Posted on: Friday, May 3, 2002

Wal-Mart renews plans for Ke'eaumoku superblock

By Andrew Gomes
Advertiser Staff Writer

In a move that will change the face of retailing in Honolulu's urban core, Wal-Mart has signed another agreement to buy the Ke'eaumoku superblock near Ala Moana Center for development of double-decker Wal-Mart and Sam's Club stores.

Wal-Mart Stores Inc. spokeswoman Cynthia Lin said the company expects to complete the deal by the end of the month and possibly have the stores open in late 2003 or early 2004.

Wal-Mart abandoned a similar plan a year ago, after 16 months of negotiations, because of what Lin said in general were financial and market reasons that are now improved.

A spokesman for the superblock's owner, the kama'aina Wichman Family Trust, said the family sees no potential impediments to the estimated $35 million purchase this time.

If completed as both sides expect, the deal would end the rotating door of developers and big-box retailers who have lined up to buy the 10.5-acre property only to fail for varying reasons, the last of which was Kmart's bankruptcy which killed the most recent deal in March.

"I am a little surprised with so much happening with that location," said Ross Murakami, an Arthur Andersen partner who heads up the firm's retail accounting and consulting group in Honolulu. "But then again, nothing surprises me these days."

A sale to Wal-Mart will reshape retailing in Honolulu's urban core — perhaps more than any other previous proposal for the coveted site.

As several analysts previously noted, nearby retailers such as Daiei, Longs, Ross, Foodland and many other smaller stores can expect new competition from the world's largest retailer, though to some extent a Wal-Mart and Sam's Club will draw new levels of customer traffic that could benefit everyone.

Some residents fear traffic congestion, and union organizers two years ago led rallys opposing the nonunion retailer before neighborhood board meetings, but it seemed most consumers welcomed Wal-Mart's plan because of convenience and low prices.

Wal-Mart's updated project is essentially the same as previously proposed, with two 150,000-square-foot stores on the property bordered by Sheridan, Makaloa, Rycroft and Ke'eaumoku streets.

The Sam's Club would still be on top of the Wal-Mart. Plans for a six-deck parking garage with about 1,500 stalls also are retained, as is the design for heavy landscaping and a Hawaiian territorial style of architecture. Roughly 850 employees would be hired.

To mitigate traffic, Wal-Mart plans to align Makaloa where it is offset at Sheridan, and install traffic signals at Kanunu and Ke'eaumoku streets. Signals are also being considered for the Rycroft/Sheridan intersection.

The only significant difference, according to Lin, will be added space for small shops along Ke'eaumoku. "That's in response to desires that the city has expressed for a shop-based street-front along Ke'eaumoku," she said, adding that the city's request was not a factor that derailed Wal-Mart's previous attempt at the project.

A number of spaces ranging from 400 square feet to 1,000 square feet are planned for a total of up to 7,000 square feet or so of retail space.

Specialty merchandisers and food vendors are likely types of tenants that will be sought, according to Jon-Eric Greene, a Wal-Mart consultant with local commercial real estate firm Colliers Monroe Friedlander. "It has both positive physical and economic impacts on the project," he said.

Some observers were surprised that Wal-Mart decided to make another bid to buy the property, but Wal-Mart had continued to affirm its interest in the superblock even as other retailers such as Home Depot and Kmart made their own unsuccessful purchase attempts in the last year.

Lin said one of the factors that led to Wal-Mart's decision to move ahead again was a corporate strategy to accelerate expansion of new conventional discount stores and retail supercenters during the company's fiscal year that started in February.

Wal-Mart owns seven stores in the state, including two Wal-Marts on the Big Island, two on O'ahu, one each on Maui and Kaua'i, and a Sam's Club on O'ahu.

Wal-Mart has a contract to buy 20 acres in Pearl City at the Manana Industrial Park from the city for about $18 million, and has been studying that site for a 140,000-square-foot Wal-Mart near Sam's Club.

Lin said the superblock plans will not affect the Pearl City project. The company, she said, hopes to have its due diligence on the Pearl City property finished by July, and a sale completed thereafter.

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