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Residential Rentals Scarce, Commercial Space Gluts

New video takes a hard look at a difficult question.

June 3, 2014
Susan Halas - Contributing Writer , Maui Weekly

Are you an employed single person or perhaps a family looking for a place to live? And have you found that even though you work, have a decent credit score, local references and don't do drugs or party into the wee hours, it's almost impossible to find a rental on Maui?

You are not alone.

Just a few years ago during the recession, rentals were plentiful. Tenants could pick and choose. There was a big selection and terms were somewhat flexible. Housing opened up as employment shrank and workers left the island in droves.

Article Photos

This small rental house on Lower Main Street in Wailuku has a mortuary on one side and a motorcycle shop on the other. It fronts a busy road with an auto-wrecking yard across the street. It’s listed as two-bedroom/one-bath house, $1,300/ month plus utilities and security deposit. No pets, not HUD approved, tenant pays all utilities.

That was then, this is now.

In better times, that inventory has all but dried up. Those seeking accommodations today find there is little or nothing offered, and for what is available it is buyer beware, because scams and rip-offs abound.

Craigslist has largely replaced the classified section of the newspaper as the place to look for rentals. Each day, there are new listings and new rants--rants about greedy landlords, rants about people who won't accept children or pets, rants about fakers who take deposits on units they don't own, rants about what it's like to try to find a place to live on an island where demand exceeds supply. It's a scenario where rents are escalating and small, rundown properties get top dollar.

Just ask Joe Kent. Until the end of May, he worked as an elementary school music teacher at King Kamehameha III Elementary School in Lahaina. He lived in a 300-square-foot rented studio. When he first occupied the unit a few years ago, his rent was $700 per month. It bumped up $100 per month each year. When he decided to move, he was paying $1,000 for the same tiny space.

By the time you read this, Kent will be on Hawai'i Island, where he thinks the cost of living is more reasonable and he hopes he'll be able to get twice the housing for half the price. But Kent, unlike most people, didn't just grumble about the situation. He spent four months making a documentary about housing on the Valley Isle, and posted it as a YouTube video on Craigslist (www.youtube.com/watch?v=00TMKaEumLA).

Kent's effort is thoughtful, wide-ranging and provides interviews with a number of people who have extensive knowledge of the subject. It leads the viewer to the conclusion that the high cost of rentals isn't just about "greedy landlords," but an entire system that's out of whack--the rules, the regulations and the people who enforce (or don't enforce) them.

It is an hour-long excursion into reality that avoids easy answers and provides a great deal of factual information. Within that framework, Kent hits most of the main factors that contribute to the currently scarcity of local housing.

First, he notes that less than 5 percent of the land on Maui is actually available for use as housing. The rest is off-limits. Then he points out that Hawai'i has six levels of land use regulation (and is adding more all the time).

Because not very much land is available for housing, and because it takes housing a very long time to get the green light from the powers that be, very little housing has actually been built except at the upper end of the market.

A few years ago, a law was put in place that mandated 50 percent of every new residential project must be allocated to "affordables." Though at the time it was hailed as a victory, in reality, the requirement backfired and served to suppress new construction. At 50 percent, the numbers never worked, little was built and developers went elsewhere, making existing housing just that much more expensive.

The people Kent interviewed discuss the zoning and codes written at a time when suburban sprawl and dependence on the car were the working models for planning, and how these regulations have crippled attempts to design with more sustainable growth in mind.

They talk about modular and prefabricated housing on the Mainland and explain why few of these low-cost, high-quality advances have ever reached Hawai'i. In fact, the viewer discovers that in many cases these buildings are forbidden here. Also mentioned are various ruses relating to homes built on agricultural lands and what happens when some farms are farms but other farms are really bogus.

Braver than most, Kent not only looks at the inconsistencies and antiquated practices that hold the whole jury-rigged system together, but also explores the question of homelessness. When there is no place for middle class people to live (despite having jobs and money), it is not surprising that poorer people find themselves on the street, living rough or worse.

One of the most interesting segments is an interview with a Mauian who thought he might make a modest contribution by providing a campsite for the use of travelers and transitional housing for homeless. After a prolonged effort, the man discovered his good intentions cost him thousands of dollars and raised the ire of his neighbors. The project was eventually abandoned.

The Kent video is an honest attempt to take a hard look at a difficult question--to see the big picture. Even though it's filtered through a Libertarian "free market" perspective (see "Joe Kent: Reluctant Libertarian" on front page), it's a very credible effort using his own time, money and resources.

Viewers might not share his economic beliefs, but taken as a whole, it goes a long way toward explaining why--though there is land as far as the eye can see and almost all of it is empty--most discussions about local housing are still mainly smoke and mirrors.

Airbnb lists 1,000-plus units on its travel accommodations site

What he doesn't talk about is the most recent wrinkle in vacation accommodations known as Airbnb. This Internet service (and many recently launched similar sites) seeks to match travelers with people around the world who have a spare room or cottage for rent. The media has paid lavish attention to this new development, touting it as a more enjoyable, authentic and less expensive travel experience.

Airbnb, founded in 2006, has met with almost universal acceptance and rave reviews from travelers, and those with an extra room in high tourism locations sing its praises. Far less enthusiastic are the city fathers in those locales, who regard this massive upsurge of mostly illegal accommodations as impossible to regulate, tax or supervise.

On Maui alone, Airbnb displays over 1,000 properties. Virtually all of them include detailed photos, and many have received enthusiastic reviews. Categories include homes, rooms and shared rooms. Prices range from minimal to astronomical.

But there is no question that zoning or no zoning, rules or no rules, policy or no policy, existing hotel and time share or not, this is indeed the shape of the future, and very likely a major reason Mauians can't find a place to live on the Valley Isle is somebody else from somewhere else wants and is willing to pay more for it than they can.

The travel and business pages of the last few years have endless comments, statistics and analysis of this trend, and most seem to think it's here to stay. Even more recently, there have been pronouncements by the site's founders that they intend to expand their new business model even further to compete with and rival existing travel and hospitality empires.

Huge, up to code, brand new and empty

In mid-2014, there is another real estate paradox to ponder. Even as rental housing disappears, there is a glut of commercial space. For example, that big, new Maui Lani complex anchored by Safeway in Wailuku opened in September 2013. Now going into the summer of 2014, every other space in the massive complex remains vacant. There are no tenants--not a single other business has opened. It is huge, up to code, brand new and empty.

Look around Maui. In almost every mall and shopping center there are multiple vacancies.

Within the last 60 days, a number of long-established eateries have closed, including Dragon Dragon in Kahului, Stella Blues in Kihei and the venerable Moose McGillicudy's in Lahaina. All three were longtime food and beverage establishments that could no longer make a go of it in the new scheme of things.

Yet despite the high vacancy and failure rate--where commercial space is concerned --it's still full speed ahead. A new big market is nearing completion behind the new Longs on Waiale Road. Right across from Longs is an almost identical Walgreen's--two corners, two brand new drug stores and hardly any shoppers.

Meanwhile, shopping center developers in Kihei are working their way through the entitlement process. Their goal is more and bigger commercial space in South Maui. In addition, thousands of square feet of new commercial space are either being built or planned in other parts of the island.

But one thing is certain: The people who are living in their cars won't be shopping there.

 
 
 

 

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