Dive Brief:

• Plans for a 32-story, 246-unit condo hotel tower in the Waikiki neighborhood of Honolulu have been shelved temporarily amid concerns over rising construction costs and dwindling demand, according to Pacific Business News. Construction was expected to begin in 2016 and wrap up in 2018.  

• Developer BlackSand Capital said bids for the 133 Kaiulani project came in as much as four times higher that a similar luxury condo project built a decade ago. It noted that some design and entitlement work had been done for the project.

• When complete, the project will add a combination of studios and one- to three-bedroom units, with 85% available as hotel rentals. It is expected to yield an $8 million annual economic boon for the city along with 200 permanent jobs and as many as 300 construction jobs.

Dive Insight:

Honolulu’s luxury condominium and apartment market is slowing down amid rising construction costs and lower demand following a spate of such projects to rise in the last few years. Honolulu ranks No. 2 for construction costs globally as the building boom there puts pressure on a shrinking labor pool, according to the Business News.

Cost overruns are being absorbed on other projects in the city, too, with officials at the Honolulu Authority for Rapid Transportation confirming last month that costs on its planned Honolulu Rail Transit Project are now nearly $3 billion over initial estimates, due in part to alleged financial mismanagement. It is the most expensive public works project in Hawaii history.

In October, the Honolulu City Council approved the $700 million mixed-use Manaolana Place project. The 36-story tower is expected to house a 125-room luxury hotel, 109 condominiums, as well as dining options and access to the Hawaii Convention Center and to a forthcoming light rail station. It is set to be the state's first transit-oriented development.

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