Diseased Coral (photo by Greta Aeby-Hawaii Institute of Marine Biology)
Diseased Coral (photo by Greta Aeby-Hawaii Institute of Marine Biology)
Diseased Coral (photo by Greta Aeby-Hawaii Institute of Marine Biology)

HONOLULU – Oahu’s inventory of fee-simple industrial property, until now in very short supply, received a huge boost today when a joint-venture between affiliates of Walton Street Capital, LLC (Walton Street) and Avalon Development Company LLC (Avalon) announced that they closed on the purchase of the 123-acre Kapolei Business Park West (formerly known as West Kalaeloa Business Park).  The park is located along Kalaeloa Boulevard, the gateway to the industrial, commercial and employment center of West Oahu.  Zoned I-2 Industrial, the property sits just below Kapolei Commons and the Honolulu Advertiser printing plant and across the street from the 54-acre Kapolei Business Park Phase II, which Walton Street and Avalon recently purchased in a separate transaction. The venture’s latest 123-acre acquisition is expected to provide approximately 47 fee-simple industrial lots ranging in size from 1 to 7 acres as well as one yet to be planned 23-acre fee-simple industrial lot.

“We are excited at the opportunity to make much-needed fee-simple industrial property available for sale,” said Christine Camp, Avalon president and CEO. “The growing scarcity of fee simple industrial land has been tough on businesses, so opportunities like this are very valuable.”

“As industrial land in town is repurposed to non-industrial uses, this acquisition and subsequent development ensures that sites for Hawaii’s large and small industrial users will be available for the next few years,” said Guy V. Kidder, vice president of Colliers International, the real estate broker for both the venture’s purchases and the listing broker for the future sale of lots to individual businesses.

Scott L. Mitchell, executive vice president of Colliers International, added, “This is shaping up to be a very astute and strategic acquisition. As I look around Oahu, there is virtually no vacant industrial land left anywhere except Kapolei.”

Mitchell said early decision-makers should benefit most by acquiring needed land before prices return to pre-recession levels and likely beyond.

The property was purchased from a division of the James Campbell Company, LLC, Kapolei Properties LLC.  Regional infrastructure will be improved by way of the sale as Kapolei Properties will complete the remainder of Kalaeloa Boulevard as well as sewer lift station improvements.  “We are excited and pleased to have Walton Street and Avalon as active and valued participants in the Kapolei industrial market. This transaction will result in the improvement of Kalaeloa Boulevard, a vital highway that serves the island’s major industrial employment hub as well as the state’s second-busiest harbor,” said Brad Myers, president of Kapolei Properties.

Camp said the venture plans to expedite the completion of infrastructure on both purchased properties in order to quickly deliver much needed industrial product to an already supply constrained market.

The project has the ability to move quickly in part due to the debt-free nature of the acquisition. “We were fortunate to have strong capital backing on this acquisition to allow us a debt-free purchase through Walton Street,” she said. “We expect the subdivision plans to be completed by the end of this year as infrastructure construction can be completed without the need for financing, thanks to the strength and commitment of our capital partner.”

The fee-simple nature of the sale, with clear property title to the buyers, is a big incentive to businesses looking to control costs and build equity and security in their businesses. “From an investment standpoint, buyers will secure a place for their businesses at a fixed cost base they can control because they own the land,” Camp said. “This is an unprecedented time for the growth of construction-related industries on Oahu, coupled with the favorable small business loans that are available for buying and building facilities. With limited industrial-zoned land available for private ownership elsewhere, Kapolei Business Park will be a beacon for small business empowerment.”

Avalon Development Company LLC is a Honolulu-based real estate development company established in 1999. It develops industrial, commercial, residential and multi-family projects in Hawaii.  Avalon successfully developed the last phase of the Mill Town Industrial Park near Waikele in 2008.

Walton Street Capital, L.L.C. (Walton Street) is a private equity real estate investment firm based in Chicago.  Since its founding in 1994, affiliates of Walton Street have received total equity commitments of over $8 billion from public and corporate pension plans, foreign institutions, sovereign wealth funds, insurance companies and banks, endowments and foundations, trusts, family offices and high net worth individuals.  Through its affiliates, Walton Street has invested and/or committed to invest in more than 250 separate transactions with a gross asset cost of almost $19 billion in U.S. and international real estate, including the development and acquisition of office, hotel, retail, industrial, multi-family, for-sale residential, senior and student housing, gaming and other assets through both individual, portfolio and company-level transactions.  Specific to Hawaii, affiliates of Walton Street recently acquired the 300-key Ambassador Hotel Waikiki and Maui Mall, and previously owned the 645-key Aston Waikiki Beach and Komohana Industrial Park in Kapolei.

Colliers International is Hawaii’s premier commercial real estate brokerage and property management firm, with more than 40 years of success in the Islands, providing consulting, sales, leasing and management services for office, retail and industrial properties.

Kapolei Properties LLC is a division of the James Campbell Company LLC.

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