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The Honolulu Advertiser
Posted on: Tuesday, April 17, 2001

Wal-Mart Ke'eaumoku project stalled

By Andrew Gomes
Advertiser Staff Writer

Wal-Mart Stores Inc. is reassessing plans to build double-decker Wal-Mart/Sam's Club stores on Ke'eaumoku Street near Ala Moana Center after the company let a contract to purchase a development site expire earlier this month.

A spokeswoman for the Arkansas-based retailer said the company would not discuss what it called "outstanding issues" that led to the purchase agreement lapsing with the Wichman Family Trust, owner of the Ke'eaumoku "superblock."

Both sides, which say negotiations have been steady, are still interested in completing the deal, though the Wichman trust is now free to entertain other development proposals.

Wal-Mart spokeswoman Amy Hill said that neither the economy — in Hawai'i or elsewhere — nor the purchase price are among the outstanding issues.

"It always has been a complex project," she said. "We are continuing to work through these issues."

A representative of the Wichman trust said the Sam's Club division of Wal-Mart expressed concern over sales projections.

Hill said she was not aware of that concern, and would not say whether Wal-Mart is considering changing plans or is committed to the double-decker design, which would be a first for the company.

At the very least, the retailer's plan to open a 150,000-square-foot Sam's Club on a 150,000-square-foot Wal-Mart will be delayed. Previously, construction was anticipated to begin this spring, with store openings by next spring or summer.

But Hill emphasized that at this point "the deal is not dead," and said the company remains interested and "very positive about resolving the issues."

A Wichman representative said the trust is waiting for a new proposal from Wal-Mart.

It has been more than a year since Wal-Mart agreed to pay an undisclosed price for the vacant 8.5-acre Wichman parcel bordered by Sheridan, Makaloa, Rycroft and Ke'eaumoku streets.

Wal-Mart signed the deal in January 2000, and began evaluating what kind of store to build. Last August, the retailer shared "work-in-progress" plans to stack a Sam's Club on a Wal-Mart store. The combined operation would employ 850 people.

The design, which involved six decks of parking, was conceived to maximize the project's viability. It would have brought consumers added convenience and retailers daunting competition.

Some area residents and union organizers opposed Wal-Mart's plans. They voiced traffic, sight and low-wage objections at neighborhood board meetings. But the retailer addressed concerns with road realignment, new traffic signals, "Hawaiian territorial" architecture, landscaping and wage information to win the support of most residents.

The Wichman parcel is valued at $35 million, significantly more than Wal-Mart is accustomed to paying for land. Yet the attractiveness of positioning the discount retailer in the center of Honolulu's urban core interested the company, which has developed stores in the middle of major cities before.

Still, putting a Sam's Club on top of a Wal-Mart is unprecedented for the company, according to Hill, who said it operates several Sam's Club and Wal-Mart stores adjacent to one another — but not stacked.

If successful, Wal-Mart's would be the first of several previously proposed projects to get off the ground at the site.

In 1989, Haseko Hawaii Inc., an affiliate of one of Japan's largest condominium developers, leased the property, intending to develop a condominium/office/ retail project. But a slowing economy derailed a $400 million first phase.

Cleveland-based Forest City Development, a $3.6 billion publicly traded real estate investment trust, canceled plans for a retail/entertainment complex at the site in late 1999 after theater operator Consolidated Amusement Co. instead chose to build a 16-screen multiplex at Victoria Ward Centers.

Wal-Mart operates five stores in Hawai'i, including three on O'ahu (a Sam's Club in Pearl City and two Wal-Mart stores in Mililani and Kunia.) The company's sixth, a Wal-Mart in Maui, is under construction and scheduled to open around October.

Andrew Gomes can be reached by phone at 525-8065, or e-mail at agomes@honoluluadvertiser.com.