Oh Ward, Won’t You Lease Me a Mercedes-Benz? At Honolulu’s Ward Center They Will

In 2015 I wrote a pair of articles about Howard Hughes Corporation’s purchase and development plans for 60 acres in the Kaka’ako section of Honolulu (here, here). The development is sandwiched between downtown Honolulu and world-famous Waikiki and is slated for 16 high-rise condo towers with 4,300 units plus over 1 million square feet of restaurants and retail being rolled out in the next 10-20 years.

Work is continuing to chug along, but there is a global softness in the ultra-luxury real estate market. What to do, what to do?  In order to get the last few units sold in their first three projects, Howard Hughes is offering some sweet incentives.  Of course if you’re purchasing one of these seven-figure beauties, these incentives are baubles you could easily secure yourself.  But still … a sale is a sale.

Waiea Tower completed in 2016

The most noteworthy is a three-year lease on a new Mercedes Benz for buyers.  The other buyer’s incentive is payment of a seller’s sales commission on the home they ditch to move into one of these buildings.  Assuming a pretty equal swap in prices, that’s a very nice discount incentive.

There’s also good news for Realtors.  Even though two of the three buildings aren’t finished yet, Howard Hughes will pay 75 percent of the sales commission NOW.  No waiting.  I’m not sure what happens if a deal gets cancelled, so it’s probably smart to save rather than spend it.

Anaha facing sunsets over the blue Pacific

Why would a developer be offering incentives like this on properties that may not even be ready to move into until 2019?  It’s to move product off their balance sheet before breaking ground on their next projects. In August the 751-unit A‘alii tower opens its sales office while the 125-unit Gateway Cylinder starts construction later in the year. With 876 new units breathing down your neck, you need to clear the decks of the “old” stuff.

Why not just offer discounts?  So you don’t tick-off folks who’ve already bought.  Better to give away stuff and keep prices stable.

The three buildings eligible for the incentives are the Waiea, Anaha, and the Ae’o. Waiea was finished in 2016. Anaha move-ins start in September. Completion of Ae’o is expected in winter of 2018-2019.

Ae’o and it’s distinctive “wings” that help focus views towards the ocean

Pickings are slim with only about 10 of Waiea’s 174 condos still available with prices ranging from $4.4 million to $36 million.  It’s even a little tighter over at Anaha with just 15 condos left out of the original 317 units.  Prices for those remaining units range from $2.9 million to $14 million.  There are “bargains” to be had over at Ae’o with 175 of the 486 units still available starting at just $800,000 and only going to about $2 million.

See what I mean about the incentives being good, but that in this price range certainly nothing buyers couldn’t do for themselves with nary a thought? But if you’re going anyway, you might as well take what’s being offered.

Remember: When I’m not stirring up trouble in Dallas, Texas or Honolulu, Hawaii for Candysdirt.com and SecondShelters.com, I’m off scouting interesting locations for a second home.  In 2016 and 2017, the National Association of Real Estate Editors has recognized my writing with two Bronze (2016, 2017) and two Silver (2016, 2017) awards. If you’re a Realtor with second home clients who’d like me to feature their journey, shoot me an email sharewithjon@candysdirt.com

One Comment

  • Really good articles with information not provided in other Howard Hughes commentary. Interesting to me that Howard Hughes management acknowledged at its May investor day that Hawaii margins were only 10% including land value, lower I believe that the margins D.R. Horton for example might expect from a Texas tract home development. Seems to me that Howard Hughes and/or its lenders are taking a lot of marginal development risk to monetize the underlying land. At the same time, management claims that the scope and scale of Ward Village is such that Howard Hughes has virtually cornered the market on Honolulu high-rise condo development. One question for investors is whether the company is establishing a durable, valuable Hawaii franchise or whether the Hawaii presence really won’t be worth much once the Ward Village land value is worked through.