1833 kalakaua - hff
TRANSCRIPT
1833 KALAKAUA
Holliday Fenoglio Fowler, L.P., acting by and through Holliday GP Corp., a real estate broker licensed with the California Department of Real Estate, License Number 01385740
AND EATON SQUARE PARKING GARAGE
VALUE-ADD OFFICE AND PARKING GARAGEINVESTMENT OPPORTUNITY
WAIKIKI, HAWAII
OVERVIEWHFF, as Exclusive Advisor, extends to qualified investors the opportunity to acquire the fee simple interest in 1833 Kalakaua Avenue (the “Property” or “1833 Kalakaua”), and certain rights to control parking in the Eaton Square Parking Garage (the “Garage”), pursuant to a perpetual license agreement in favor of the ownership (collectively, the “Properties”). 1833 Kalakaua is a 97,585 square foot, 10-story boutique office building located in the affluent resort community of Waikiki, Hawaii. Eaton Square Parking Garage is a 561-stall parking garage adjacent to the Property and serves the office building, Eaton Square Shopping Center and 16 hotels within one-half mile of the garage. This is a rare opportunity to acquire an institutional quality, value-add and fee simple office building and parking garage in one of the top performing markets in all of Hawaii.
◊ Fueled by a lack of developable land, high construction costs, and a dwindling supply of office space as buildings are converted to residential and hotels, the Waikiki office market has a vacancy rate of just 5%.
◊ Constructed in 1964, 1833 Kalakaua has had extensive renovations with over $7.5 million of capital expenditures since 2011.
◊ These Properties are offered at a significant discount to replacement cost of $750 PSF. Market rents will need to increase by 60% in order to justify new construction.
◊ 1833 Kalakaua is 72% leased to a diverse roster of over 40 regional and national tenants from a broad range of industries, which provides downside protection to a new investor. The varied tenancy includes tourism, healthcare, publishing, media, and hospitality services.
◊ In-place rents are more than 25% below market rents in the submarket, allowing investors the opportunity to substantially increase cash flow over the hold period.
◊ 1833 Kalakaua is part of the Waikiki resort district and is within walking distance of the Ala Moana Center and directly across the Ala Wai Canal from the Hawaii Convention Center.
◊ The Properties are being offered together or separately.
1833 KALAKAUA EATON SQUARE PARKING GARAGE
DWINDLING SUPPLY OF OFFICE PRODUCT PUSHING FUNDAMENTALS UPWARD
A combination of increased demand and dwindling supply in the Waikiki submarket, currently only 951,000 square feet, has resulted in a significant drop in vacancy rates. Rates are expected to drop even further with the conversion of the Waikiki Trade Center (“WTC”), a 264,000 square foot office tower. WTC’s conversion to an upscale hotel with two floors of premium retail will be completed in Spring of 2016. The Properties give investors an opportunity to own a sizable share in one of the most dynamic markets in O’ahu.
ROLLOVER AND IN-PLACE VS. MARKET CHART
$1.45 $1.33
$1.51 $1.56
$1.70
$1.57 $1.67 $1.67
$1.53 $1.52 $1.64 $1.70
$1.83 $1.76
$1.83 $1.83
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
$0.00$0.20$0.40$0.60$0.80$1.00$1.20$1.40$1.60$1.80$2.00
RSF
Expi
ring
Rent
(PSF
/Mos
. NN
N)
NNN Rent (Upon Expiration) vs. Market Rent
% RSF Expiring NNN Rent Upon Expiration Market Rent
INVESTMENT HIGHLIGHTS
1833 KALAKAUA
RENTS RAPIDLY ESCALATING
Triple net asking rents in the submarket have increased nearly 20% since mid-year 2013. The Property’s current rents are more than 25% below market rents in the submarket and less than the 60% necessary to support new construction, providing a tremendous upside opportunity for investors. The office building and parking garage are well positioned to absorb the occupancy gaps left from displaced tenants as no new office product has been delivered to the market in the past 10 years, and there is no office development planned in O’ahu in the forseeable future.
PARKING CONSTRAINED LOCATION
In a dense market where parking is scarce, the Eaton Square Parking Garage is an opportunity to own one of the most strategically located parking garages in all of Hawaii. The Garage provides 162 spaces to 1833 Kalakaua, and additional parking for Eaton Square, a mixed-use development, which includes residential condominiums, office condominiums, and a retail center. Many of the non-office users at Eaton Square are not heavy users of the parking structure during office hours, therefore, an above standard parking ratio can be offered to the office tenants.
INVESTMENT HIGHLIGHTS
AVG. TENANT SIZE: 1,560 SF
$7.5 MILLIONI N R E N O V AT I O N S S P E N T
S I N C E 2 0 1 1
WAIKIKI = 1.51.5 SQUARE MILES
OF WORLD-CLASS RESORTSDINING, SHOPPING, AND
BEACHFRONT RECREATION
SUPERIORPARKING RATIO IN THE
COMPETITIVE SET
1,593RESTAURANTS AND BARS
WITHING A 5 MI. RADIUS
WALKER’SPARADISE
Walk Score
93
DIVERSE RENT ROLL
The Property has a highly diverse rent roll with tenants from a broad range of industries, including tourism, healthcare, publishing, media, and hospitality services. There are no tenants at the Property over 10,300 square feet providing an investor with durable cash flow that benefits from dispersed rollover over the hold period.
EXCLUSIVE WAIKIKI LOCATION
1833 Kalakaua is located at the entrance to Waikiki, an area that encompasses a mere 1.5 square miles. The Property has beautiful panoramic mountain, city and ocean views and exceptional access to hotels, world-class resorts, fine dining, shopping and beachfront recreation. 1833 Kalakaua is one of 23 buildings in the Waikiki office market, truly representing a very rare opportunity to own a boutique office building in an area with some of the most expensive beachfront real estate in the world.
RARE FEE SIMPLE OPPORTUNITY
1833 Kalakaua offers investors the opportunity to acquire a fee simple interest in an institutionally maintained and operated office building in the highly desirable Waikiki submarket – an opportunity rarely found in Hawaii where leasehold transactions dominate the market.
TRANSFORMATIONAL REDEVELOPMENT IN THE AREA
There are currently 20 residential and retail projects underway in the Kaka’ako/Kapiolani Corridor which neighbors 1833 Kalakaua. The approximately 5,000 residential units and over 300,000 square feet of retail space will be completed by 2018 and will cost $2.0 billion dollars to construct with additional development and planning expected. The area has seen over 500% growth from 1990 to 2013 and is accelerating with more than 10,000 new residents expected by 2018. The emerging live, work, play environment and new retail and residential amenities make the Kaka’ako/Kapiolani and Waikiki submarkets an even greater attraction to office tenants.
ABUNDANCE OF NEARBY AMENITIES
Downtown Honolulu is home to an abundance of retail and hospitality amenities. Many of these amenities are located in 1833 Kalakaua’s backyard, including Ala Moana Center, the largest shopping mall in all of Hawaii and the fifteenth largest shopping mall in the United States. At approximately 2.1 million square feet, Ala Moana Center is home to over 300 local and national stores including Macy’s, Nordstrom, and Neiman Marcus. Other nearby retail developments include Eaton Square Shopping Center, located directly behind 1833 Kalakaua and attached to the Eaton Square Parking Garage, as well as numerous developments along Kalakaua Avenue, Ena Road, and Ala Moana Boulevard.
HAWAII CONVENTION CENTER
Located directly across the Ala Wai canal from the Properties just adjacent to Ala Moana Center is the Hawaii Convention Center. At 1.1 million square feet the Hawaii Convention Center is the premier convention and exhibition center in Hawaii. Additionally, the Honolulu Zoo, Ala Wai Golf Course, and dozens of world class resorts and hotels are located within walking distance of the Properties.
OFFERING TERMS
The assets are being offered for sale on an individual basis or as a combined portfolio without an asking price. All investors should base their offer on the “As Is, Where Is” condition of the Properties.
1833 KALAKAUA
HAWAIICONVENTION
CENTER
ALA MOANACENTER
INVESTMENT HIGHLIGHTS
ATLANTA | AUSTIN | BOSTON | CAROLINAS | CHICAGO | DALLAS | DENVER | HOUSTON | INDIANAPOLIS | LOS ANGELES |
MIAMI | NEW JERSEY | NEW YORK CITY | ORANGE COUNTY (CA) | ORLANDO | PHILADELPHIA | PITTSBURGH |
PORTLAND (OR) | SAN DIEGO | SAN FRANCISCO | TAMPA | WASHINGTON, D.C.
1833 KALAKAUA
NORTH
Marketed in co-operation with Matthew Bittick of Bishop Street Commercial, licensed Real Estate Broker, State of Hawaii
AND EATON SQUARE GARAGE
EXCLUSIVELY PRESENTED BY:
TODD TYDLASKASenior Managing [email protected]. 310.407.2175CA License #01329711
MICHAEL LEGGETTSenior Managing [email protected]. 415.276.6924CA License #01056334
ANDREW [email protected]. 310.407.2139CA License #01319640
DAVID DOKKOAssociate [email protected]. 415.276.6926CA License #01960806
www.hfflp.comT. (310) 407-2100F. (310) 407-2101
10250 CONSTELLATION
SUITE 1000,
LOS ANGELES, CA 90067
T. (415) 276-6300F. (415) 276-6306
100 CALIFORNIA STREET
SUITE 720
SAN FRANCISCO, CA 94111
FOR UNDERWRITING:
DAVID [email protected]. 310.407.2132CA License #01976984
LOCAL CONTACT:
MATTHEW BITTICKBISHOP STREET [email protected]. 808.695.3501HI License #RB-20315
FOR FINANCING:
ALDON COLESenior Managing [email protected]. 858.812.2344CA License #01457351