“Real estate diva” has seen all sides of Hawaii’s tumultuous real estate world

Stephany Sofos has for years been known in Hawaii as a real estate broker, appraiser and consultant — but recently “diva” has been added to the list, thanks to a book she self-published in 2012, “Untold Stories of a Real Estate Diva,” which has sold more than 5,000 copies.

In the business for nearly 40 years, Sofos in her book recounts episodes from her long career, exposing readers to secrets of the trade, key events and personalities from the past, and personal observations that help explain how she has survived in Hawaii’s tumultuous real estate world.

Sofos grew up in a real estate family. Her parents, Catherine and Thomas, started out with a small building in Waikiki — the Sofos Building, which still stands — and went on to develop many of the first homes in Kahala and then Waialae Nui Ridge. Her brother Steve of Sofos Realty specializes in commercial real estate.

Stephany started in the business when she was just 20, and since then has worked in virtually all facets of it, including shopping center management, commercial sales and leasing, property management, appraisals and consulting. She also is called on as an expert witness in court cases involving real estate and business valuations.

Past employers include Chaney Brooks & Co., Hawaii Management Corp., Kaiser Development Co. and Aston Hotels & Resorts. She went solo in 1986, as SL Sofos.

Sofos is a graduate of St. Andrew’s Priory and the University of Hawaii, where she earned a bachelor’s degree in history and minored in economics.

She has long been active in local business associations and community groups, including the Kapiolani Park Preservation Society. Personal interests include swimming and tennis.

Sofos lives in Waikiki with her two dogs, two cats and a bird.

Question: What is your impression of the real estate market in Hawaii right now?

Answer: Well, this is a very odd market. I’ve never experienced something like this. In the past you’ve had waves of different groups come in, and this time around everybody’s coming in. We’re even seeing Russians. It’s because this is the first time people are moving money into an American port to just land bank. They’re hedging their bets, because everybody’s nervous about the economy — the world economy — because there’s currency wars going on right now. So if you take some of your yuan and throw it into U.S. dollars through an American investment, you’re protecting your assets. An investor told me, he said, “I appreciate the greatest military guarding my assets.” That’s why he’s investing in Hawaii. I thought that was interesting.

Q: Are there any bubbles going on?

A: I think that we’re in a bubble right now. I just don’t know when it’s going to pop.

Q: Is it in a particular category?

A: No, I think it’s worldwide. And here in Hawaii, we have been seeing a slowdown. The peak of real estate here of this market was 2014 and the first half of ’15. The big slowdown is in the $2 million and up. And that’s where all the money is coming in from different countries.

Q: Are these people buying (single-family) homes, or are they buying these condos going up in Kakaako?

A: They’re buying everything. They’re looking at what will at least hold its value, if not appreciate, because historically Hawaii has always done better than the world. Like on the mainland when we had the great recession, the average real estate dropped about 30 percent. In Hawaii it dropped about 15. That’s a big difference.

Q: What are the buying trends in residential real estate right now?

A: People are still interested in buying. On the mainland, home ownership is 64 percent of the population. In Hawaii it’s 58 percent. … So that shows you that even though it’s expensive, people still want to own their own home, they still want to own a piece of paradise. But the pressure is getting heavier and heavier. So it is an issue.

Q: Well, like you suggested, when you do get into the market here, your home pretty much does hold its value. There aren’t too many people underwater here, are there?

A: That’s hard to say. I would say there’s a lot of pressure on people to maintain their homes, because it costs so much money and they’re just holding on, and if they lose their job they could lose their house, as was shown in 2007-2008. There were a lot of foreclosures. So, could it happen again? Absolutely.

On the mainland, the cost of housing is less, so if you miss a couple of paychecks, you can afford your house still. But that’s not the case in Hawaii. There’s a lot of pressure. And it’s not just that mortgages are so high. We have the highest cost for electricity in the United States, the highest cost for food, … so you have to have multi-family members just to maintain your home.

Q: What about commercial real estate?

A: Retail was soft all of last year, but the shopping profile here in Hawaii is people do shop more. It’s a better market than it is on the mainland United States.

Q: People shop here more for what?

A: They just like to shop. Retail therapy. I mean, they love the shopping centers. You also have the tourists who like to shop. They come and they want to buy their gifts. So Hawaii does a lot better in retail here than in mainland United States, though I have heard from retailers that it was a soft Christmas. But I haven’t see the stats yet.

Q: Is it true there are more office vacancies right now?

A: Oh yeah, that’s no question. The world is changing with office. Office is the dinosaur of the future, because people are going to virtual offices. If you have an office, you have smaller offices, and you can operate in a much smaller space than you used to. So with virtual offices now, you’re not going to need as much office space as before.

And I predict that probably you’ll see one of the office buildings in Honolulu convert to an apartment or condominium in another 10 years, because we don’t need the office space. A lot of people say, no way, we’re going to build more space. Well, they may, but I doubt it.

As for industrial, you have booming construction, food is booming, materials are booming, so industrial space is in big demand. Retail seems to be holding on, although the landlords are gouging the crap out of all the tenants.

By the way, this idea of changing offices into apartment building or condominiums is not a new idea. It’s being done on the mainland a lot now. Just like where they’re building condominiums at Ala Moana Center? That’s been going on for 10 years on the mainland because it’s space that’s not been utilized, so the developers have gone back and built these apartments on the shopping center’s above decks, because older people like it, because it’s easier to get to the mall. It’s a convenience.

Q: Speaking of Ala Moana Center, if its neighbor the state convention center is destined to be a white elephant, what would be a better use for that space?

A: The way it’s designed is horrible, so it’d be hard. You can’t do retail because it’s vertical; people don’t do vertical. You could probably do office, since you have adequate parking meeting rooms there. You can’t really do residential because you don’t have enough windows. You’d have to blow all of that out.

Q: Would tearing it down and starting all over make sense?

A: The property’s pretty valuable, but that would be a big trigger to pull because of the costs. … The state has so much other land that they should be utilizing right now. You know, all of that Nimitz property that goes all the way to the airport they could utilize. All that back area.

Q: For what?

A: Well, you could do homeless housing. You could also move the state offices there, consolidate everything. I mean, they’re trying to put stuff at Kapolei, which is so stupid because there’s only one road to Kapolei and if you get a car accident, everybody’s jammed. I mean, it’s ridiculous, and rail is not going alleviate that problem.

Q: Do you see the long-planned Second City finally coming into view?

A: Yeah, I do. The four components for true development — like I said in the book — are residential, recreational, commercial and office, right? So they’re finally putting all the components in. The problem with Kapolei is the roads; there’s not enough infrastructure. I mean, you put another 200,000 people there, how are you going to get back and forth to Honolulu? You can’t be living out there 24/7 for 365 days.

Q: So you don’t think rail will help much?

A: No, I don’t.

Q: Why, because people just like to use their cars?

A: I just think rail’s capacity alone won’t be able to sustain it, and people do like to have their cars. I mean, the thing about real estate and everything else is convenience and pricing. Like people say all the time, “Oh, I miss my mom and pop store,” but that’s not really true. They talk about it, but what they really want is the shopping experience, the convenience and the price point, and that’s for everything they do, whether it’s where they live, where they work or where they recreate.

Q: What about the touted transit-oriented development — do you think that’s going to pan out?

A: It could. We don’t know. If the rail is greatly successful, and it’s constant, if it’s a ridership that goes 20 hours a day, say, then it would behoove any developer to go in there and capture that market. Because that’s perfect. People are going to be standing there waiting to get on board to go home and they could buy their groceries and get on board.

It’s like that Walmart that went into Downtown Honolulu; that was a brilliant move. I wish I had thought of that. That was brilliant because people go on their lunch hour and buy their groceries and stuff … take it back to the office and then put it into their car and drive home. It’s brilliant.

Q: About the west side again, developer Stanford Carr has entered the picture to redevelop the Makaha resort area. Do you think that area might be poised to take off finally?

A: I think so. I think Stanford does a good job on his developments. The issue is that the farther you go out of Honolulu, the less people become interested because of the access. So it’s got to be like Ko Olina where it’s a stand-alone. I mean, if you talk to people who are out there, they just love it. There’s entertainment, there’s food, there’s activities. … So if it’s done well, where it can be self-sustaining, then, yeah, absolutely. And the west side needs that because for the people who live there, it would be easier for them to have jobs there rather than travel 80 miles roundtrip every day to have a job.

Q: Going to the east side, from Kahala out to Hawaii Kai, would you say that’s kind of maxed out?

A: Yeah, I think so, because unless you start to build high-rises … I think that the biggest issue that I find continually is that there does not seem to be vision as to infrastructure, with the government. We saw in your paper that they’re renovating the sewer system but they’re not enlarging capacity. So, that’s an issue.

The reason people live in Hawaii, you and I, is because of the quality of air and water, right? We love to be in the water and we love the fresh air, but if you start to have so many people and you’re not focusing on how to preserve what people love, and just try and build it because they will come, then you’re going to change the ambience of why we all live here.

… The other issue is that they need to create more open space. There was a time when they saw that, but all these condominiums coming into Kakaako? I talked to the developer (Howard Hughes Corp.), and he said, “Oh yeah, we’re going to build a 4-1/2 acre park.” Big deal. So they’re going to be looking at Ala Moana Park, which is great, but you’re going to have to maintain that park, and get the homeless out of there. But you do need to have more open space around these grandiose condominiums, because otherwise you’re going to have people going crazy.

Q: Is Waikiki maxed out, too?

A: Waikiki has pockets that they can still redevelop. … You have a pretty heavy density in this 3-1/2 mile resort, but it could stand to be really upgraded. I mean, you’ve got pockets that are really just disgusting. How you do it, I don’t know. You have tiny little roads and the cars are just packed in. I go bicycling down there sometimes and I’m going, like, “Please God, you gotta get me home safely.”

Q: Recently it was revealed that the city property tax appraisers were valuing some of the higher-end properties at below the prices that the properties actually had sold for. Does that make sense to you?

A: Yes, it does make sense that that particular house might be a little lower, because of the whole neighborhood; they can’t go in and individually appraise every house. They call it ad valorem. So it’s a snapshot. And I have to tell you that over the last couple of years, I’ve seen their valuations and they’ve been pretty accurate. So I give them credit — and usually I don’t give public people credit. (Laughter)