Every time Hawaii’s cyclical housing market heats up, condominium tower developers snap into action and work gets busy on large subdivisions. Such high-profile projects dominate the new-home production scene.
However, builders of smaller projects with lower profiles also typically get into the mix, and it’s happening again with Oahu’s residential real estate market in what local economists say is the early stage of another major expansion cycle.
These pockets of infill housing under development include 20 homes fronting Kaneohe Bay, a 12-unit rental building in Moiliili, 54 homes in Ewa fronting a golf course, eight homes in Aiea and a subdivision for 23 homes connected with farming between Waimanalo and Kailua. Other small projects also are in the works or underway.
"Now’s a good time for small projects," said Ricky Cassiday, a local housing market analyst.
Small housing projects often involve land owned by local families or remnant parcels from larger developments. Interest in developing such property usually rises as the prospect for higher home prices and buyer demand heat up.
During Oahu’s last real estate boom, lots of small projects were advanced, though some didn’t take off because of financing difficulties, permitting challenges, and the downturn that eventually hit the market.
One of the more unusual small housing projects undertaken during the mid-2000s market boom was a line of nine luxury homes called the Bali Lofts developed on a narrow strip of land at the base of Kamehame Ridge in East Oahu by local architect Jim Schmit. Development of this project has stretched over several years and is still ongoing, with one home that sold last month for $1.5 million.
Another small project during the last boom was a six-story condo in Waikiki called the Loft@Waikiki with 36 units developed by another architect, Don Huang. Despite some financing challenges that required some unit price increases, the project was completed.
One project that failed to get built as the last boom was fading was a 42-unit condo in Makiki dubbed The Chelsea, which a Chicago-area developer planned on a site formerly occupied by a small cluster of homes and apartments.
A new round of small housing projects is now largely being driven by low interest rates and rising strength in real estate values and buyer demand.
» In Kaneohe, principals of a local real estate brokerage firm recently announced that they plan to build 20 homes fronting Kaneohe Bay after buying a 3.3-acre site from a California investment firm for $5 million last month.
Chad Waters and Tyler Greene of Bridge Real Estate Hawaii are heading the project called Waikalua Bayside as a cluster housing development under city permitting rules.
A Colorado firm attempted to develop the parcel with 20 homes at the tail end of the last real estate market upswing, but lost the property to a lender in foreclosure.
Waters and Greene formed WB Hui LLC to buy the property from the lender and develop the homes, which they intend to sell for $700,000 to $1.7 million.
"The stars have finally aligned for this project to be built out," Waters said in a statement.
» In Moiliili, a family partnership plans to turn a small "field of weeds" into a four-story building containing 12 rental apartments with one to three bedrooms renting for $1,000 to $1,800 a month. Construction on the project dubbed Waialae Hale began recently.
The roughly 9,000-square-foot plot of land adjacent to an H-1 Freeway onramp going east near the Hawaiian Humane Society was bought about a decade ago by the partnership led by Merton S.C. Lau.
"The developer has waited many years for the right time to build and believes the conditions are now right to proceed," a representative for the family said.
Lau said smaller "mom and pop" developments like Waialae Hale are tough because of permitting requirements and rising construction costs.
» In Ewa, it’s not a mom and pop developer but one of Hawaii’s major homebuilders planning 54 homes in an existing neighborhood. The local Schuler Division of Texas-based developer D.R. Horton bought 54 lots in the Lokahi Greens neighborhood within Ewa Villages from the city earlier this year at auction.
Schuler’s plans call for developing single-family homes with three to five bedrooms available early next year at the project dubbed Golf Villas at Lokahi Greens.
» In Aiea, a 1-acre parcel once occupied by seven older homes was bought by local developer Graham Builders in December for $960,000 and is being turned into a cluster of eight single-family homes with shared ownership interests in the land.
The first new homes in this project called Lilikoi Park Place are priced at about $800,000 and are expected to be completed by March.
» In Windward Oahu, a new gated community is being developed for 23 homes on land zoned for agriculture. This project, called Olomana Heights, is similar to several projects launched during Hawaii’s last residential real estate boom, when developers sought to capitalize on the market by subdividing agricultural land into smaller parcels for residential use under lax state and county regulations that permit homes as accessories to farm operations.
Because farm operations are vaguely defined, plans for a few fruit trees or a couple of horses typically qualify as enough to permit construction of a "farm dwelling."
Waters and Greene of Bridge Real Estate Hawaii, the Waikalua Bayside developers, are developing Olomana Heights on 62 acres mauka of Olomana Golf Course.
A prior developer acquired subdivision approval in 2008 from the city Department of Planning and Permitting, saying that breaking the property into smaller lots would help facilitate crop production on the land once used for stabling and pasturing horses.
Olomana Hui LLC, led by Waters and Green, acquired the property in April for an undisclosed price and began marketing the project a few months ago as "luxury Hawaiiana living at its finest." The developer is establishing a fruit tree program for buyers and offering custom home options. Prices for lots ranging from 2 to 8 acres start at about $1 million.
