Former Gold Bond
building soldA San Francisco-based firm
buys the 12-story building
A California real estate development company has acquired the former Gold Bond Building in Kakaako for an undisclosed amount.
San Francisco-based Ellis Partners LLC confirmed yesterday that they are the managing member of a partnership that has purchased the 12-story office building from Connecticut General Life Insurance Co.
"We're looking forward to participating in what looks like a Hawaii economy that has some strengths and is going to continue to grow," said Gordon Hess, president of Ellis Partners.
The deal comes as neighboring real estate activity has been on the upswing with retail and residential development on the former Victoria Ward Ltd. properties and the University of Hawaii's $150 million John A. Burns School of Medicine, said Daniel Dinell, executive director of state Hawaii Community Development Authority.
"Any kind of real estate activity in Kakaako is really a validation of HCDA's efforts to make Kakaako a great place to live, work and play," Dinell said.
Built in the 1960s, the office building located at 677 Ala Moana sits on leasehold land owned by the Kamehameha Schools. The building was named after the Gold Bond Stamp Co., a Minneapolis-based company that was its main tenant for years.
A partnership that included local developers Dick Gushman and Duncan McNaughton took over the building in 1989 before turning it over to Connecticut General Life in 1996.
Although Ellis Partners has not revealed plans for the building, the company was founded in 1993 for the purpose of acquiring and developing commercial real estate equities and providing asset management services. Ellis Partners, which has most of its holdings in Northern California, has acquired and developed assets valued at more than $1 billion.
Oahu's office market has been stagnant for years, but an improving economy combined with low interest rates and a greater expectation for returns has spurred an investment cycle, said Mike Hamasu director of consulting research for Colliers Monroe Friedlander.
"There is still plenty of mainland money coming into the market and these deals are attracting a lot of attention," Hamasu said, adding that increased publicity has caused more mainland investors to eye the market.
The metropolitan Honolulu gross average asking rental rate has climbed to $2.22 per square foot a month, the highest it has been since 1999, said Jeffrey Hall, senior director of research at CB Richard Ellis.
With no new construction and or delivery of office space expected in the next five years, vacancy rates will continue to decline, likely causing asking rental rates to increase by 10 percent to 20 percent in the next 12 to 24 months, he said.
With the strong economy and the possibility of collecting higher rents, sellers are making more office space available to buyers, Hamasu said.
The trend is evidenced by the number of properties that have had recent activity, including Harbor Court, the Davies Pacific Building, the Pan Am Building, the Pacific Business News Building, Waterfront Plaza and others.