Hawaii residents face leasehold shake-up

During the next decade, leases at some 1,500 leasehold units are due to end, causing the potential transitioning of thousands of Hawaii residents.

Starting with the Kailuan, a Kailua co-op whose lease expires at the end of December, owners of some of these leaseholds inevitably will be displaced or subject to uncapped lease-rent increases. Some might even become homeless.

The Kailuan, potentially the first modern day multifamily lease surrender in modern times, has raised questions about how fee owners and leasehold tenants will fare as the market continues to transition.

Some say that the leasehold crisis of the 1990s is rebrewing. Many landowners have, and some eventually will, offer lessees the opportunity to purchase fees. Some properties, however, will be redeveloped.

The uncertainty already has begun to impact real estate purchasing decisions and pricing on Oahu and it's caused considerable angst about who ultimately will pay the price as the leasehold era comes to an end in the next 20 or so years.

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