HONOLULU (HawaiiNewsNow) - The state is currently paying more than $10 million to rent private office space in downtown Honolulu. Some lawmakers believe money can be saved by buying a downtown high-rise office building.
A measure going before the Senate Ways and Means Committee Monday would allow the state to purchase the 25-story building bounded by Alakea, hotel and Richard Street. It's considered prime real estate.
"This will alleviate a lot of the pressure for the state renting office space downtown," said state Rep. Mark Hashem (D-Hahaione, Aina Haina, Waialae, Kahala), one of the bill's sponsors. "We currently rent over 300,000 square feet. So this is the ideal property."
Alii Place has about 330,000 square feet of space. it's also about the same amount of square footage for a new building that the state was considering next to the old Oahu Railway Station in Iwilei at an estimated cost of $270 million.
Alii Place would join other nearby buildings that the state has purchased in the past, including Hemmeter Center across the street, and the Princess Victoria Kamamalu Building, which is finally begin renovated after sitting vacant since 2003.
Hashem said Alii Place's owners, Bristol Alii Holdings LLC of San Francisco, would be willing to sell for $90 million.
"Even at $90 million, it will save the state $2 million a year in operating costs, and it will save the state $180 million in construction costs," said Hashem.
About a third of the building is current vacant. According to real estate analyst Stefany Sofos, that means the current owners are losing money. Sofos also thinks that on the surface, the asking price may be a bit high. However, "It's always better to take an existing building versus to build new, because new is going to be a lot more expensive, and you're not going to get the quality of construction that this building has for the new dollars in today's world."
And there's location. Hashem and Sofos both said Alii Place is in a prime spot, adjacent to the State Capitol.
So far, Hashem's measure has attracted just one letter of testimony, and it came from the State Department of Accounting and General Services, which would likely move from from its current rented offices into Alii Place.
The Ways and Means Committee is scheduled to hear the measure Monday at 1:30 p.m. in room 211 at the State Capitol.