Developer pitches condo-hotel next to Walgreens

A California real estate investment and development firm is proposing to build a full-service hotel in a predominantly retail neighborhood of Honolulu’s urban core under new zoning rules tied to the city’s planned rail line.

An affiliate of Los Angeles-based Salem Partners LLC, Mana‘olana Partners II, has drafted plans for a roughly 35-story tower that would be part residential condominium and part hotel fronting Kapiolani Boulevard next to a flagship Walgreens store mauka of Ala Moana Center.

The project would replace a five-story office building once anchored by Heald College, and would also be integrated with an adjacent three-story parking garage used by Walgreens.

Jim Ratkovich, Salem’s managing director, said construction is projected to begin in early 2018 if planning and permitting work advances without unforeseen challenges.

Design plans, which Ratkovich shared Tuesday with the Ala Moana/Kakaako Neighborhood Board, are still in a conceptual phase but call for a tower that could be considered two towers branching out of a wide, roughly 12-story base and then bridged by a “sky garden” recreation platform that includes a pool near the top of the structure.

Randy Shortridge of Colorado architectural firm [Au]workshop Architects + Urbanists said the design was produced to avoid having a solid long facade obstruct views between the mountains and ocean like several condo towers that have gone up along Kapiolani Boulevard.

“We wanted to move away from that direction,” he said at the board meeting.

Board member John Horvath said he thought the building still blocked a lot of mauka-makai views, while Ratkovich said Salem has reduced the impact.

“This is the solution,” Ratkovich said.

Shortridge added that the amount of open space in the project, which also has a lower recreation deck with a pool about six stories up, will be about twice as big as the overall lot.

There was some discussion at the meeting over whether hotel use is permitted in the neighborhood. A representative of the city Department of Planning and Permitting noted that the city amended its land use ordinance recently to allow limited-service hotels on land with BMX-3 zoning, which covers the Salem site. BMX-3 is one level of business-mixed use zoning that previously didn’t allow hotels.

However, full-service hotels are permitted under city transit-oriented-development zoning plans that cover the Salem site, which is about two blocks from a planned rail station at Ala Moana Center. As such, the developer is proposing that its 350-foot tower would include 183 hotel units on lower floors and 163 residential condo units on upper floors.

Ratkovich said prices for the 346 residential and hotel units, both of which are intended to be sold as condos to individual buyers, haven’t been determined. He said the company is trying to find a hotel industry partner interested in what essentially will be a new area for hotel business, though the Ala Moana Hotel is relatively close by on the edge of Waikiki and near the Hawai‘i Convention Center.

“It’s not easy to get hotel operators to go into that market,” he said.

The city will require some contribution of affordable housing from the developer, and Ratkovich said Salem is trying to fit that into the tower, though the company could arrange for affordable housing to be built on another site. The developer also is working to produce a traffic study and propose a community benefits package to the city, the latter of which is a requirement for projects that take advantage of transit-oriented zoning.

Salem’s project will have to obtain approval from the City Council as an interim planned development-transit project, which will involve public hearings. The neighborhood board did not take a position on the developer’s plan.

Last week the City Council advanced a separate proposed hotel tower project involving Salem through a preliminary hearing. This project, called Manaolana Place, at the corner of Kapiolani Boulevard and Atkinson Drive, proposes depositing $2.4 million into a city affordable-housing fund instead of providing affordable housing. Other proposed community benefits are valued at about $4.6 million.

Ratkovich described Manaolana Place as a $500 million project. He declined to give a cost estimate for the tower planned for next to Walgreens.

Salem acquired the site next to Walgreens in December from the convenience store operator in a $73.5 million transaction that included the land under the Walgreens store. As part of the deal, Salem leases the land under the store back to Walgreens.

Walgreens built the parking garage specifically to support a tower, and offered to sell the site and the neighboring property it owned as a way to recoup the cost of acquiring the land it needed to establish its flagship store, which opened last year.