West Oahu Shapes its Future

What is next for businesses in West Oahu? Five panelists in retail, food processing, property management, health and development on the West side set out to answer that question at PBN’s West Oahu Means Business panel on May 9 at the Salvation Army Kroc Center Hawaii.

Each industry faces distinctive challenges with workforce and tenant retention, transportation and distribution, but share similar concerns.

One common frustration is that infrastructure isn’t keeping up with industry. Since opening his ranch in 2016, third generation rancher and owner of Kuona Cattle Co. Bobby Farias struggles with the overcrowded Honolulu Harbor, which he said often distributes shipments late that then have to be driven across the Island. His solution was one that could mutually benefit other companies with similar distribution frustrations: making use of the West side airstrip and harbor in Kalaeloa, a suggestion that drew applause from the audience.

“We are a unique company, but for a lot of our problems, business or other, the answer is unique to Hawaii a lot of times in how it adapts specifically to the needs of Hawaii,” Farias said. “I think it’s terribly under utilized. I have frustrations down there, and we all do. We have outgrown the harbor downtown ... Its’ a daunting problem to experience every Wednesday.”

Ideally, this West side asset could save companies like Kunoa Cattle or D.R. Horton-Schuler Homes in distribution costs, as the shipments would arrive in the West side and stay in the West side.

“It is an innovative thought to utilize Kalaeloa Harbor differently,” Tracy Tonaki, senior vice president of D. R. Horton said. “The cost of construction keeps rising so we have to be really creative on how we are going to be building homes in the future.”

In 2015, the state Department of Transportation, which oversees the Kalaeloa Barbers Point Harbor, developed a “KBPH 2040 Master Plan” that included an estimated $257 million worth of improvements over 25 years.

“It takes a variety of solutions ... and creative collaboration between experience and new, fresh ideas,” Mele Heresa, vice president of business development and marketing for Hawaiiana Management Company, said.

Our panelists had more than infrastructure on their minds. Here are highlights of how they intend to make their businesses more efficient and successful.

Recruitment and retention

For Farias, workforce development and retention is a difficulty in the cattle industry, so Kunoa Cattle is training young cattlemen and women to be involved in the company. According to Farias, he has had to get creative with recruiting and training.

”For us it’s really the training part,” Farias said. “Getting those kids to think outside the traditional box of a career, but then to show them the opportunity that this will be around a long time ... Cattle in Hawaii has been part of the social cloth that built Hawaii, there is a longevity to this business. We just have to build that workforce up.”

Part of that solution for Kunoa Cattle has been improving employment packages and providing a van share program option for workers without transportation to get to and from work.

“We had to build a vision,” Farias said. “We have to build it for the rancher to produce product, for the restaurants here to buy local, we also had to build our vision for our employees to see that there is a future in this.”

Jeffrey Killeen, medical director of the oncology service line at Hawaii Pacific Health, said that even in the medical profession he has seen issues with recruitment, which he attributes to the changing style of medicine.

“We’re having to adapt to a new type of physician,” Killeen said. “One with more desire for structure. It’s not so much that they want to hang a shingle and be independent, they want to be associated with an organization and not worry about some aspects of practice. That’s a change for a lot of practices.”

Recruiting has been on Tonaki’s mind since the last recession, when she realized that a new approach to hiring was the answer. Instead of posting a narrow job description D.R Horton leaves it broad.

“When we try to fill positions, it’s taking longer to do so because we have a general description we are trying to fill. But we are finding it is more successful when we take our time to hire someone and tailor the job description around the potential talent we see in this person,” Tonaki said.

Hawaiiana Management, comprised of 87 associations in West Oahu representing more than 13,000 owners, is also taking a different hiring approach, after having difficulty attracting and retaining people already in the management industry.

“We have a unique and diverse training program that we put all of our managers through,” Heresa said. “We try to find folks that care about service and care about people, and then we can teach them whatever they need to know about property management. If we start with that we find that we put a really great team together.”

Where others see West side workforce development challenges others, like Emily Reber Porter, chief operating officer of The MacNaughton Group, have witnessed just the opposite.

“We’ve heard mostly from our tenants [at Kapolei Commons] that there seems to be some [hiring] challenges, but more so in town then on the West side,” Porter said. “This could be because more people are living on the West side and there are more opportunities to work here now.”

Growing pains

Hawaiiana Management is finding that with the growing younger population on the West side, getting association board members to participate is a challenge for them. The biggest component to that, according to Heresa, is finding people with “the time and desire to volunteer their time to learn the all the laws and requirements of the association.”

“[The process] can be overwhelming,” Heresa said.

Airbnb is a hot topic for homeowners managed by Hawaiiana. A bill that would require vacation rental platforms to register as tax agents in Hawaii and collect and remit general excise and transient accommodation taxes on behalf of their hosts is awaiting Gov. David Ige’s signature. As of now, there are a lot of blurred legal lines when it comes to being an Airbnb host in Hawaii, especially with associations. Hawaiiana is facing the challenge through proposals of different projects that accommodate homeowners on both sides of the Airbnb conversation.

“Until there are clear, defined rules it is a challenge for us,” Heresa said to the audience. “We have projects that are in support and those what are not quite as supportive. It will come down to each community and the law setting a standard so everybody has clarification.”

Farias touched on how changing his business model to rely more on contracts and interact with the end buyer instead of the middle man helped his business.

“Kunoa was designed around a particular need,” Farias said. “Our markets were shipping cattle out of state. Anytime you’re not engaged in the end user, the price is very volatile.”

D.R Horton is looking into a sustainable future of construction on the West side since the company is heavily reliant on the distribution chain to get material here.

“If you think about building materials to build a home, the majority of those come from out of state because we don’t manufacture those here,” Tonaki said. “Should we be looking at manufacturing more things, or opening another harbor in which we can bring more product in?”

Tonaki mentioned how a company in Austin, Texas, is currently 3D printing homes, mostly for impoverished areas around the world.

“Is that something in 10 years we should be thinking about doing here?” Tonaki said. “We should be looking at any innovative solution of building homes in Hawaii.”

Future of West side industries

In December, PBN looked at how Kapolei Commons maintained a 100 percent occupancy rate. Since opening Kapolei Commons in 2016, The MacNaughton Group has been increasing tenants by adding on to the building.

“We will being doing that for at least 15 more years to come,” Porter said. “We partner with the tenants, ones that really want to be a part of Kapolei Commons, design a space and throughout the relationship we make sure they are doing well in the space.”

Porter attributes the success to the partnerships built with the tenants, and the evolution of shopping as more of an experience than an errand.

“It’s the mentality that we are in it together— that allows us to keep a low vacancy rate and high occupancy rate,” Porter said. “As we saw the retail trends shift a little because of advent of online shopping and Amazon, we found that people like to add some other experiences into their shopping center visit.”

Part of that experience is cultivated by restaurants. Several years ago the MacNaughton Group had difficulty finding local restaurants to plant roots on the West side in Kapolei Commons, according to Porter. Recruiting restaurants is no longer an issue for The MacNaughton Group, as the West side continues to grow and develop.

The only currently vacant spaces in the Commons include former Genki Sushi, which moved into a bigger space near Ulta Beauty and the soon-to-be Marshalls, and the Eating House 1849 that recently closed. Porter hinted that another restaurant will take its place, and would not budge on naming the tenant, but confirmed that the establishment is slated to open later this year.

Killeen predicts that the future of the medical industry on the West side lies in primary care and sub-specialties. He said that oncology programs are moving away from housing many treatments, programs and equipment in a single building. The solution, according to Killeen, is doctors partnering together across a range of practices.

“The West side represents the perfect example of the challenge in modern oncology today,” Killeen said. “It’s time to start thinking about prevention and screening programs that are proficient so we are using resources appropriately. At the same time there are pockets in the West side that are underserved. One approach does not work for both.”

Another question raised was what to do with the open space on the West side and how the former sugar cane fields should be developed. For Tonaki, the future of construction on Oahu lies on the West side. In 2005 D.R Horton acquired 1,550 acres of land for $71 million on the Ewa Plain for Hoopili. The first set of keys were handed out in July of 2017.

“Since then we have passed the keys to over 500 families that call Hoopili home,” Tonaki said. “We are seeing the vision we had 12 years ago for Hoopili come to life.”

D.R. Horton has six development phases in some form of completion, with some owners already living in condominiums or single-family homes. The six development phases represent 2,000 more residential units and commercial condominiums breaking ground in a project called Kohina at Hoopili. The condominium development is one block away from the future University of Hawaii West Oahu rail station.

“We are working together with HART to get a roadway built that goes under the rail station that connects to Kualakai Parkway,” Tonaki said.

Some projects are still on drawing board for now. Tonaki said that the developments will likely bring in more homes and commercial properties.

“It’s our goal to provide the widest range of home buying opportunity to the West side,” Tonaki said. “The need for housing is so great that its really become a collaborative effort.”

Each panelist faces challenges unique to their industry, but between them is a shared goal: securing the West side’s future.

“Economic drivers is what we need in all of our sectors,” Farias said. “It’s hard to lay tracks and get capital investment behind something that you can’t show the end game for. Local food systems, the size we want to get to, haven’t been around in the near past so it hasn’t been in anyone’s sights ... the thing government can get involved with is putting economic drivers in place that allow local business to flourish in a space it hasn’t yet. That’s what we need right now.”