already has the vibe of “the place to be” in Honolulu, whether you are talking about startups or chow downs.

Owners of the Greenhouse Innovation Huband the Box Jelly say their co-working spaces bring together young entrepreneurs and have helped create dozens of small businesses.

At The Whole Ox on Keawe Street, Bob McGee uses up an entire grass-fed cow and two to three pigs a week for his deli sandwiches, while Hank’s Haute Dogs on Coral Street offers a gourmet array of America’s favorite comfort food.

“It’s a sweet place to be, to walk around, because you find little surprises and treats,” says attorney Jay Fidell, self-appointed Kakaako watchdog, who brought together many of Kakaako’s major players in March for a ThinkTech forum to discuss the area’s future. “There’s the connection of a community all of a sudden. You’re comfortable, you’re interested. It surprises and delights. There’s something going on!”

Fidell welcomes the young entrepreneurs, but worries about their long-term future.

“The worst analysis is it turns into a foreign investors’ retreat and all these kids are strangers in their own land,” says Fidell. “And there’s a fair chance that will happen, because, at the end of the day, it’s valuable land.

“If the owners want this mixed-use, affordable urban village to happen, there’s a fair chance it will. … But if the owners don’t want it, it won’t.”

The energy, creativity and idealism today are palpable. Blank concrete walls have been enlivened, with the owners’ support, by dynamic street artists, led by Jasper Wong of Pow Wow Hawaii and John Prime of 808Urban. Alan Joaquin is growing organic vegetables on the flat roof of Auto Mart USA (formerly the CompUSA building). Poni Askew organizes monthly“Eat the Street” extravaganzas that draw as many as 7,000 people to dine at more than 40 lunch wagons.

“Hawaii doesn’t have an arts district – Chinatown was trying to be one, but now it’s more of a bar and club scene – so Hawaii is in need of one,” says Wong. “Arts districts often start off in industrial zones, so Kakaako could be that perfect spot. And the best way is to put paint on walls. It’s one way of bringing art to the people. Galleries can create barriers, but this way people are forced to see it.”

“What goes up will change over time,” says Kamehameha Schools’ commercial real estate director Paul Quintiliani, “but the walls themselves will be permanent tapestries.”

KS says it is supporting the young entrepreneurs who have already settled in aging Kakaako buildings that are scheduled for redevelopment. “We’re going to need to move certain tenants and keep some where they are,” says Quintiliani. “Our goal is to minimize disruption.”

He sees these artists, chefs, poets and other creative people as the “important builders of what this community is becoming. … They’re organizing great community events that hit different niches.”

Though plans for an Asia-Pacific Innovation Center, which would have included wet labs, are on hold, Quintiliani says, KS supports a wide variety of innovations happening in Kakaako.

“We want this community to continue to grow,” says Christian O’Connor, KS assets manager. “The revitalization of Kakaako has a lot to do with the people participating in Kakaako today. Innovation is going to continue to reside in Kakaako and in different forms. We‘re continuing to foster innovation and want to bring more into Kakaako.”

Quintiliani agrees. “We’re building the community before we build the houses. … It’s happening organically.”

But the new Kakaako will likely retain much of its old flavor, especially the grungy, flood-prone areas east of Ward Avenue, and makai and mauka of Queen Street. They’re the top enclave of car repair shops and other low-rent businesses east of downtown, with lots of small landowners who may resist redevelopment – though their land values and property taxes have more than doubled in the past 15 years.

“It’s always been like a real laid-back, nice area,” muses Nick Jones, part owner of the East Asian Basket Co. Inc., nestled on Queen Street for more than a decade. “It’s changing. For the better? Let’s hope it is. … It’s a nice area. It’s close to everything.”

Abercrombie’s Prophet

Prominent in Gov. Neil Abercrombie’s office is a 67-page book about Honolulu that was written in 1938, yet still reflects the governor’s current thinking on urban planning and why Kakaako is so important.

“Whither Honolulu?” was written by Lewis Mumford, a wide-ranging writer best known for his work on urban planning, city cultures and architecture. The Park Board of Honolulu and its chairman, Lester McCoy, commissioned Mumford in 1938 to recommend how Honolulu’s park system could be improved. McCoy took Mumford everywhere in Honolulu, from the expensive neighborhoods to slums, to farms and harbors, and everywhere in between.

The resulting pamphlet looked far beyond the park system and has become a manifesto for urban development in Honolulu. Mumford’s suggestions in “Whither Honolulu?” include:

Rebuilding the urban core rather than simply responding to the problems of growth and crowding by constantly expanding the city’s boundaries.

Creating a new and powerful city post—project director, a virtual equal to the mayor—who would have the authority to uproot urban blight, impose parks and create a coherent urban environment. This idea echoes the creation in 1976 of the Hawaii Community Development Authority, the independent state agency that plans and develops Kakaako.

Emphasizing Honolulu’s natural assets, including trade winds, fabulous vistas from mountain to sea, and view-plane corridors to keep these vistas open.

Good planning is not a series of isolated projects, but primarily a matter of coordination.

In Mumford’s view, “Honolulu is a little like a beautiful woman, so well assured of her natural gifts that she is not always careful of her toilet: she relies upon her splendid face and body to distract attention from her disheveled hair, her dirty fingernails or her torn skirt.”

Mumford’s book is out of print, but for those wanting to learn more, the Hawaii State Library system has five copies of “Whither Honolulu?”

By the way, Abercrombie did more than simply read Mumford. The governor’s 1974 Ph.D. dissertation in American Studies at the University of Hawaii covered Mumford and iconoclastic author Norman Mailer, and was called, “Mumford, Mailer and Machines: Staking a claim for man.” You can read a copy of that in UH’s Hamilton Library.