More details have emerged about last week’s deadly fire at the Marco Polo Apartments condominium.
Looking at a map of the layout of the Marco Polo apartments helps to visualize what took place. The map appeared previously on the Marco Polo website.
I’ve added rough notations on the map.
Just click on the map to see a larger version.
(1) The latest reports indicate fire officials believe the fire originated in Apartment 2602. As you can see, it’s located on the mauka side of the building, facing Kapiolani Boulevard. This is the section that flames were seen from along Kapiolani.
(2) One victim died in Apartment 2615, a smaller apartment across the hall that looked out over the Ala Wai Canal and Waikiki.
(3) Two victims were in Apartment 2613, also across the hall on the makai side of the building.
Due to the location of the initial fire in 2602, it would likely have been difficult to reach the nearest fire stairwell. Firefighters later said it was inaccessible due to heat and smoke.
Here’s a news report on yesterday’s fire at the Marco Polo Condominium for those who may not have seen the wall-to-wall news coverage. I’ve seen news stories about the fire in places across the country and even internationally.
It’s terrible to lose lives in such a fire, but it could certainly have been much worse. What if that fire had broken out at night when many more residents would have been home? That’s a scary thought.
My sister’s trust still owns her apartment on the 13th floor of the building. It’s been listed for sale for a few months, and there’s no doubt this fire is going to make selling anything very difficult for quite a while.
I’m also served a couple of terms as president of a high-rise condo just up the street from the Marco Polo, so I’ve got a sense of how much work it’s going to take to get that building back to some semblance of normalcy.
First there’s the immediate need to get in and secure the fire damaged units, and start to address the smoke and water damage, then assess physical damage to the building and to individual apartments.
Construction services are already in high demand with all the new construction going on, and that’s likely to drive up prices for what’s going to be needed to address fire damage.
There will be huge insurance issues. The condominium association is responsible for insuring the structure, while contents of apartments must be insured by the owners. With insurance costs soaring, some buildings have sought out lower-cost policies. I don’t know what the situation at the Marco Polo is, but a fire this big is bound to test the limits of that insurance coverage.
There are likely to be battles between insurers over just where the building’s policies end and individual owners policies must take over.
And it’s always possible that insurance won’t cover all of the costs to restore the building’s interior and exterior, get rid of smoke and water damage, and repair electrical and other systems damaged by the fire. If there are excess costs, they will have to be charged back to all the owners in the form of a special assessment, but that will take time to sort out.
According to a website maintained by the Honolulu Board of Realtors, there were eight units currently for sale, and an addition four already in escrow. I’m guessing that those sales are going to be stalled out for the foreseeable future as the costs and uncertainties left in the wake of the fire are sorted out.
Kamehameha Schools has reportedly turned down a request from the association of apartment owners of The Kahala Beach condominium to extend the lease on the property beyond its scheduled expiration in July 2027, according to a current owner.
If the report is correct, and the decision is not reconsidered and reversed, it means the buildings and all 196 apartments will revert to Kamehameha Schools in ten years at the end of the current lease.
Apartments in the once prestige building at 4999 Kahala Avenue, located between the Waialae Country Club and the Kahala Hotel, have been selling at heavily discounted prices in recent years due to uncertainty about the building’s future.
The 196 condominium apartments, which range in size from 1,050 square feet up to 3,510 feet, still command high lease rents, despite their limited future. Lease rents for the current period are over $5,600 per month for the largest apartments, with most apartments paying at least $2,000 per month. The association has been in negotiations to set the new lease rent for the final ten year period of the lease, which begins in July, while simultaneously seeking a lease extension.
A group of Kahala Beach owners previously tried to qualify under the city’s former leasehold conversion law, which under certain conditions would force landowners to sell the fee simple interest to qualified lessees. That case went all the way to the Hawaii Supreme Court, which ruled against the apartment owners in a 2005 decision. The city repealed the law in that same year.
Both the Kahala Hotel and the Waialae Country Club are also subject to Kamehameha Schools leases. There is some speculation that Kamehameha may be considering a long-term plan that includes the eventual takeover of the entire area stretching from Waialae Beach Park to the eastern end of the golf course.
That’s certainly a question that goes directly to our situation in Hawaii. The article digs into the situation in Vancouver, British Columbia, with a history of urban diversity.
It’s midmorning on a Saturday in Richmond, a suburb of Vancouver, British Columbia, and this is maybe the 20th example we’ve seen of what locals call the “empty-house syndrome”—homes purchased by foreign nationals, many of them wealthy Chinese, and left to sit vacant. Some will eventually have occupants; Vancouver is a top destination for well-heeled emigrants. But often, the new owners treat the houses as little more than vehicles for spiriting capital out of China. By one recent estimate, 67,000 homes, condos, and apartments in the Vancouver metro area, or about 6.5 percent of the total, are either empty or “underused”—an appalling statistic, given a housing market so tight that rental vacancy rates are below 1 percent.
We certainly see those empty houses in Kahala when we walk on the beach in the mornings. Just in the stretch of houses we walk past daily, there are probably two dozen large empty luxury homes. And I’m sure there are many more empty units hidden in high-rise condominiums.
Anyway, Vancouver is experimenting with how to respond. We should be watching.
The culprit here is the mortgage interest deduction, which lets home owners deduct the portion of their mortgage payments that go to interest on their loans. It’s a financial benefit that renters don’t enjoy.
A friend has proposed a homeowner’s surcharge dedicated to funding affordable homes, and calls existing homeowners perhaps the largest impediment to expanding the housing base.
