Selling Commercial Land in Hawaii (The Easy Way)

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Selling Commercial Land in Hawaii (The Easy Way)

Bart Waldon

Selling commercial land in the island paradise of Hawaii offers a blend of utopian beauty crossed with challenging economic realities. Though scenic vacant acreage often conjures visions of luxury resort hotels or exclusive shopping plazas for sellers eyeing property turnover profits down the road, executing deals amid a tourist-driven yet isolated island state local market proves uniquely tricky without market fluency.

Navigating special agricultural, environmental and cultural considerations surrounding “aina” (sacred land) usage on the Hawaiian Islands demands patient yet informed navigation. The indigenous host culture with spiritual ties to land ownership requires foreigner or mainland seller sensitivities many first-time commercial parcel investors overlook when targeting quick flips for sizable returns rather than respectfully communicated long plays.

This overview examines nuances driving Hawaii commercial land transactions to equip savvy sellers for smoother closings among the island chain’s distinctive yet potentially lucrative investment landscape. Embrace the local pace needed to thoughtfully meet stewardship obligations while still attracting buyers through your unique offerings amid limited supply constraints.

The Alluring Yet Deceptive Face of Paradise

Beyond just the sherbet sunsets over dramatic cliffs and waves mythologized on tourism brochures, raw statistical data confirms high demand desirability for commercial property in the Aloha State among individual and corporate investors alike. Consider compelling indicators like:

  • Among U.S. states, Hawaii maintains the highest average land values per acre topping $222,400 – nearly four times the national median price point according to USDA research.
  • Over 9.5 million visitors pumped $17.8 billion into Hawaiian economies during 2019 alone based on state tourism authority statistics, demonstrating immense hospitality industry commercial site project ROI potential on the proper acreage despite remote geography.
  • With nearly a third of Hawai’i land mass already locked into conservation land trust protection status limiting developable supply, combined with lengthy permitting delays, new commercial site turnover remains restricted keeping values irrationally lofty longer amid fiercely competitive bids.

So clear cutsite profit opportunity appears self-evident on paper given baked-in tourism demand drivers. Yet traditional property investment models crumble for those unprepared for Hawaii’s unique acquisition conditions requiring patience and cultural immersion rather than brute flipping force over indigenous concerns.

Distinct Deal-Making Considerations in the Islands

Beyond the sunk cost sticker shock per vacant acre, closing viable Hawaii commercial land deals demands sensitivity toward several key factors that can derail impatient investors seeking mainland-style high velocity site flips to ever-awaiting development buyers. Savvy sellers observe caution around realities like:

Strict Zoning Limitations 

Just 30% of total Hawaiian land area allows any commercial zoning permissions at all after indigenous reservations and conservation sites claiming most remaining acreage. Selection proves extremely limited aiding approved parcel value retention. Home to endangered species or ancient remains introduces more hurdles still.

Complex Permitting 

The islands feature some of the longest wait times nationwide for development permitting approval stacking years upon years even before groundbreaking shovel touches soil as multiple agencies weigh ecological impacts or sourced material transport difficulties.

Strained Grid Infrastructure 

Hawaii’s remote island electricity, water and road systems remain overtaxed by swelling tourism capacity demands on finite space. Costly major utility infrastructure upgrades accompanies new builds, inflating end project budgets.

Litigious Outcomes 

Failure to conduct adequate environmental or archaeological review during planning have sunk major Hawaiian projects mid-development after native Hawaiian lawsuit injunctions regarding disturbed burial sites or endangered species habitat damage tied the courts up for years while sites deteriorated through delays.

These unique local traits means those flipping commercial sites to major mainland ventures or regional developers cannot simply parachute standard operating processes onto Hawai’i but must respect engrained limitations and cultural concerns to maintain trust with historically marginalized native voices who still watch land issues extremely closely as sacred ancestral legacies while wielding power to veto insensitive selections. Invest time learning regional nuances.

Maximizing Deal Potential in the Aloha State

Once acclimating expectations to Hawaii’s pace and priorities around commercial land swaps, attractive risk-managed opportunities still exist for selective investors embracing the islands on their own terms through choices like:

Seeking County Guidance 

Accessible local county advisors provide guidance navigating zoning codes, ideal permit order and potential fast track opportunities suited for target parcels to streamline success probabilities once site selection completes. Become their student early.

Prioritizing Flex Zoned Acreage 

Certain flexible zoning classifications better accommodate variance permit requests from county authorities as needs dictate without full rezoning pursuits. Options retain selling advantage.

Considering Creative Earnouts 

If direct site flip dreams fail with picky developer buyers, pursue contingency-laced deals allowing a cut of future post-build revenues over longer-term infusions after transfers as projects mature rather than demands for lump sums upfront now before securing permits and plans. Be patient.

Engaging Locally 

Gaining community trust and demonstrating willingness to adapt respects Hawaiian management traditions and cultural figure decision-making authority over land use changes in their ancestral areas. They will reciprocate guidance navigating regulators and local partnerships if engaged transparently as stewards rather than nameless foreign capitalists.

The challenging aspects should not deter investment out of hand - but rather steer strategy toward smart partnerships and planning suited for the islands on their own terms.

Mistakes to Avoid While Selling Commercial Land

Selling commercial land requires strategic thinking and planning to maximize the value from potential sales. Unfortunately, inexperienced or naive land investors often sabotage deals by ignoring common yet avoidable mistakes that derail transactions once learning processes commence.

Heed warning signs around key blunders like:

Failing To Verify Zoning Restrictions

Seemingly ideal 10 acre parcels for prime retail developments won't attract any buyer interest when zoned strictly for agricultural activities without extensive rezoning pursuits. Always validate:

  • Designated commercial zoning alignment
  • Residential density allotments if intended for housing
  • Setback minimums hampering construction plans

Early confirming chosen site selection flexibility prevents sunk costs into non-viable acreage. Regional planning departments help navigate codes.

Avoiding Environmental Due Diligence

Picturesque meadows could actually classify as protected wetlands. Forested slopes may shelter endangered species habitats. And remote lands could still contain undiscovered artifact troves. State and federal agencies wield power torpedoing sales once discoveries emerge if due diligence skipped before listing sites.

Marketing Before Securing Access

Limited highway frontage, shared easements or lack of utility connectivity all dampen site integrity for development buyers expecting flexibility. Failing to document guaranteed perpetual access rights across the property also introduces doubt on claims made stirring reluctance. Leave no ambiguity on layouts and easements.

Pricing Without Appraisals

Randomly guessing site values based on wildly inclusive “per acre” area averages won't yield accurate pricing aligning with a specific parcel's limitations noted above. Seek third party appraisals benchmarking against comparable deed transfers nearby to list competitively.

Final Thoughts

In conclusion, selling commercial land in Hawaii can be a straightforward process when you follow the right steps. By understanding the local market, setting a competitive price, and leveraging the power of online listings and professional networks, you can attract potential buyers efficiently. Working with experienced real estate agents who specialize in commercial properties can further streamline the process, as they have the expertise and connections to help you navigate the intricacies of the Hawaiian market. Remember to showcase the unique features and potential of your property, and be prepared to negotiate with prospective buyers. With the right approach and a bit of patience, you can successfully sell your commercial land in Hawaii and move forward with your business or investment goals.

Frequently Asked Questions

What percentage of land in Hawaii carries commercial zoning?

Roughly only 30% of total acreage in Hawaii allows for any commercial zoning designation currently. The remaining percentage occupies indigenous reservation lands and environmental conservation space limiting development.

How long does permitting take for new site projects typically?

Depending on size, scope and environmental review needs, securing essential permits for new Hawaiian commercial site developments often spans multiple years from initial filing through final approval - far outpacing mainland contexts.

What special site features help expedite permits?

Selecting acreage located within federal opportunity zones, existing commercial corridors or distanced from environmental habitats like wetlands helps ease permitting approval loads over pristine sites necessitating lengthier review.

What legal risks await poor site due diligence?

Improper cultural artifact or burial site disturbances sparked by rushed site development draw native Hawaiian lawsuits halting all progress while in prolonged court deliberations - emphasizing the need for immersive diligence over standard evaluations.

What flexible deal terms help buyers acquire sites? 

When direct site flips fail alluring ready investors, consider contingency-based “earnout” arrangements allowing developers or hospitality ventures to purchase sites via revenue sharing over fixed lump sums - creating more creative pathways toward ownership without 100% bank financing.

About The Author

Bart Waldon

Bart, co-founder of Land Boss with wife Dallas Waldon, boasts over half a decade in real estate. With 100+ successful land transactions nationwide, his expertise and hands-on approach solidify Land Boss as a leading player in land investment.


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