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Kakaako Makai Redevelopment Uncertainty Could Delay New Projects by 18-36 Months

·7 min read·⚡ Act Now

Executive Summary

The Hawaii Community Development Authority (HCDA) is revisiting the long-term master plan for Kakaako Makai, creating a window for public input that could significantly alter future development. Real estate owners and investors need to engage early to influence revised zoning, while entrepreneurs should assess potential delays in accessing new commercial spaces. Action is required within the next 30 days to impact the initial concepts and public feedback phase.

  • Real Estate Owners & Developers: Risk of project delays (18-36 months), potential for revised zoning impacting density and use. Opportunity to shape future land use.
  • Investors: Uncertainty in Kakaako real estate market valuation, potential shift in investment focus away from the area until plan is finalized.
  • Entrepreneurs & Startups: Delays in securing new commercial leases or expanding operations in Kakaako.
  • Action: Engage with HCDA's planning process and public input sessions within the next 30 days.

Action Required

High PriorityNext 30 days (for initial engagement with community input)

Early concepts and public feedback stages are critical for influencing development plans; delays in engagement could mean missed opportunities to shape future land use and investment.

Stakeholders must actively engage with the Hawaii Community Development Authority (HCDA) and the Office of Hawaiian Affairs (OHA) during the public input and conceptualization phase of the Kakaako Makai master plan revision. The next 30 days represent a critical window to submit feedback, attend community meetings, and articulate specific concerns or proposals to influence early planning decisions. Failure to engage within this initial period risks having future development opportunities and investment strategies dictated by a plan formulated without your input, potentially leading to extended project delays and altered market dynamics.

Who's Affected
Real Estate OwnersInvestorsEntrepreneurs & Startups
Ripple Effects
  • →Delayed commercial/residential development → Exacerbated housing shortages → Increased rental costs
  • →Extended development timelines → Reduced immediate demand for construction labor
  • →Planning uncertainty → Potential shift of development capital to less regulated areas
  • →Impact on OHA land → Affects Native Hawaiian community benefits from development
A striking modern skyscraper in sunny Honolulu, Hawaii, featuring contemporary architecture and tropical surroundings.
Photo by Cyrill

Kakaako Makai Redevelopment Uncertainty Could Delay New Projects by 18-36 Months

The long-debated future of Kakaako Makai is once again a focal point, as the Hawaii Community Development Authority (HCDA) partners with the Office of Hawaiian Affairs (OHA) to update the area's long-term master plan. Early concepts were presented to OHA trustees, signaling a critical period for stakeholders to influence the direction of development in this prime Honolulu location. This revision process, from initial conceptualization through to a finalized plan, is expected to span 18-36 months and introduce significant uncertainty for immediate and near-term development projects.

The Change

Discussions around Kakaako Makai development have been ongoing for years, but the formal partnership between HCDA and OHA to create a new master plan marks a renewed push towards defining the area's future. The initial concepts presented to OHA trustees are the first public glimpse into potential land use, density, and project types. This process is in its nascent stages, with public community input sessions being the next crucial step. The HCDA and OHA aim to gather feedback to shape the revised plan, which will ultimately guide all future development and zoning within the roughly 29 acres owned by OHA in Kakaako Makai.

Who's Affected

Real Estate Owners and Developers

Property owners, developers, landlords, and property managers with interests in Kakaako Makai face immediate uncertainty. The master plan revision could lead to:

  • Revised Zoning and Density Limits: Changes to permissible building heights, floor area ratios (FARs), and land use categories could significantly alter the feasibility and profitability of planned or existing development projects.
  • Extended Permitting Timelines: The master plan update will likely trigger a moratorium or significant slowdown on new development approvals, potentially delaying projects already in the pipeline for 18 to 36 months until the new regulations are finalized and enacted.
  • Shifting Market Values: Uncertainty surrounding future development potential can lead to temporary stagnation or decline in property values and investment interest in the immediate Kakaako Makai area. Developers may re-evaluate their capital allocation and project pipelines.

Investors

Investors, including real estate investment trusts (REITs), private equity firms, and individual portfolio managers, need to assess the impact of this master plan revision on their existing holdings and future investment strategies.

  • Valuation Adjustments: The long-term nature of the planning process and the potential for substantial policy shifts create volatility in Kakaako Makai real estate valuations. Investors may see a pause in transactions or a need to discount future cash flows to account for planning risks.
  • Opportunity Costs: Capital earmarked for Kakaako Makai projects might be better deployed elsewhere during the extensive planning and approval phase. Investors may shift focus to areas with more stable or predictable development environments.
  • Partnership Dynamics: The collaboration between HCDA and OHA could signal new partnership opportunities or require investors to navigate more complex stakeholder relationships. Understanding the priorities of both entities will be key.

Entrepreneurs and Startups

For entrepreneurs and startups, particularly those looking to establish or expand operations in prime Honolulu commercial real estate, the Kakaako Makai master plan revision means potential delays and changes in the availability of suitable spaces.

  • Delayed Access to Commercial Space: If new commercial developments are put on hold or redesigned as part of the master plan, startups expecting to lease new office, retail, or co-working spaces in Kakaako could face significant delays in their expansion plans, potentially extending their current lease commitments or forcing them to seek alternatives.
  • Increased Operating Costs: Any future commercial spaces developed under a new master plan might incorporate higher construction and operating costs due to new design standards, sustainability requirements, or land lease terms, impacting the long-term affordability for startups.
  • Ecosystem Impact: Kakaako is a growing hub for innovation. Delays in new development could slow the growth of its entrepreneurial ecosystem, affecting networking opportunities and the availability of ancillary services.

Second-Order Effects

The uncertainty and lengthy timeline associated with the Kakaako Makai master plan revision can have cascading effects on Honolulu's constrained economy. A prolonged delay in new commercial and residential development could exacerbate existing housing shortages, potentially driving up rental costs for residents and increasing the wage pressure required to attract and retain labor in service-based industries occupying ground-floor retail. This, in turn, could lead to higher operating costs for small businesses and a reduced disposable income for local consumers, impacting overall economic activity beyond the immediate Kakaako area. Furthermore, a significant portion of OHA's land holdings is involved, potentially impacting the Native Hawaiian community's direct benefits from development, such as affordable housing or business opportunities.

What to Do

Real Estate Owners and Developers

  • Engage Early and Consistently: Actively participate in all HCDA and OHA public planning meetings, workshops, and feedback sessions. This is the primary window to influence early concepts and ensure your project interests are considered before they are codified into regulations.
  • Review Existing Project Timelines: Re-evaluate all current and planned development projects in or near Kakaako Makai. Factor in potential delays of 18-36 months and assess the financial implications. Consider shifting focus to projects in areas with more defined regulatory environments if immediate development is critical.
  • Scrutinize Lease Agreements: If you are a landlord, anticipate tenant concerns about future development certainty and be prepared to renegotiate or offer flexibility in lease terms. If you are a tenant, understand the potential for project delays impacting your expansion or relocation needs.

Investors

  • Monitor HCDA and OHA Communications: Closely follow official announcements, meeting minutes, and public feedback summaries from HCDA and OHA regarding the Kakaako Makai master plan. These will provide lead indicators on the direction of policy changes.
  • Scenario Planning: Develop financial models that account for different development scenarios under the revised master plan, including potential variations in density, land use, and infrastructure requirements. This will help in assessing risk and identifying potential investment opportunities should the plan favor certain asset classes.
  • Diversify Holdings: Consider reducing concentrated exposure to the specific Kakaako Makai submarket until sufficient clarity emerges on the master plan’s implications. Diversifying within the Honolulu real estate market or other sectors may mitigate risk.

Entrepreneurs and Startups

  • Delay Lease Commitments for New Kakaako Spaces: If you are planning to secure new commercial space in Kakaako Makai within the next 1-2 years, anticipate significant delays. Begin exploring alternative locations in other Honolulu districts to avoid disruption to your business operations.
  • Assess Impact on Existing Leases: If you currently lease space in Kakaako Makai and were anticipating a move to a new, larger space in the area, understand that your current lease may need to be extended or renegotiated. Communicate with your landlord about potential future development timelines.
  • Explore Co-working and Flexible Office Solutions: In anticipation of potential space scarcity or delays, investigate co-working spaces or flexible office solutions that can accommodate your business needs in the short to medium term while the Kakaako development landscape evolves.

Action Details

Stakeholders must actively engage with the Hawaii Community Development Authority (HCDA) and the Office of Hawaiian Affairs (OHA) during the public input and conceptualization phase of the Kakaako Makai master plan revision. The next 30 days represent a critical window to submit feedback, attend community meetings, and articulate specific concerns or proposals to influence early planning decisions. Failure to engage within this initial period risks having future development opportunities and investment strategies dictated by a plan formulated without your input, potentially leading to extended project delays and altered market dynamics.

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