Royal Hawaiian center to get major makeover
By Andrew Gomes
Advertiser Staff Writer
The owner of Royal Hawaiian Shopping Center is planning a major multi-phase renovation — the first for Waikiki's largest retail complex in its 20-year history and yet another investment in the flagship destination of the state's $10 billion tourism industry.
Sanford Murata, who joined Kamehameha Schools last month as the estate's director of commercial assets, said the project is in the early planning stages and will require the approval of Kamehameha trustees.
Representatives of center operator Pauahi Management Corp., a for-profit subsidiary of Kamehameha Schools, would not comment on the project. A spokeswoman said it would be premature to discuss any plans.
But people familiar with the project say it is being designed as a roughly $30 million job that could begin late next year and be completed in phases over two or three years, opening up the four-story structure that spans more than three blocks along Kalakaua Avenue.
If it moves forward, the renovation would contribute to what has amounted to three-quarters of a billion dollars in recently completed, ongoing or planned capital improvements in the area. And with its six acres of prime land in the center of Waikiki, any changes at Royal Hawaiian are expected to have a significant effect on maintaining the momentum of Waikiki renewal and rejuvenation.
Experts say a major upgrade of the Royal Hawaiian center also is crucial for the center to keep up with competitors.
Retail Darwinism
The center has had no significant upgrades, leaving its architecture looking increasingly aged amid a rapidly changing and increasingly upscale Waikiki. Among the new competitors: the recently opened 186,000-square-foot DFS Galleria addition; added attractions at Hilton's new Kalia Tower; 2100 Kalakaua, the 110,000-square-foot luxury retail complex under construction; and the $75 million retail/entertainment phase of Outrigger Enterprises' redevelopment announced last month.
Advertiser library photo • June 1999
"We're entering into a new world," said Mike Windsor, president and chief executive officer of McInerny, an original Royal Hawaiian tenant. "There's a lot more retail competition, and the customer is changing, too."
Experts say a major upgrade of the Royal Hawaiian Shopping Center is crucial for it to keep up with new competitors, including the recently opened 186,000-square-foot DFS Galleria addition and the planned $75 million retail/entertainment phase of Outrigger Enterprises' redevelopment.
The center also faces challenges for tenants, as some of its more than 150 stores are being lured to more modern complexes. Chanel, for instance, will move its boutique to 2100 Kalakaua across the street.
A major overhaul, retail experts said, would quell tenant concerns and give the center an advantage over Outrigger, which is scheduled to begin its 75,000-square-foot retail project on neighboring Lewers Street in 2003.
"It's an obvious move," said Alan C. Beall, a local retail consultant and developer who advised Kamehameha Schools on the Royal Hawaiian center in the early '80s. "There are a lot of things going on down there (in Waikiki) — first-class projects. If you're going to compete, you've got to be sharp."
Kamehameha Schools officials say the center, over the long run, has been a significant source of income for the estate, a charitable trust whose mission it is to educate children of Hawaiian ancestry. But mall sales lately have been declining.
When the complex opened in 1981, then-estate trustee Hung Wo Ching, now deceased, estimated the $40 million center would initially generate annual revenue of about $6 million to $8 million — then roughly half of the estate's total gross income.
At the time, the center increased retail space in Waikiki by 25 percent. Estate officials called it the biggest visitor-oriented shopping center in the nation or even the world. The center also became the fourth-largest mall in the state.
With upwards of 90 percent of sales generated from tourists, the center rode Hawai'i's wave of rising visitor arrivals during the late '80s and early '90s.
But competition has increased since then, with expansion and upgrades at malls such as Ala Moana Center and the addition of shopping destinations such as Waikele Center. Meanwhile, tourism has struggled and Waikiki has worked hard to overcome an image of an aged urban resort.
This year, sales at the Royal Hawaiian center have been down between 10 percent and 15 percent partly because of declines in visitors and weakness in the yen.
Mitigating defects
Beall said that in addition to helping improve sales, a major renovation also could potentially solve one of the center's greatest problems: generating more traffic for tenants on the upper floors.
"Renovation is simply keeping up with the market, and spending whatever they need to do that is deserved, but the trick is going to be getting attractive tenants on the top floors — especially the fourth floor," he said.
Creating visual interest and accessibility is the key, according to Beall, who years ago proposed installing one-exit escalators to deliver shoppers into a Hilo Hattie flagship store on the fourth floor. "It was like pumping people to the top and they would percolate down (stairways)," he said.
In addition to improving business on upper levels, a redesign will likely soften the landscaped bunker look of a structure that once attracted the moniker "Fort Bishop" after the former name of Kamehameha Schools, Bishop Estate.
Although it was criticized as bad urban planning for its massive use of concrete, the complex won a city landscaping award in 1988. Still, its dense image has remained.
"I think the center has been perceived as a pretty imposing monolith in Waikiki, and anything that opens it up is going to be good," said Randy Yeager, president and chief executive officer of center tenant Crazy Shirts.
Louis Kau, a Kamehameha executive who was involved in building the mall, said in hindsight that it would have been better with 2 1/2 floors and a more open design.
Longtime Waikiki resident and neighborhood board chairman Sam Bren, who used to call the center "Fort Kalakaua," said any remodeling will be greatly appreciated.
"The shopping center has been a focal point for Waikiki, and the upgrade that is anticipated will bring it more in keeping with today's modus operandi of doing business," he said. "From all aspects, this looks like a winner."
Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.
