Honolulu business and political leaders are pushing to create a new special downtown business improvement district, similar to the one governing Waikīkī, to add more safety, sanitation and security to a once thriving neighborhood that has never fully recovered from the Covid-19 pandemic.

The idea is in its infancy, and it’s far from clear whether it can gain the support from a majority of property owners needed to pass a city ordinance establishing the district. But the initiative has the backing of Tradewind Group, the parent of Island Insurance, and its influential founder, Colbert Matsumoto. 

Tradewind is launching the idea at a breakfast today co-sponsored by Hawaii Business Magazine. Panelists include Honolulu City Council member Tyler Dos Santos-Tam; Trevor Abarzua, executive director of the Waikīkī Improvement District and Christine Camp, chief executive of Avalon Group, who wants to redevelop underused office buildings into condominiums.

Downtown is seeing new signs of life, thanks to investors like Camp, Dos Santos-Tam said. He hopes to harness that into a coherent push.

“The stars are aligning to really start an exciting upswing for the downtown area,” Dos Santos-Tam said. “The one thing missing is a coordinated effort.”

Chris Fong, a senior investment associate at Tradewind Capital who is moderating Wednesday’s panel, said the community needs to reclaim common spaces that have fallen into disarray.

“When we take care of our public spaces it can create a huge positive impression on the neighborhood as a whole,” he said. 

Another goal: for Fong’s generation of 30-something executives “to have that vibrant downtown” enjoyed by previous generations, he said.

More Than A Tenth Of Downtown Office Space Is Vacant

Downtown Honolulu has suffered the fate of many urban centers in the past several years. The Covid-19 pandemic sent people from offices to work from home, and many never returned to the offices, said Mike Hamasu, consulting and research director for Colliers Hawaii, a commercial real estate firm.

When it was time for commercial tenants to renew leases, he said, many opted for smaller spaces. The result was a spike in vacancies. That has evened out, Hamasu said, as investors like Camp have acquired office towers to convert to condos, taking swaths of office space off the market.

The vacancy rate for office space in Honolulu’s central business district has stabilized at 12.8%, for the third quarter of 2024, according to Hamasu’s most recent market report. That’s slightly lower than the previous quarter, Hamasu reported, and below national averages.

Still, the overall picture downtown isn’t pretty. 

As chairman, president and chief executive of Bank of Hawaii, Peter Ho has seen the changes. The bank’s massive headquarters is located on King Street between Bishop Street and Fort Street Mall, the once bustling pedestrian arcade that typifies what’s happened to the neighborhood. Walmart, Ross Dress For Less and Long’s Drugs — three of the area's largest retailers — have all closed.

Like other downtown business districts, Ho said, Honolulu has been “really kind of taking it on the chin post-Covid.”

Bank of Hawaii hired additional security after a guard on duty at Fort Street Mall was bludgeoned to death with a metal water bottle in 2022, Ho said. Safety concerns also forced Bank of Hawaii to close its nearby Chinatown branch on North King Street, Ho said. 

Ho said he doesn’t know whether establishing a business improvement district is the answer. But, he said, business owners “rightfully understand that that unless we do something it’s going to be unlivable.”

Bright Spots Include Pickleball, Business Traveler Hotel

Signs of new life include Camp’s new indoor pickleball club, Pickles at Forté, set to open Monday. Located in the long-dormant former Walmart building on Fort Street Mall, the club will initially include six pickleball courts, golf simulators and, eventually, Camp says, a bar. 

“For now it’s BYOB,” she said, explaining that the liquor license approval is pending.

Camp plans to expand the Walmart building into a full-fledged pickleball center with 15 pickleball courts, four golf simulators, 20,000 square feet of retail and bars restaurants, plus a cigar bar, comedy club and sports bar. 

She’s also acquired the Davies Pacific Center and Topa Fort Street Tower to redevelop.

Boutique real estate firm Continental Assets Management is investing in downtown, too. In January 2020, the family-owned firm had an opportunity to acquire the ground lease for a commercial building on Bishop Street near the Honolulu District Court building, said Patricia Chang Moad, Continental’s vice president of operations.

The firm realized that Honolulu lacked a hotel for business travelers and set out to serve that market, Moad said. In December 2023, Continental opened its 112-room, full-service property under the AC Hotels by Marriott brand. It includes a restaurant, coffee shop, speakeasy lounge and 2,400 square feet of meeting space. 

Moad said she’s happy to bring new life to the building, previously occupied by the Remington College trade school. Plus, she said, the bet on business travelers is paying off. There’s a steady flow of travelers coming for meetings or hearings at the state and federal courthouses, banks, State Capitol and other government buildings in what she describes as Hawaii’s hub of commerce and business.

“People forget that some visitors come here to work,” Moad said.

And it’s not just big businesses. Petra Paunovic lost her job waiting tables after she broke her arm in a skiing accident last year, so she and her friend Michael Chan started an online Valentine’s Day business selling bouquets of dried roses and dollar bills folded into the shape of flowers.

This year, they’ve leased a space in the historic Arcade Building on Merchant Street. They sold close to 100 bouquets last year, Chan said. And they’re expecting their Cupid’s World Hawaii pop-up to do even better this year, now that they have a brick-and-mortar storefront. But Chan said they’ll need to wait a few weeks to know for sure.

“Most guys wait ‘til the last minute,” he said.

Not everyone is so lucky. David Choi thought he saw a good opportunity after Longs Drugs vacated its downtown location near Fort Street Mall in 2022. Near a bus stop that once teemed with commuters, the location seemed perfect for a supermarket, which Choi opened in 2023. But his 88 Pal Pal Super Market has proved a bust. 

Choi said he’s pumped $2 million into the venture, to no avail: “There’s nobody here all weekend, sometimes for three-day weekends,” he said. Or at night after 5 p.m.

On Monday, the last of his merchandise was piled onto tables for his going-out-of-business sale.

"How Many Ways Can You Skin A Cat?"

Whether creating a business improvement district will stabilize the neighborhood isn’t clear. Moad, for instance, says she already pays for extra security for her property, which benefits surrounding properties as well. But she said she’s not sure all of the nearby property owners will volunteer for an additional property assessment.

The City Council will have to create the district by ordinance and, if it chooses to do so, will face a substantial hurdle. Landowners may file written protests opposing the district’s creation. And if the owners of 51% of the land in the proposed area protest, the proceedings to create the district must cease, according to the improvement district ordinance. 

Moad commended Matsumoto for investing the time and energy on the initiative. But she said it could be a struggle to persuade enough people to agree to a property assessment. In any case, she said, there could be other options.

“What’s that saying: ‘How many ways can you skin a cat?’” she said.

Dos Santos-Tam is pursuing other ways. He’s also supporting a bill making it easier to build housing on top of ground-floor commercial space. Another would put downtown outdoor malls under the management of the city’s Department of Transportation Services, which has produced a succession of street festivals in Waikīkī. 

While Bank of Hawaii’s Ho said he would like to know more details of business improvement district plan, he said, “I’m all for whatever is going to make the place more livable and better for our employees.”