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The Honolulu Advertiser
Posted on: Friday, October 19, 2001

Macy's takes back Waikiki space

By Andrew Gomes
Advertiser Staff Writer

Macy's has begun taking back subleased space adjacent to its Waikiki Liberty House department store in preparation for a planned

$8 million expansion and renovation scheduled after Liberty House's conversion to Macy's around Thanksgiving.

The project is scheduled to start early next year, according to Deena Nichols, Macy's vice president of Hawai'i operations.

The changes being roughed out will be among the biggest physical alterations to 18 stores Macy's operates in Hawai'i and Guam, and will represent an effort to make a better impression on tourists in Waikiki.

"The idea is to have a bigger presence — an exciting, active feel with open and easy access," Nichols said.

Macy's leases 40,000 square feet of retail space in the bottom of the Waikiki Beachcomber Hotel from Japanese bank Mitsui.

But nearly all of the retailer's space fronting Kalakaua Avenue is filled with display windows or other retailers subleasing from Macy's.

So far, Macy's has taken back a space that was sublet to Folli Follie, and next week will turn it into a sunglass shop in the interim. Macy's space occupied by an art gallery also will be taken back.

There also is a possibility that Macy's could acquire more space that is not part of its lease.

All of the additions front Kalakaua, and would give Macy's precious exposure to the thousands of visitors who walk by every day.

"That's where the money is," said Roger Lyons, vice president of retail services for commercial real estate firm CB Richard Ellis Hawaii Inc. "It's a prime location."

Increasing the size of the department store in Waikiki is a departure from a strategy explored last year by Liberty House that would have involved subleasing the store to other retailers better oriented toward visitors.

Liberty House management, believing it could make more money as landlord, floated the proposal while in bankruptcy.

The retailer retained local commercial real estate firm Colliers Monroe Friedlander to solicit tenants, but the plan ran into opposition from former Liberty House owner JMB Realty Corp. and was withdrawn.

Macy's, whose parent Federated Department Stores Inc. purchased the kama'aina retailer in July, sees more value being in Waikiki, where tourists accounted for about 90 percent of sales at Liberty House.

Lyons noted that maximizing business with Japanese tourists also will help Federated if it expands to Asia, which it has said in the past it is interested in doing.

"It offers them an opportunity to operate retail in a location that has a high exposure to Japanese visitors, and that's unique to them," he said. "I think it's a very wise move."

Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.