Global Developer Bullish on Tucson & Phoenix
By David Pittman
Holualoa Companies, a Tucson-based real estate investment firm managing more than $3 billion in assets spanning the United States and Europe, has achieved a significant milestone – surpassing 35 years in business.
“Our business had fairly humble beginnings and it has been gratifying to see it grow over the years,” said I. Michael Kasser, Holualoa’s founder and chairman. “Our culture has focused on discipline, attention to detail and patience, and we’re proud to have produced superior results for Holualoa’s investors for over 35 years, through bull and bear markets and favorable and unfavorable cycles.”
Kasser began operating Holualoa in 1985 in Kailua-Kona, Hawaii. From the start, the company has focused on the acquisition, repositioning, redevelopment and disposition of under-performing commercial properties, particularly those in superior locations.
Kasser credits much of Holualoa’s success to a “detailed due-diligence process” that fully analyzes potential risks and rewards before making investments. He said Holualoa also utilizes an “intensive management approach” to continually upgrade the value of its properties, which increases tenant satisfaction, raises property occupancy and makes investors happy.
“Some say we’re too nitpicky, but it works for us,” Kasser said.
From Hawaii to Tucson
In 1992, Holualoa expanded into Arizona and moved its headquarters to Tucson. It was a period following the savings and loan crash of the late 1980s and early 1990s when the federal Resolution Trust Corporation was selling foreclosed commercial assets for pennies on the dollar.
Kasser and his wife, Beth, were first introduced to Tucson when they vacationed at Canyon Ranch. As the couple’s Tucson visits grew more frequent, Kasser and Holualoa began investing heavily in distressed properties in Tucson and Phoenix.
“I was traveling back and forth between Hawaii and Canyon Ranch,” recalled Kasser. “I suggested to my wife that maybe it was time to move to Arizona because my partners weren’t going to continue investing if I was living 3,000 miles away. Beth told me she would leave Hawaii for Tucson, but not Phoenix. So we moved to Tucson.”
Holualoa has experienced consistent growth, and has opened offices in Scottsdale, Santa Monica, California, and Paris, as well as entered into partnerships in Chicago and Washington, D.C.
Holualoa currently owns or manages more than 60 properties exceeding 6.5 million square feet. It has procured more than 180 loans totaling in excess of $2 billion from over 40 lenders.
In late 2019, Richard B. Kauffman, who had been Holualoa’s CFO since 2000, was promoted to CEO, succeeding Kasser and becoming only the second person to lead the firm.
“I was ready to pass on leadership, and Rick worked his way into the position. He’s a natural leader,” Kasser said at the time of the transition. “Rick has been an integral part of Holualoa’s success over the last 20 years. He not only has my confidence and respect, but the confidence and respect of everyone in our company. This change is part of a leadership succession plan developed several years ago, and we are well-positioned to continue our momentum under Rick’s leadership.”
Kasser said he remains active in the business, offering guidance and experience when needed.
Kauffman praised Kasser for building a fantastic company.
“Mike (Kasser) is very smart and he’s been an outstanding mentor to me,” Kauffman said. “He encourages people to speak their minds and wants to hear all sides before making decisions. He has a deep relationship with people and the communities. Holualoa is highly successful because of the culture Mike has created.”
Kauffman said the business of real estate investment demands flexibility and a willingness to adapt. “Everything is cyclical and market conditions are always changing,” he said. “We study how apartments are doing in Los Angeles and how the industrial market is doing in Phoenix. We study various product types. The when, where, why and how we invest is always changing; that’s change of orientation, but our analytical approach and attention to detail is constant.”
Though Holualoa covers large amounts of territory, it employs only 30 people, 17 of whom work in Tucson. “Our size is a strength,” Kauffman said. “We are small enough to be nimble and responsive, but big enough to commit appropriate resources to opportunities.”
That Holualoa has little turnover, “is a good reflection on the business and the quality of the staff,” he said.
Holualoa is bullish on downtown Tucson. The firm’s downtown investments have included the Pioneer Building, Herbert Residential Apartments, One East Congress and McCormick Townhomes, which was recently sold.
“Rio Nuevo is doing a great job,” Kauffman said of the tax-funded district whose board guides redevelopment efforts. “We have invested in several downtown properties and continue to look for future opportunities there.”
Holualoa recently acquired a significant share of Greenlight Communities, a Scottsdale-based company dedicated to providing high-quality, affordable rental housing. Greenlight has more than 3,000 units under development in metro Phoenix. In those projects, buildings surround common courtyards that feature a pool, fitness areas and other amenities designed to encourage interaction.
Kauffman said Holualoa is looking for sites to build similar communities in Tucson.
Holualoa is also part of a joint venture – which includes New Mountain View and A.W. Mars – that is developing Mountain View Ranch, two distinct housing neighborhoods in Vail that feature home plans ranging from 1,800 to 4,000 square feet on one-acre lots with views of the Rincon and Catalina Mountains. Fairfield Homes, Bednar Design & Construction and Del Mar Homes are the home builders.
Sales at Mountain View Ranch have increased by more than 43% over the past year despite challenging economic circumstances caused by COVID-19.
Among Holualoa’s several significant commercial projects in the Phoenix area, two stand out as extremely massive, high-profile endeavors.
SkySong, otherwise known as The Arizona State University Scottsdale Innovation Center, is billed as one of the Phoenix area’s premier economic engines. Holualoa has joined ASU, the City of Scottsdale and Plaza Companies, the project’s master developer, as development partners.
SkySong attracts cutting-edge, innovative companies to Scottsdale to connect with ASU’s Innovation Center. Five Class A, green office buildings totaling 750,000 square feet have been completed and are well-occupied. The final 320,000-square-foot building is ready to begin construction. The development also boasts more than 325 apartment residences, five restaurants, a hotel, and an extra-large shade structure that has become one of Scottsdale’s most recognized landmarks.
Holualoa and Plaza Companies are also working to thoroughly modernize and expand Park Central, the first shopping mall in Phoenix. The shopping center is being converted into office and retail space with Arizona’s tallest precast parking structure that added 2,000 parking spaces to Phoenix’s core.
Creighton University’s Health Sciences Campus is under construction and is expected to serve 900 students. A 278-unit apartment community is also under construction at the site.