Mandarin Oriental Brings Questions And Haughty Baggage To New Honolulu Location

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When I saw the Mandarin Oriental construction fencing go up across from the Honolulu convention center, my curiosity was piqued. First, the Mana’olana Place development isn’t a stellar location. To contradict the marketing materials, it is not “steps from the beach” and certainly not while schlepping chairs, towels and sunscreen. It’s also flanked by a bevy of stripper bars and sits across from the aforementioned convention center that’s far from the beehive of activity promised by city leaders more than 20 years ago.

Being a Mandarin Oriental, you’d expect a better, more chic location. Granted, as Kaka’ako (with its large Howard Hughes development in progress), Waikiki and downtown Honolulu inevitably merge together, the Ala Moana area will be just another part of the city, but that’s years away. Folks buying one of the 99 condos or staying in the 125 hotel rooms are unlikely to want a front row seat to a neighborhood in transition.

It, like Kaka’ako, is unlikely to become a super-vibrant neighborhood either. The new high-rises popping up are not aimed at local residents. They’re almost all ultra-luxury targeting the global elite who may spend a few weeks a year soaking up the sun while their asset appreciates. I have visited several of those new buildings and been told that 10 percent occupancy is average. Like its brethren, the Mandarin Oriental is largely constructing an empty box staffed with low-paid servants waiting for someone to show up.

Then there’s the attitude.

The city has enabled developers additional height and density and lower parking requirements near light-rail stations. The goal was to incentivize affordable housing. The 36-story Mana’olana Place will cross 400 feet with a FAR of 10:1 and have half the typically required 576 parking spaces (which given the buyer profile, wouldn’t be used regardless of location).

In exchange for all those giveaways, the city agreed to $3 million in givebacks for affordable housing – not in the building itself, but within a mile of it. And even that is unlikely to result in helping “push forward the development of up to 1,000 affordable rental housing units at a proposed nearby project” quoted because Honolulu hasn’t built a single affordable unit with those funds since 1998. The (weak) reason the city gave was that poor people couldn’t afford the HOA dues were the units inside the building. With a total project price tag of $1 BILLION, the $3 million in givebacks equates to three-tenths of one percent of the project costs.

Not only do I find that a shockingly low precedent for Honolulu to set, but Los Angeles-based Salem Partners, the investment bankers financing the deal, seem to be complaining about it. Jim Ratkovich, Salem’s managing partner was quoted as saying “regulators shouldn’t impose more restrictions on developers to provide more affordable housing.” He said that would lead to developments not getting off the ground.

Given that the target market for these condos will coincidentally be those in the three-tenths of one percent income bracket, a little more kindness would have gone a long way.

And while Ratkovich crowed about all the jobs being created, he apparently didn’t discuss their wages nor what type of housing those wages would support in super-expensive Honolulu. Hotel jobs aren’t known for being high-paying. In fact, 2,700 Waikiki hotel workers went on a 51-day strike beginning Oct. 8, 2018. One of their key slogans, “One Job Should Be Enough,” said it all.

Regular readers will know, I’m usually in the front row gushing about Mandarin Oriental either as writer or guest. They’ve only just cleared the site and this one is already grating me the wrong way after grating others since the project was announced in 2016.

Is an explanation beyond “tone-deaf rich people” found in the frantic pace of the hotel group’s expansion (versus their slogan “Rarified air, for the most discerning few”)? With seven hotel/condo projects in operation, Mandarin Oriental has projects in the works in Barcelona, Bali, Bangkok, Boca Raton, Dubai, Grand Cayman, Honolulu, Mayfair London, Melbourne, Moscow, Munich, and Muscat – almost tripling their footprint globally.  Is rapid expansion causing their grace and civility to wear thin?

Subtracting the developers’ attitude, this will of course, be beyond luxurious.

Glass tower with residences above and hotel below (and Photoshopped greenery)

As with all things palatial, everything is branded – from the architect to the interior designer to the Michelin star restaurants (21 to date). The spa will be the biggest on Oahu (although apparently not the state or they’d have said).

The ground and second floors will contain various restaurant and retail operations of the swanky variety.  There will be a ninth floor amenity deck and spa along with a pool (seemingly without an ocean view). As a Mandarin Oriental residence owner, you become a member of the Residences Elite club which entitles you to discounts and freebies at other Mandarin Oriental properties.

Using the recently completed Ritz Carlton Residences in nearby Waikiki as a guide, expect prices for the condos to start at $2,000 per square foot. Construction is expected to take 30 months placing completion around mid-2021.

The oceanfront Kahala Resort

This is a radically different Mandarin Oriental project than their first foray into Honolulu. From 1994 to 2006, Mandarin Oriental managed the Kahala Hotel, taking over from the original Hilton management. That property opened in 1964 on 6.5 oceanfront acres. I still have a Kahala Mandarin Oriental sweatshirt from those days.

My Dallas readers will remember that pre-Recession, Mandarin Oriental was slated to be the anchor tenant in the cancelled Victory Park project called Victory Tower. That building would have been 633 feet tall supporting 40 stories of residential, office and hotel – making it 200 feet taller than Victory Park’s W Hotel and Residences. Mandarin Oriental’s footprint would have been similar to the current Honolulu project with 120 hotel rooms and 91 condos.  With Mandarin Oriental’s explosive growth, will they make another run at Dallas?

 

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, 2017 and 2018, the National Association of Real Estate Editors recognized my writing with three Bronze (2016, 2017, 2018) 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. Be sure to look for me on Facebook and Twitter. You won’t find me, but you’re welcome to look.