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Maui Commercial Real Estate Looks Strong at Mid-2013

Commercial lags residential, but many new properties just opened or opening soon.

July 11, 2013
Susan Halas - Contributing Writer ( , Maui Weekly

Halfway through 2013, the recession seems a thing of the past for Maui commercial real estate. New Central Maui product is coming strongly on the market--both fee simple and for lease in all categories (see "Central Maui Commercial Inventory Expands Dramatically" story at

Other sizeable ventures are beyond the talking stage, including an outlet mall on Weinberg property at the Kapalua end of Front Street in West Maui.

Wailea may be Maui's most sought-after business address, but West Maui still has the cash.

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Mario Cardone, a broker affiliated with Peake & Levoy Real Estate Services, had one of the top commercial real estate transactions in May. Though his sale was in West Maui, he is best known for his expertise in North Kīhei commercial properties. He can be reached at

The recent top two Maui commercial sales reported by old Republic National Title & Escrow Co. in their May 2013 statistics are both in West Maui.

The leading property, selling for $19 million, is the Napili Plaza near Kapalua. The retail complex consisting of over 40,000 square feet was purchased by Alexander & Baldwin.

Coming in second is a bulk sale of 13 office condo units in Lahaina's Keawe Business Center that sold for $2.1 million.

Mario Cardone, a broker affiliated with Peake & Levoy Real Estate Services, represented the buyer in the transaction. He said his client was a West Coast developer who intends to relist the units individually "at market." The buyer paid cash.

The office complex was recently constructed in the new Lahaina Business Park above the highway. The building had been taken back by First Hawaiian Bank. Alan Yap at CBRE-Hawai'i represented the seller.

Though Cardone's big-ticket transaction for the month was on the West Side, he is best known as one of Kihei's top commercial realtors. He's a pro, especially when it comes to the commercial condos in North Kihei--such Kihei Commercial Plaza.

Cardone saw leasing as leading the market, but "doing the numbers," he still recommended looking at buying. In a June phone call, Cardone commented that only a few bargain fee-simple distressed properties remained. When these are gone, he expects prices to float upward to more resemble their prior, pre-recession levels.

Cardone thinks the best outright buy in North Kihei was a pair of commercial condos going for "two for the price of one." The asking price is $450,000 for both. He added that this was not his listing, but he thought it was the best value at the moment.

As for lease rates, Cardone said prices for commercial space in North Kihei ranged from $1 to $1.75 per-square-foot per month with an additional 35 cents to 67 cents per month added to the base for common area maintenance (CAM) plus tax.

"With interest rates where they are now," he observed, "it's cheaper to buy."

He said current prices are, in some cases, "20 percent below replacement value."

Cardone does not look for rapid appreciation in North Kihei commercial values, but he does think that they will "over time, more closely come to resemble 2008" with "tourism and visitor arrivals" in Kihei, Wailea and Makena as the driver.

Though most, like Cardone, think the commercial outlook seems brighter all the way around, some professionals are reluctant to say it will last.

Cardone put forward a more modest goal of recovering prices set in 2007-08.

He reminded would-be buyers that commercial loan rates--"always higher and shorter term" than their residential counterpart--have already bumped up and appraisals are still coming in low. Those without cash or significant existing equity are still finding it hard to qualify for loans of any kind. However, he said, other less traditional financing options are still available.

There is still ample (if no longer deliciously cheap) leasing inventory available. Lease terms are no longer as short, nor as flexible as they have been in recent years.

Editor's note: Susan Halas is a licensed Hawai'i real estate broker.



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