Sprinklers are expected to become a selling point

Location is key. A pool is a plus, as are views and new appliances. But whether a condominium has a fire sprinkler system suddenly has become a top-of-mind issue in Honolulu’s real estate market.

Before July 14’s fatal fire in the Marco Polo tower on Kapiolani Boulevard, Properties of the Pacific broker Sue Ann Lee couldn’t recall a single client who expressed concern about the lack of fire sprinklers in deciding whether to buy a high-rise condo.

That’s expected to change following the fire that killed three people, damaged about 200 homes and sparked a proposal from Mayor Kirk Caldwell to mandate installation of sprinkler systems in all Oahu condo towers that lack them — around 300 high-rises built before 1975, when such systems were required for new towers.

“I’m sure certainly it’s going to be a big deal in everyone’s mind now,” Lee said.

Added Phyllis Okada Kacher, a senior executive vice president at residential property management firm Hawaiiana Management Co., “I think there will be a new kind of due diligence. There’s going to be a different way of thinking.”

Lee, who also serves as president of the Honolulu Board of Realtors, said she would expect prospective homebuyers to discount purchase price offers to reflect the possibility that they will have to pay for installing a sprinkler system if a law passes.

Such discounts might not add up to much relative to the price of a unit. At the 568-unit Marco Polo tower, owners received an estimate of roughly $8,000 per unit to install a sprinkler system in 2013. That’s 2.6 percent of the more affordable units in the building priced around $300,000 and even less for high-end units valued at around $1 million.

Installation cost estimates vary widely. In 2005 a city task force study estimated the per-unit cost at $4,306 for the Marco Polo, $1,995 for the 300-unit Pearl One tower in Aiea, $10,460 for the 67-unit Wilder Avenue building and $22,902 for the 112-unit Royal Court high-rise in Kakaako.

One important item condo buyers should pay attention to is a building’s maintenance fund reserve. A weak reserve could mean owners get charged a special assessment on top of normal monthly maintenance fees if sprinkler systems become mandatory. A building with extra reserves could use a surplus to pay or help pay for installing a system.

Sellers can provide copies of a building’s reserve study to prospective buyers. Copies also can be bought from a condo’s property management company.

Knowing which condo towers have fire sprinkler systems isn’t usually apparent to prospective buyers from sale listing information. The listings usually include information on appliances, security, trash chutes and even smoke detectors — but typically doesn’t mention fire sprinkler systems.

For instance, a unit on the market now at the Commodore in Hawaii Kai touts “stunning” views, central air conditioning, covered parking, a heated saltwater pool, a garbage disposal and a smoke detector, among other things — but not a sprinkler system, which the tower, built in 1982, has.

Prospective buyers can, of course, see whether a condo has a sprinkler system by attending an open house. Also, sellers are required to deliver to buyers a legal disclosure form that for condos includes a line indicating whether the building has a sprinkler system, but that document is usually furnished after a buyer has committed to a purchase and is in escrow.

Now knowing which buildings in Honolulu don’t have such systems is easy. According to an informal Star-Advertiser survey of industry officials and a review of city building permit records, no residential high-rises (buildings taller than 75 feet, or typically seven stories) built before 1975 (when sprinkler systems became mandatory in new residential tower construction) have installed such systems designed to confine a fire to a single room or unit. Sale listings typically state the year a condo was built.

Low-rise condos and single-family homes in Honolulu, regardless of the year built, are not required to have fire sprinkler systems.