On Tuesday, Mandarin Oriental and Salem Partners, a Los Angeles based investment firm, announced their return and debut respectively with a “36-story mixed-use tower across from the Hawaii Convention Center in Honolulu”.
For the first time in four years, the commercial real estate investment sales volume in Hawaii declined. After establishing a record high last year of more than $4.57 billion, the transaction volume dipped slightly for a year-end 2015 total of $4.47 billion.
Despite continued strength in Hawaii’s visitor industry, the total volume of Hawaii hotel transactions dropped by 63% in 2015 while the number of transactions dropped by 17%.
A substantial portion of the low end of the Waikiki hotel inventory is being renovated and will dramatically reduce the number of hotel rooms in the economy segment.
The Hawaii hotel industry had a great summer and a particularly strong August. Given the continued growth in air seats we should see similar levels of RevPAR growth through the end of 2015.
Hawaii is undergoing a recent surge in planned hotel construction. From 1997 to 2012, the visitor accommodation units built relied on a residential, timeshare or club component to make financial sense.
The Hawaii hotel investment market remained positively buoyant through the first half of 2015. The continued strength is driven by improved visitor metrics, better bottom line hotel performance and lower investor yield requirements.