Home Depot latest suitor for Ke'eaumoku 'superblock'
By Andrew Gomes
Advertiser Staff Writer
A month after Wal-Mart backed out of a deal to buy the Ke'eaumoku "superblock," Home Depot has signed a purchase agreement for the 8.5-acre Honolulu site.
Home Depot spokesman Chuck Sifuentes said yesterday that the retailer is assessing the site near Ala Moana Center and has not determined what kind of store, or stores, it plans to build.
"We're going to do our homework," he said. "We'll have a better sense, after a couple of months, what we want to do there."
A store on that site would be Home Depot's fourth in Hawai'i and analysts said it would significantly ratchet up pressure on area hardware and improvement stores.
Lloyd Sueda, a local architect consulting on the project, said Home Depot hopes to close a sale with the Wichman Family Trust, owner of the property, by the end of the year. It typically takes seven to 10 months to build and open a store, Sifuentes said.
The move comes after Home Depot late last year abandoned plans to buy an undeveloped site in Hawai'i Kai amid community opposition and a vow by Mayor Jeremy Harris to block needed rezoning. When Wal-Mart backed out of its deal to buy the "superblock" site last month, Home Depot expressed interest in the land bordered by Sheridan, Makaloa, Rycroft and Ke'eaumoku streets.
"Anywhere you can build a store in a population center is a good thing," Sifuentes said.
The home-improvement chain is offering about $100 a square foot, or $37 million for the property, substantially more than Wal-Mart was willing to pay, according to people familiar with the deal.
In Hawai'i, Home Depot operates a 135,000-square-foot store in Iwilei, is building a second O'ahu store in Pearl City scheduled to open July 26, and has another under construction on Maui scheduled to open May 24.
In addition to its "big-box" stores, Home Depot operates several other types of stores on the Mainland. The retailer's EXPO Design Centers are custom showrooms with installation services; its Villager's Hardware stores are geared for small home-enhancement projects and also carry housewares and gift merchandise.
If a more traditional Home Depot store is built on the Ke'eaumoku parcel, it would likely employ between 150 and 200 people, Sifuentes said.
Local retail analyst Stephany Sofos said a Home Depot store in the urban core would have a significantly different impact than a Wal-Mart or Sam's Club.
"Wal-Mart is a power retailer," she said. "They have jewelry, they have clothes, they have home-improvement, they have groceries. All of those retailers would have been affected.
"Home Depot is a category killer. It's pretty much going to capture the (home-improvement) market and really put pressure on the existing retailers in that marketplace."
Hawai'i's largest home-improvement chains, City Mill and True Value, have been adjusting to Home Depot's presence since the powerhouse opened its first Hawai'i store in 1999. To compete, they have focused on customer service, tweaked prices and merchandise, and strategically positioned new stores.
But the competitive pressure is expected to intensify if Home Depot puts a store in the middle of Honolulu. The location also would place the store close to Home Depot's existing stores in Iwilei and Pearl City, but Sifuentes said Home Depot believes the size and growth in the Honolulu market will allow it to add another store without undermining existing-store sales.
Home Depot caters to do-it-yourselfers, contractors and other home-improvement professionals. Stores typically stock 40,000 to 50,000 items.
The average store size is 105,000 to 115,000 square feet, plus outdoor garden centers that range from 15,000 to 25,000 square feet.
Home Depot opens about 200 new stores a year. It operates 1,181 stores in the United States, Puerto Rico, Canada, Chile and Argentina. Sales totaled $45.7 billion for the company's most recent fiscal year ended Jan. 28.
Andrew Gomes can be reached at 525-8065, or by e-mail at agomes@honoluluadvertiser.com
