HONOLULU — In the core of downtown Honolulu, there is a towering disconnect between the supply and demand of affordable housing.
Hawai‘i has long been in the throes of an affordable-housing crisis, yet eight months after the opening of a rental apartment high-rise built at 1192 Alakea St. for people age 55 and older with low incomes, more than half the units are still vacant.
The developer of the 20-story project called Kokua Hale has reduced rents twice, run advertisements and is offering one month free rent plus no application fee, along with a reduced security deposit of $99 instead of the typical amount equating to twice the monthly rent.
Still, as of Friday, 141 of the tower’s 222 studio units, or 64 percent, are available for $1,210 a month.
Kevin Carney, a veteran Hawai‘i affordable-housing development executive now in the consulting business, said the vacancy rate for Kokua Hale is incredibly surprising.
“It’s kind of a head-scratcher,” he said. “Based on my experience, it is unusual to provide all those incentives and spend so much money on advertising, particularly given the location in Downtown Honolulu. It’s very shocking that they’ve only gotten this far.”
Kokua Hale, which cost $88 million, was developed largely with lower-cost state financing to serve a demographic on a low and fixed income in great need of housing that is affordable.
Indications while the building was nearing completion suggested that demand would far exceed supply. The project’s lead development partner, California-based Highridge Costa, received 1,736 lottery entries from applicants wanting to rent a unit.
“The popularity of the Kokua Hale project is truly a testament to the project’s quality build,” David Oi, finance branch chief of the Hawai‘i Housing Finance and Development Corp., a state agency that provided much of the tower’s financing, said during the lottery event. “It also offers further proof of the huge demand for quality senior affordable rental units in the Downtown Honolulu area.”
The lottery was held June 20, and the tower opened in October with a mix of furnished, unfurnished and partially furnished units.
Monte Heaton, Highridge Costa senior project manager, said in an email that a few factors led to the underwhelming number of units being rented so far.
One factor is that most of the lottery entrants did not meet income qualifications or were seeking one of only 12 apartments reserved for seniors with very low incomes.
These units rent for $687 a month and were available only to households earning no more than 30 percent of Honolulu’s median income, which equates to $29,250 for a single person and $33,420 for a couple. No vacancies exist for the 12 units.
The other 210 units are reserved for households earning twice as much, $58,500 for a single person or $66,840 for a couple, and were initially priced at $1,375 a month.
Heaton also said there was a competing project seeking tenants a short distance away that contributed to some of the slow leasing at Kokua Hale.
The size of Kokua Hale studios and the availability of parking have not been factors in the low occupancy, according to Heaton.
Apartment sizes range from 260 square feet to 330 square feet. There are 34 parking stalls in the building for residents and are available on a first-come, first-served basis.
Heaton said public transit is very accessible, and thus parking isn’t viewed as much of a challenge in leasing the apartments.
In an effort to boost occupancy, Highridge and the building’s management firm, New Jersey-based affordable housing developer and operator The Michaels Organization, reduced monthly rent to $1,310 from $1,375 and waived application fees around January for available units.
Then in March, the $99 security deposit incentive was added along with a further reduction in rent to $1,210 and an initial month of free rent.
Highridge and Michaels also are offering existing tenants a reward if they refer someone who leases an apartment.
Heaton said there was a substantial increase in prospective tenant traffic since the spring that has resulted in what he described as a rapid decline in the number of available units recently.
Janet Propst moved into one of the furnished units in April, and said the rent was attractive and that the $99 security deposit represented a savings of almost $2,400.
Before moving into Kokua Hale, Propst and her husband were living in a warehouse and facing the prospect of having to live in their truck after looking for affordable housing in recent prior months.
“I feel so lucky and so blessed,” she said. “We are one paycheck away from homelessness. (Finding Kokua Hale) is a true blessing. My alternative would have been sleeping in our vehicle and taking showers on the beach.”
