Old Navy seeks Pearl exit
By Andrew Gomes
Advertiser Staff Writer
Old Navy Clothing Co. is trying to find a tenant to take over its anchor space at Pearl Highlands Center in an effort that would consolidate operations on O'ahu where the clothing retailer opened a pair of larger stores about two years ago.
Local real estate firm CB Richard Ellis Hawaii Inc. recently began marketing the 19,600-square-foot space for Old Navy, which is one of four anchor tenants at the Pearl City mall.
According to brokers familiar with the effort, there has been only preliminary interest in the store site, and Old Navy will remain until it finds a subtenant.
Jordan Benjamin, a spokeswoman for Old Navy parent company Gap Inc., said it is company policy not to comment on potential store closings.
But the move by Old Navy to sublease its Pearl Highlands store was not unexpected by local retail and real estate experts who say Old Navy's newer stores at Waikele and Ala Moana centers have cut into sales at Pearl Highlands.
"We've known they were going to want to dispose of that (Pearl Highlands store) once they opened their Waikele location," said Jon-Eric Greene, senior vice president of retail services at Colliers Monroe Friedlander, which manages Pearl Highlands.
Greene estimated that the Pearl Highlands Old Navy store, which opened in 1995, had as much as 50 percent of its sales cannibalized by the 24,305-square-foot store less than two miles away at Waikele and the 32,646-square-foot store at Ala Moana.
Gap, which also operates Banana Republic stores, has been on a mission to reverse a drop in sales at stores open at least a year, as part of an effort to solidify profit growth after what had been a long slide of shrinking earnings.
Sales at Old Navy stores open at least a year were down 1 percent in a three-month period ended in early August, compared with 14 percent in the same period last year, according to Gap's most recent quarterly financial report.
For a six-month period ended in early August, Gap closed 37 stores, compared with 16 in the comparable period last year. Last month, the company closed a Gap store at Windward Mall.
At the same time, Gap has been maintaining a slower pace of opening new stores, with the expected addition of 115 stores this year.
In Hawai'i, Gap operates 19 stores — six Banana Republics, nine Gaps and four Old Navys, including one on Maui.
At Pearl Highlands, Old Navy is an anchor tenant along with Sam's Club, Signature Theatres and Ross.
Finding a replacement for the retailer would further reposition the center's tenant mix, which has undergone much change since a Chicago-based pension fund bought the 420,000-square-foot retail complex two years ago.
Andrew Friedlander, chief executive officer of center managing agent Colliers Monroe Friedlander, said that in the last two years his firm has renewed several leases of tenants that had considered leaving, and added new retailers to boost occupancy to 83 percent.
Recent additions include Fantastic Sams, a dental clinic and Countrywide Home Loans. Price Busters may expand. A Sushiman restaurant and video game retailer Gamestop are scheduled to open soon.
Three other retailers are negotiating leases that, if signed, would bring occupancy to almost 90 percent. "We're going gangbusters," Friedlander said. "The center's really doing great."
Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.
