Bob Olson, the West Coast’s most active hotel developer for over the past decade, is heading back to a familiar market—the Hawaiian island of Maui—for his latest project.
In a switch, his R.D. Olson Development won’t be building a hotel on the island, but rather an industrial building.
The Newport Beach-based firm recently broke ground on a nearly 137,000-square-foot speculative project next to the island’s primary airport, Kahului Airport, and a little more than a mile from the island’s main shipping port, Kahului Harbor.
Between the land and construction costs, the entire project, due to be completed early next year, is expected to cost close to $54 million.
It’ll be the first Class A concrete tilt-up industrial project on Maui, the second-largest island in the state of Hawaii, and is expected to serve Maui as it recovers from last year’s devastating fires in and around the town of Lahaina.
“We will be part of the rebuilding effort, as our building will be used for materials that ultimately head to Lahaina,” Olson, founder, president and chief executive of the development company, told the Business Journal.
“It’s a great development.”
Maui Locals
R.D. Olson has developed over $2 billion worth of real estate over the past 25-plus years, and reports having about $1 billion worth of hotel and mixed-use real estate under asset management.
Notable area properties under the company’s umbrella include the Lido House hotel in Newport Beach, and the Marriott Irvine Spectrum.
It’s familiar with the tourism-focused island of Maui, having built a trio of select service hotels on the island, totaling 448 rooms, since 2010.
The company’s prior projects on the island are reported to have cost over $170 million to develop, and are said to have sold for over $300 million.
Its last reported sale on the island, for the newly built, 110-room AC Hotel by Marriott Maui Wailea, took place in 2021. The hotel sold for a reported $83.6 million, or nearly $760,000 a key.
Industrial Pivot
The developer’s sister company, Irvine-based R.D. Olson Construction, has built industrial projects for others, as a contractor.
“As a developer, it is our first industrial project,” Olson said of the new project in Maui.
The company bought the land about four years ago, for nearly $10 million.
The site, located on about 6.3 acres, was initially eyed by Olson as a hotel, serving the adjacent airport. However, the company was unable to get the necessary entitlements over a multiyear period.
After the fires of 2023, it made more sense to build an industrial project, which the land was already entitled for.
Limited, Shrinking Inventory
Maui’s main industrial area counts some 5 million square feet of industrial space—a little more than the industrial base for the city of Tustin, by comparison—with a vacancy rate under 2%.
The existing industrial product on the island is “primarily prefabricated steel buildings designed to serve smaller business and owner operators,” the developer noted.
Monthly rents on the island average about $1.80 per square foot; the new project is expected to generate rents closer to $2.50 per square foot.
The market lost close to 200,000 square feet of industrial space, roughly 4% of the island’s total base, during last year’s fires near Lahaina, which is about a 25-mile drive from the new project.
Rebuilding Efforts
The wildfire took the lives of over 100 people, destroyed more than 2,000 homes, and impacted an area holding more than 800 businesses with about 7,000 employees.
R.D. Olson expects its new building, the only sizeable new industrial building under construction on the island, to help with rebuilding efforts.
“We are getting lots of interest in the building,” Olson said.
The developer says that it has been contacted by several groups, including federal agencies and national home-improvement retailers, with inquires regarding the availability of the space.
CBRE Group Inc. has the listing for the project, whose general contractor is Swinerton Builders.
The industrial development’s high cost, nearly $400 a square foot, is typical for a project on the island. Costs on Maui are roughly 1.5 times higher than those on the mainland U.S., due to issues like shipping costs and labor, with construction workers often coming from Oahu.
The developer got a roughly $33 million loan from First Hawaiian Bank to help finance the project.
Dana Point, Sedona
On the U.S. mainland, R.D. Olson remains focused on hotel development.
It’s one of three partners, along with Newport Beach’s Burnham Ward Properties and Bellwether Financial Group, heading up the estimated $300 million redevelopment of the Dana Point Harbor.
Construction work for the commercial core of the nearly 50-year-old, county-owned harbor began last month, marking the most visible sign of progress for one of South Orange County’s biggest real estate development projects in years.
R.D. Olson is planning a pair of boutique hotels at the harbor. The partnership said last month they’re aiming to get Coastal Commission approvals for the two hotel projects in the next year.
Olson is also planning the company’s first development in Arizona, at an 11-acre site along the river in Sedona. It’ll be a five-star, bungalow-style retreat for leisure travelers.
The company expects to go to the city’s planning department for approvals next month and is hopeful it can start construction by the end of this year.
