A local developer is pushing ahead with the second of two workforce housing condominium towers in Kakaako, though a historic preservation group is pushing back because of the impact on an 84-year-old building where much of Hawaii’s history was chronicled by daily newspapers.

Downtown Capital LLC, led by Marshall Hung, has applied for a development permit from the state to build a tower with 410 units next to a 635-unit tower that recently broke ground on the 3.7-acre site at the corner of South Street and Kapiolani Boulevard.

The site of the two 46-story towers is the former home of The Honolulu Advertiser, which developed the News Building as its headquarters in 1929 with a Renaissance Revival architectural design. Roughly half the building would be demolished under Hung’s plan.

The developer is moving forward with the second tower just a few months after starting construction on the first tower in response to strong buyer interest.

Jason Nishikawa, a vice president with Marcus & Associates Inc., a real estate brokerage firm representing the project named 801 South St., said roughly 6,000 people visited the sales office of the first tower over the last three to four months.

Almost every one of the 635 units, except for a handful of studios, have been sold. “They sold fast,” he said. “Demand’s there.”

Hung said buyers were attracted to new units with modern amenities at moderate prices ranging from $250,000 to $550,000 for studio, one- and two-bedroom units.

The sales response, Hung added, shows just how much of an affordable-housing shortage exists on Oahu where the $330,000 median price of all existing condos sold this year through July has eclipsed the all-time peak of $325,000 reached in 2007 and 2008.

“That’s why we have a housing shortage,” he said. “People don’t realize how bad it is.”

The second 801 South St. tower will feature bigger units, one to three bedrooms, and prices between $360,000 and $700,000.

Downtown Capital is seeking approval for the second tower from the Hawaii Community Development Authority, a state agency regulating development in Kakaako.

The $400 million two-tower project is proposed under a year-old HCDA “workforce housing” rule that allows twice as much density for projects that receive no government financial assistance and make at least 75 percent of units affordable to residents earning between 100 percent and 140 percent of Honolulu’s median income. All the units in Hung’s project will serve this income group.

The workforce housing rule has been touted as a new tool to help produce moderate-priced housing in the Honolulu market where housing prices consistently rank as the highest or almost highest among major cities.

 However, the Historic Hawai‘i Foundation objects to Downtown Capital’s plan to demolish roughly half of the News Building and build a 788-stall parking garage in the space.

Kiersten Faulkner, foundation executive director, said the News Building, which was built for The Advertiser and later also housed the Honolulu Star-Bulletin, should be preserved.

“It’s an incredibly significant historical and architectural treasure in the center of the civic area,” she said.

Hung, who noted that tearing down the entire building isn’t prohibited, said he is trying to preserve the most significant portion that includes major interior and exterior architectural flourishes capped by a red tile roof.

“We’re sensitive to the community,” he said, adding that keeping condo units affordable requires a separate garage. Downtown Capital said previously that building the first tower’s parking garage beside instead of below the tower saves $10 million and is a key to making unit prices affordable to moderate-income residents.

Colbert Matsumoto, a local insurance company executive partnering with Hung on the project, said the plan strikes a balance. “I think it’s a beautiful building,” he said. “We’re trying to make it fit within the economics of a workforce housing project.”

The building is not on state or federal registers of historic buildings, but is eligible for such listings.

One state agency that has yet to publicly weigh in on the issue is the State Historic Preservation Division of the Department of Land and Natural Resources.

A DLNR spokeswoman said the developer has yet to submit the project plans for review and comment.

Downtown Capital has a tentative deal to sell the front piece of the News Building to Hawaiian Dredging Construction Co., the general contractor for 801 South St.

The construction firm, which would make the remainder of the News Building its headquarters, is analyzing the property for potential restoration that could be costly.

The building was designed by Emory and Webb, a noted Hawaii architecture firm whose other projects include the Hawaii Theatre and the James Campbell Building in downtown Honolulu.

The front L-shaped piece of the News Building proposed for retention and sale to Hawaiian Dredging features numerous architectural flourishes.

These decorative elements include a front entrance flanked by curved concrete railings and fluted pilasters with Ionic capitals, according to a historic architecture assessment from Mason Architects Inc. commissioned by Gannett Co., the former owner of the property and The Advertiser.

Inside the entryway is a grand staircase with ceramic tiles and terra cotta balusters that leads to a second-floor lobby highlighted by a stained-glass window.

The back half of the building originally served as a press and press-support area, and had no interior architectural finish details of significance, according to the 2005 assessment.

However, Mason Architects recommended that any new construction “ideally” be outside the footprint of the building.

The firm’s report also suggested some historic character-defining features in the back half of the building should be protected, including an elevator tower topped by a clay tile roof, a freight elevator and a rear stairwell.