General Growth Gets Green Light for 60-Acre Honolulu Project

A plan for a mixed-use community in Honolulu has just received the approval of the Hawaii Community Development Authority. The development, proposed by Chicago-based General Growth Properties Inc. affiliate Victoria Ward Ltd., will span 60 acres and ultimately encompass approximately 17.3 million square feet of commercial and multi-family space. “HCDA was created several years ago specially for planning this area of Hawaii, and we’ve created a master plan based on direction from the community, HCDA and the State of Hawaii,” a General Growth spokesperson told CPN. Known as the Ward Neighborhood, the site fronts the ocean in the heart of Honolulu. With development anticipated to take place over a 20-plus-year period, the plan calls for as much as 5 million square feet of retail and entertainment space, 4 million square feet of office and additional commercial space, as well as 4,300 mixed-income residential units accounting for 7.6 million square feet. Additionally, 14 acres will be set aside as public space. “Approval of the master plan creates a framework for long-term development of the land that will meet long-term needs for commercial and residential space–not needs that currently exist,” the spokesperson noted. “Also, when you build residential, you are automatically creating new customers, so a lot of it is interdependent.” Currently, commercial demand is relatively strong, but not as robust as it had been due to the sharp downturn in the economy. As per a third quarter report by real estate services firm Colliers International, the industrial market vacancy rate in Honolulu, although on the rise, is still a low 4 percent, and the office vacancy rate is 8.3 percent. Today’s numbers, however, are not General Growth’s concern. “The key idea behind the master plan is it’s better to have a broad, long-term vision than to develop the land in a piecemeal fashion,” he said. Above all else, smart growth is the central idea. With the economy in shambles and the credit market in somewhat of a deep freeze, few developers can secure funds to kick off a gargantuan endeavor like the Ward Neighborhood. “The current economic climate is not ideal for this kind of project right now,” the spokesperson said. “How we will finance it is yet to be determined. We might identify joint venture partners. Bank financing is not favorable now, but we’re optimistic that that will change. With HCDA’s approval in hand, only the market is holding the project back from taking the next big step. “In terms of timing for commencing the first phase, we’re not firmly committed to a particular timeframe, but we’ll be ready as soon as conditions allow.” General Growth, a publicly traded REIT, presently has ownership interest in or management responsibility for over 200 regional shopping malls in 44 states. The company’s portfolio encompasses approximately 200 million square feet of retail space. Like many REITs, General Growth, facing a mountain of debt, has been having a rough time of it. Over the last 52 weeks, company stock has ranged from a high of $44.23 per share to a low of 24 cents, but currently, shares are well over the $1 mark. In December, General Growth announced the completion of $896 million in refinancing loans, and secured a two-month forbearance and waiver agreement on two mortgage loans totaling $900 million