During my two decades in Japan, every summer I traveled to Honolulu for our family vacation. After the flight from Tokyo, I would drive on Nimitz Highway, looking at miles of rusting warehouses and used-car lots, along with hundreds of single-wall homes and walk-up apartment buildings. And on every trip, I would ponder: Why hasn't anything changed since I first moved to Kalihi a few years after Statehood?
When I moved to Tokyo in 1991, I saw acres of old buildings and tiny streets in the middle of a vast metropolis. One by one, I witnessed hundreds of family-owned parcels assembled and redeveloped into projects such as Roppongi Hills, Tokyo Midtown and, more recently, Azabudai Hills.
The contrast was staggering: old Tokyo residential neighborhoods becoming new mixed-use districts with retail, restaurants, entertainment, hotels and, most importantly, new housing.
I was witnessing a different development process.
Why didn't Hawaiʻi develop an equivalent process?
During my Hawaiʻi visits, over lunch with friends at Bishop Street law and banking firms, the conversation would return again and again to what they regarded as the Holy Grail of Hawaiʻi's economic discussion:
- How do we get more visitors?
- How do we manage tourism's impacts?
- How do we diversify away from tourism?
- How do we create more jobs?
In hindsight, perhaps these questions started from the wrong place.
Of course, tourism is the obvious economic engine. But Hawaiʻi also has generationally accumulated private wealth, much of it embedded in real estate — which is a role rarely discussed in Hawaiʻi’s economy.
Families own:
- land
- commercial properties
- apartments
- ground leases
- development sites
Much of this wealth is invisible in conventional economic-development discussions.
Hawaiʻi has two economies: the visible economy of visitors and the invisible economy of accumulated local capital.
Yet being “invisible” does not mean that Hawaiʻi families are necessarily poor in wealth. Instead, they are often heavily concentrated in one form of wealth: land and real estate.
Compare that with wealthy families in larger Mainland economies or internationally connected regions. Many have diversified their fortunes into operating businesses that produce revenues well beyond their home markets — like consumer or food products.
A family business in California or New York can build factories, distribution networks or brands that sell around the world. A small country or region does not necessarily have to be a limitation.
Switzerland is an instructive example. With a population of only about nine million — roughly nine Hawaiʻis —globally recognized Swiss firms like UBS, Rolex and Novartis remind us that the size of a domestic market does not determine the potential scale of a business.
Hawaiʻi's challenge has been different.
Generations of Hawaiʻi families accumulated wealth primarily through land and real estate. That created long-term wealth, but it also created concentration.
A $50 million property portfolio is not the same thing as $50 million in cash, or a global operating company generating $50 million in annual revenue.
That distinction becomes especially important when a family owns a valuable property but needs capital to improve it.
Selling the property may conflict with family legacy, stewardship, future generations, emotional attachment, and long-term appreciation.
I recall sitting in the Castle & Cooke boardroom in the early 1980s and listening to the CEO discuss how the company owned thousands of acres of land but had difficulty finding the capital to develop it to its “highest and best use.”
If a major Hawaiʻi landowner with institutional relationships and access to Mainland credit lines could struggle to finance development, what happens to a family that owns a single Waikīkī retail property?
The issues are not theoretical.
One family member wants to renovate the building. Another wants a distribution. Someone else wants to buy a house.
These are not abstract questions of operations or return on investment. They are real family decisions being made today in Nu‘uanu, Mānoa, Hawaiʻi Kai and communities throughout the Islands.
The challenge for the next generation of Hawaiʻi families may not be creating wealth.
It may be learning how to steward it.
The founder's philosophy — “Never sell the land” — worked remarkably well for a generation. Land provided security, income, appreciation, and family continuity.
But what happens when the founder is gone and the property passes to five children, 12 grandchildren and eventually 30 beneficiaries?
The circumstances change: multiple heirs, fragmented ownership, increasingly complex properties, capital requirements, redevelopment opportunities, and housing and community pressures.
So the question evolves.
Not: Should we sell?
But: How can we make the asset more productive while preserving long-term family ownership?
Wealth preservation asks: How do we keep what we have?
Capital stewardship asks: How do we responsibly deploy what we have for the next generation?
Perhaps the next evolution is to think of family land not simply as an asset to hold, but as a form of Neighborhood Capital — capital capable of participating in the long-term development of the communities around it.
That brings me back to my two-decade frustration at the start of every Hawaiʻi vacation.
What happens when Hawaiʻi's greatest untapped economic asset is not the monthly visitor count but what already exists in family balance sheets across the Islands?
Most importantly, what could Neighborhood Capital mean for Kalihi-Pālama, a historically overlooked community strategically sited between the airport and Waikīkī, Hawaiʻi's economic engine?
If the capital and the land are already here, why aren't we seeing more large-scale, locally rooted development?
Perhaps Hawaiʻi does not have a shortage of capital, land, or expertise.
What it may lack is a process for bringing them together — patiently, professionally and at a neighborhood scale.
This is the inaugural column in Ray Tsuchiyama’s series exploring one central question: How does Hawai‘i use the wealth and land it already has to create its next economic future? He can be reached at ray@guild.im
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