Avalon Group has acquired the Davies Pacific Center, President and CEO Christine Camp confirmed Monday.
Camp said the developer plans to convert the 378,000-square-foot Downtown Honolulu office building to a mixed-use building.
About a third of the space — between 100,000 and 120,000 square feet — is expected to be used for commercial purposes, while two-thirds will be converted to residential condominiums.
Camp told Pacific Business News the developer looks to add between 300 and 400 residential units “that will be catered to the workforce.”
The units, she said, will primarily be one bedroom, with pricing to be targeted between $550,000 and $650,000.
The condos will be sold, and Camp said the developer will allow some to be purchased by investors to create rental opportunities within the building.
Camp said, too, that Avalon is keeping some of the space commercial because some tenants “really like being here, and so we didn’t want to disrupt their business, so we’re allowing them to continue their businesses.”
Camp noted later in the conversation that the previous owner was already contemplating the possibility of a conversion and kept some floors empty while some floors have few tenants whose leases are expiring or who have a relocation clause in their leases.
“So we’ll be working with these tenants to be not disruptive, but to be helpful,” she said. “Some tenants are looking to expand, some tenants — a lot of tenants — are looking to downsize. [We will] be assisting them in their relocation within the building to areas that will permanently stay … as office space.”
The developer also aims to make the building as energy efficient as possible, Camp said.
“We’re looking at separate metering. We’re looking at putting in really good, new efficient systems instead of the older HVAC,” she said. “The elevator upgrades have already been done, so we’re just looking at opportunities to make sure that the building is up to par for the modern time, specifically related to water conservation and energy conservation.”
The developer’s theme for the building will be “urban oasis,” she said.
“This is a concrete building. We’re not going to change that,” Camp said. “So we want to introduce a lot of landscaping and wood and lighting to make this into a really hip and new urban area. We’re also going to build out a dog park so that this becomes one of the very first class A … mixed-use buildings that allow for and accommodate all of our furry friends.”
Camp said introducing workforce-priced housing in the Downtown corridor is something that’s “very exciting” to the organization.
This is Avalon’s second endeavor to bring housing to Downtown Honolulu. Camp said Avalon is also working with Catholic Charities Hawaii on an affordable senior housing project on Fort Street Mall.
“Downtown shouldn’t be all about affordable housing, it should also have workforce housing and market housing,” she said. “That’s what we’ll be introducing.”
According to Camp, the Davies Pacific project will offer homes to those who make 100% to 140% of the area median income as well as market rate units.
“The sale of Davies Pacific Center to Avalon Development marks a new direction for the iconic property,” said Matt Bittick, senior vice president with CBRE Capital Markets Institutional Group, who represented the sellers along with Todd Tydlaska from CBRE’s Los Angeles office. “It is the center-core of Downtown Honolulu slated for repositioning into a for-sale project. Our team is honored to have been part of such an important real estate transaction and are excited to see what the future holds for Davies Pacific Center.”
According to Camp, the deal was nearly a year in the making.
She was unable to share the sale price, but according to county property records, which show the prior fee owner as Davies Pacific LLC, the land value is assed at more than $29.7 million while the assessed building value is nearly $66.8 million, for a total property valuation of nearly $96.5 million.
Permits, however, are needed before the conversion work can start, and Camp said she expects it will be “no sooner than 18 months” before the work begins.
Avalon Group is the parent company of Avalon Development Co., which will develop this project.
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