Waikoloa complex to expand further

By Andrew Gomes
Advertiser Staff Writer

With the paint barely dry on a $10 million expansion, Kings' Shops at Waikoloa Beach Resort on the Big Island's Kohala Coast is announcing plans for a second, $10 million addition, which when finished is scheduled to be followed by a supermarket, multiscreen movie theater and outdoor amphitheater.

Phase-by-phase expansion plans for Kings' Shops at Waikoloa, a retail complex on the Kohala Coast of the Big Island, include the Kings' Boathouse. Garduque Architechts

The next addition will be 20,000 square feet to house a dozen or so retailers, a full-service restaurant and cultural garden that should be open next summer.

That would bring leasable area at Kings' Shops to 95,000 square feet, making it bigger than Lanihau Center in Kona and a little more than half the size of Aloha Tower Marketplace in Honolulu. The subsequent expansion would make the project even bigger.

Local tourism experts said Waikoloa Resort's commercial center, if built as planned, would be of unprecedented size and scope for a Hawai'i resort. To get this far, however, has taken almost a decade. The first phase of Kings' Shops opened in 1992 overlooking a 10-acre lake at the resort's entrance.

Business was slow to develop at the 55,000-square-foot complex during the state's economic doldrums. But a growing number of direct flights to West Hawai'i gradually lifted sales for 43 tenants, including Roy's Restaurant, Big Island Steak House, Liberty House and Crazy Shirts.

Last year, sales were up 17 percent over 1999, which also was a strong year, according to Alan C. Beall, a limited partner and leasing agent of Kings' Shops.

The second phase of the center originally was scheduled to come on line in 1998, but was delayed because of Asia's economic crisis. In January, a 10,000-square-foot DFS Galleria was the first of six tenants to open. Others, including Louis Vuitton, opened last week. One space remains unleased, though Beall said a brand-name luxury goods retailer is negotiating for it.

"There's a lot of pressure for space over there," he said. "We've had so much tenant interest, we're rolling right into the third phase."

After Phase 3, plans call for a supermarket, amphi-theater and indoor theater (probably a three-plex), to start construction next April and be open in November 2002, said Thos Rohr, Waikoloa Land president. "The idea is to have a self-contained resort," he said.

Continuing expansion of the commercial center, Rohr said, is one of five ongoing projects at the resort, including development of single-family homes, townhomes, condominiums and a recreational beach club like Outrigger Canoe Club.

The shops serve a resort population of roughly 6,000 people, including 2,000 employees, hotel guests and resort residents.

Kings' Shops merchants also draw business from guests at other Kohala Coast properties, from Hualalai Resort in the south to Mauna Kea Resort in the north.

Joseph Toy, president of local visitor industry consultancy Hospitality Advisors LLC, said the extent of Kings' Shops plans is unusual for master-planned resorts.

"It is interesting that Waikoloa Resort is going to that length of expansion," he said. "Typically you have retail amenities, but not much more than high-end shops. (Kings' Shops) is taking on more characteristics of residential retail."

Other master-planned resorts such as Wailea, Ka'anapali and Hilton Hawaiian Village have large retail components, but not as extensive as Waikoloa.

According to Toy, that's because most Island resorts are not far from residential communities with supporting retail and entertainment.

"You look up and down the Kohala Coast and you don't really have that," he said. "The resorts are separated by lava fields. Waikoloa (Resort) has become an amenity facility really for the whole Kohala Coast."

Rohr said the original purpose of Kings' Shops was to bring together people at the resort, which opened in 1980 and comprises the Hilton Waikoloa Village, Outrigger Waikoloa Beach, two golf courses and about 400 residential units. "We needed a place for everybody to convene," he said.

In the next 20 years, the resort's master plan calls for the addition of two more golf courses and 2,600 more residential units. One other hotel site exists, though a hotel is not currently included in the long-range plan.

Debbie Parmley, Kings' Shops general manager, said kama'aina make up about 25 percent of customers. Westbound visitors make up about 60 percent. Another 15 percent or so are eastbound visitors.

On the tenant side, about 25 percent of the space is occupied by restaurants, which range from Dairy Queen to Roy's. About 70 percent is retail. Of that, luxury goods make up only 15 percent — nearly all of it added in the recently completed addition.

"We knew that we were missing that component," Parmley said.

The next phase as planned won't contain as much high-end retail, according to Beall, who said tenants who cater to local customers has always been the focus for Kings' Shops. "The local people sell the visitors," he said.

The formula, Beall said, has translated to sales per square foot of nearly $900, about three times the national average.

Just up the coast, Mauna Lani Resort has taken note. It expects to begin construction next month on a $25 million, 65,000-square-foot retail complex focused on luxury retail and restaurants.

Mark Richards, president of project developer Maryl Group Inc., said retailers have committed to 50 percent of the space. "Virtually no one has said, 'We're not interested'" he said.

Richards said the Shops At Mauna Lani, scheduled to open around the turn of the year, will complement Kings' Shops more than compete with it.

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