Waikele Storage Park Tenants Offered Opportunity To Purchase

Realtor/developer Peter Savio is in the process of converting his Waikele Storage Park from single ownership to leasehold under a 99-year tenant lease that will allow tenants to purchase the space they are now renting and eliminate monthly lease rent payments.

“Our long-range plan in acquiring the property is to provide affordable, accessible storage to local and small businesses. It will take us about a year to complete this plan, which is very complex due to the size of the project and the fact that it’s a property basically used for storage and warehousing purposes,” Savio said.

“For any existing or new tenants who want to get in on the ground floor, we are offering a 99-year lease that can be purchased with a discount of up to 20 percent. Tenants who buy now will get a substantial discount on the price of their storage space and will not be paying any rent for the 99-year term of the lease.” Savio offered the example of a bunker warehouse with 4,000 square feet of storage on about 6,000 square feet of land with a market price of $300,000 that would sell for $240,000 under the plan.

It’s an unusual approach to selling a property that is itself “one of a kind.” The facility, once known as the Caves at Waikele, was utilized by the Navy for munitions storage prior to World War II. The 128 bunker-like compartments were dug out of solid rock in the lower portion of Kipapa Gulch. When the Navy cleared them out and shut them down in the late 1980s, Savio recognized their potential for commercial and personal storage, which is in short supply in the area.

The approximately 1.7 million-square-foot complex, located near Waikele Shopping Center on just under 500 acres, includes 500,000 square feet of covered space and 1.2 million square feet of open storage and yards. “The 99-year tenant lease is a variation of an old concept and offers many advantages as applied to this project,” Savio explained. “We have a few lenders that understand and accept the concept and are financing their clients. Some lenders are willing to make business loans or refinance other property so buyers can pay cash.

“For the small business, this offer is a great opportunity to reap financial benefits while securing a permanent fee simple site to store their product or equipment with a long-term lease that eliminates concerns about escalating rents or being displaced,” he continued. “The tenant lease is usually short-term and never financed. We had to develop a new lease that would also include the lender protection found in Hawaii’s land leases so our buyers can obtain financing.”

Savio noted that another facet of his long-range plan for the 500-acre Waikele Storage Park is to redevelop the portions of the property that are not for storage as native forest or for agriculture.

“This property was just bare dirt for years with nothing growing,” he said. “We recently planted a test garden at the entrance, and the plants are thriving. My dream is to create a small native forest here and I continue to look for more varieties of Hawaiian plants. What started out purely as a business has become an environmental project as well.”