Hilo Hattie to sell Waikiki property
By Andrew Gomes
Advertiser Staff Writer
Island retailer Hilo Hattie has halted construction of its planned Waikiki store on Beach Walk and hired a broker to sell the property.
Bruce Asato • The Honolulu Advertiser
The decision was prompted by this year's sagging visitor arrivals and a growing number of other potential store locations, said Paul deVille, chief executive officer of Hilo Hattie parent Pomare Ltd.
Hilo Hattie has halted construction of its planned Waikiki store on the Beach Walk property seen in the middle of photo. The retailer had planned to open a 20,000-square-foot store on the parcel in September. The Waikiki Post Office is in the background.
Another factor in the change in plans is an expectation that the land's value has been boosted by recently announced plans for a $300 million renewal of Outrigger Hotels & Resorts' nearby Lewers Street properties and Honu Group's $140 million retail complex under construction across Kalakaua Avenue.
Pomare Chairman Jim Romig bought the 28,000-square-foot parcel a year ago for $7.5 million. Now it's listed for sale at $9.9 million.
"We can afford to be patient," deVille said. He said Hilo Hattie still wants to have a store in Waikiki but couldn't pass up an opportunity for a potential return of more than $2 million.
"You know how long it takes to make that in the apparel business?" asked Mark Bratton, the agent with Colliers Monroe Friedlander listing the property. "A long time."
The asking price puts the value at $358 a square foot. Local real estate appraiser Robert Hastings said Waikiki retail property has not recently sold for that amount, but Hilo Hattie is perceiving what may well turn into a surge in values given the momentum of the area's revitalization.
Bratton said Hilo Hattie had received repeated unsolicited interest from potential buyers of the parcel, formerly the home of the Hula Hut and New Tokyo Restaurant.
Theoretical layouts for the property include developing it as a three-tenant luxury retail townhouse or a retailer's flagship store.
Hilo Hattie has gutted the main building and demolished an old three-story apartment building. A two-level parking deck with access on Saratoga Road exists behind the main site. Permits are in place for a 20,000-square-foot store, which Hilo Hattie had scheduled to open in September.
"It's ready to go," Bratton said.
If a luxury retailer or retailers fill the project, it would be a key piece in the upgrading of Hawai'i's most-visited tourist destination.
The roughly three-block section from Royal Hawaiian Avenue to Saratoga is shaping up as the tony epicenter of Waikiki retailing.
High-end retailers in the area include Kenneth Cole, Louis Vuitton, Cartier, Prada Boutique, Fendi and Burberry's Limited, which is next to the Hilo Hattie property.
Confirmed tenants at Honu's complex include Chanel, Tiffany & Co. and TOD's. Other upscale retailers such as Gucci, Yves Saint Laurent, Boucheron, Celine Paris, Hermes Paris and Bali are expected to take some of Honu's remaining tenant spots.
One tenant, Tiffany, has said its new store will replace its location at the Sheraton Moana Surfrider, furthering a shift by upscale retailers to the 'ewa side of Waikiki.
"Really all the action for the big dollars is moving this way," Bratton said.
Hastings said Hilo Hattie does not fit in with the ritzy group.
"I think what's happening in this part of Waikiki is there's an upgrading that is perhaps inconsistent with the level of Hilo Hattie," he said. DeVille said Hilo Hattie will continue to seek its long-desired Waikiki store.
The company sees potential locations at the Outrigger development, phase two of the Honu project, the expected redevelopment of International Marketplace and other sites. But it is not in a rush.
"With visitor counts coming down and spending down, it's not an ideal time for us to charge ahead," deVille said. "The timing is perfect for us so we can simply step back and look at opportunities."
Hilo Hattie operates 12 stores, including seven in Hawai'i, four on the Mainland and one in Guam. Another store is set to open in Florida in October 2002.
Andrew Gomes can be reached at agomes@honoluluadvertiser.com or 525-8065.
