The hotel-condominium tower will be the luxury accommodations operator's first presence on Oahu
POSTED: 01:30 a.m. HST, Dec 20, 2012
Ritz-Carlton has hooked up with a developer to manage a planned Waikiki condominium-hotel tower that will give the luxury hotel operator its first presence on Oahu.
Los Angeles-based developer Pacrep LLC announced that its $275 million tower formerly known as 2121 Kuhio will be branded as The Ritz-Carlton Residences Waikiki Beach.
Pacrep expects sales of the tower's 459 hotel units to investors will begin early next year followed by construction toward the end of the year if permitting approvals are obtained without delay. Completion of the 37-story tower would occur in early 2016, based on the projected timetable.
The management agreement will give The Ritz-Carlton Hotel Co. its second presence in Hawaii. The company operates a hotel and residential suites in Kapalua, Maui.
Jason Grosfeld, a principal with Pacrep who helped develop another Waikiki condo-hotel, the Trump International Hotel Waikiki Beach Walk, said the addition of a new luxury hotel brand in the market will benefit Hawaii's most-visited tourist destination.
"The Residences will further secure Waikiki's position as a world-class destination providing full- and part-time residents, as well as visitors, with all the legendary services and amenities they have come to expect of The Ritz-Carlton brand," he said in a statement.
Tim Grisius, a Ritz-Carlton senior vice president, said the company looks forward to entering an iconic market with an exciting project.
Condo-hotels, also referred to as condotels, are similar to traditional hotels except that the developer sells individual rooms to investors, most of whom typically opt to rent the units to tourists and split proceeds with an on-site management firm. Owners also usually have the option to reside in or manage their own units.
Pacrep expects to sell Ritz-Carlton Waikiki units to investors for more than $300 million, or more than $654,000 per unit on average, according to a final environmental assessment accepted by the city earlier this month.
The company also estimated that the hotel would generate $20 million to $30 million in annual room revenue, and employ 475 people in its first full year.
Pacrep said hotel units will range from 400 square feet to more than 3,000 square feet. A restaurant, cafe, gourmet food market and "world-renowned" sushi chef are among planned tower amenities along with pools, a spa and fitness center.
Grosfeld in an interview said he believes there is pent-up demand to own luxury hotel rooms in Waikiki, where the last luxury condotel built was the Trump tower in 2009.
If the Ritz-Carlton Waikiki tower is built as planned, it would follow a record year for Hawaii tourist arrivals, and help Waikiki increase its hotel room count after declines in recent years from retail and residential development projects supplanting older hotel properties.
"To have a new luxury property of this stature rising in Waikiki at this time is a very positive sign for tourism and lodging in the islands," Rick Egged, president of the Waikiki Improvement Association, said in a statement.
To proceed with construction, Pacrep needs a Waikiki Special District Major permit and a resolution from the City Council allowing the tower to rise 350 feet, or 50 feet higher than the standard limit for the site at the corner of Kuhio Avenue and Kalaimoku Street toward the Ewa end of Waikiki.
At 350 feet, the tower would be as high as the Trump tower and the biggest towers at Hilton Hawaiian Village.
Many owners in an adjacent condo, the 25-story Four Paddle, have objected to the orientation of the Ritz-Carlton Waikiki tower, which is designed with its broad side facing mauka-makai. The orientation capitalizes on expansive ocean views over Fort DeRussy park but would block those views from Four Paddle.
In letters to the city Department of Planning and Permitting, a few Four Paddle owners and the Waikiki Neighborhood Board contend that Waikiki Special District Design guidelines specifically call for the long axis of new towers to be oriented in a mauka-makai direction to preserve public mauka views and natural ventilation.
The Department of Planning and Permitting determined that the planned project will have no significant environmental impact. But project opponents have indicated they intend to contest Pacrep's special district permit over the orientation.
Pacrep contends that the tower's orientation is consistent with Waikiki design guidelines largely because it better preserves view corridors and open space along Kuhio.
In response to complaints from Four Paddle owners, Pacrep redesigned the tower to preserve some ocean views from Four Paddle by reducing the tower's length by 48 feet even though private property owner views aren't protected by state and county regulations.
Pacrep has been working on its development plan since buying the 1.4-acre site for $15.5 million in January.
The property was once home to landmark gay bar Hula's Bar & Lei Stand but has been vacant since the late 1990s in connection with developing the 2100 Kalakaua retail complex housing high fashion boutiques including Chanel, Gucci and Tiffany & Co.
Pacrep bought the property after failed plans by past owners to develop the site for retail, residential, time-share or hotel use.