Business owners tackle challenges in Waikiki
By Andrew Gomes
Advertiser Staff Writer
Kamehameha Schools executive Sanford Murata has a theory about why Waikiki has been such a magnet for street performers. It's because there aren't a lot of better attractions.
And while there are $400 million to $500 million in redevelopment projects planned for the area in the next decade, many are finding moving forward tricky because of the financial risks, changing markets and competing interests.
The longtime problem for O'ahu's urban resort — how to reposition the area with exciting entertainment and shopping experiences that draw more tourists and invite residents back to the aging beachside playground — was addressed by a group of retail specialists and property owners yesterday at an International Council of Shopping Centers conference at the Ala Moana Hotel.
"Waikiki really is one big shopping area," said Barbara Campbell, vice president of retail development for Hawai'i hotel operator Outrigger Enterprises. "We have a lot of different ownership interests represented. We've got retailers such as DFS, we've got the hotel companies, we've got real estate developers and everybody's doing their own thing. How do we bridge all these interests?"
Among the $400 million to $500 million in planned redevelopment projects are Outrigger's $300 million hotel, retail and entertainment complex on Lewers Street, a Royal Hawaiian Shopping Center renovation, redevelopment of Consolidated Amusement Co.'s three movie theaters, and an upgrade of International Market Place.
Cheryl Lau, assistant vice president of commercial real estate firm CB Richard Ellis Hawai'i, said Mainland retailers long interested in opening in Waikiki have become more conservative about rents they are willing to pay given weakness in the national economy.
Meanwhile, sales per square foot at retail shops in Waikiki fell last year to $1,045. That's down from $1,126 in 2000, but still higher than $930 in 1999, according to a market study Outrigger commissioned from local real estate firm Colliers Monroe Friedlander.
Kim Scoggins, a retail specialist with Colliers, suggested that landlords offer deals to tenants who can't pay the highest rent but can create excitement that attracts consumers.
Miles Nishijima, property management director for Pacific Beach Hotel owner HTH Corp., noted that property owners have a fiduciary responsibility to get the highest rent they can, which can result in less-dynamic tenants.
Murata, director of commercial assets for Royal Hawaiian center owner Kamehameha Schools, said there needs to be more holistic planning by private property owners.
The panel, which also included Patti Nakagawa, director of consumer marketing for DFS Hawai'i, and Gwen LeBlanc, area director of leasing for Hilton Hawaiian Village, agreed that more collaboration should be a goal to improve Waikiki as a destination.
The panel also agreed that attracting more residents to Waikiki would naturally improve the visitor experience by giving them a better a sense of Hawai'i's culture. The alternative, Murata said, is a risk of creating a tourists-only theme park.
Lau said residents avoid Waikiki because parking is troublesome and they can generally find the same merchandise at stores outside Waikiki. "There is no compelling interest to pull the locals in," she said.
The panel praised government improvements to beaches and parks, as well as the Brunch on the Beach and Sunset on the Beach programs featuring outdoor dining and free entertainment that has been a hit with residents.
Nishijima of Pacific Beach said he believes new entertainment is more essential than retail in Waikiki. He also said there is a need for more local restaurants and nightclubs that have been driven out of the area by higher-paying luxury retailer tenants.
The idea exchange, organizers hoped, will help developers shape their projects.
At Outrigger, Campbell said there has been enough interest by local retailers to fill 75 percent of the project's 75,000 square feet of retail space, though leasing has not begun.
Royal Hawaiian center is still in the conceptual design stages, though it is trying to land Cheesecake Factory as an anchor restaurant that would appeal to residents.
Murata said Kamehameha Schools planners next week will present renovation design concepts to an internal review committee, but that the project still has much planning ahead.
Consolidated Amusement, which has envisioned redeveloping its three theaters in Waikiki since 1990, is pushing new ideas forward, according to Glenn Yim, company vice president of operations.
"We're trying," he said. "The theater business itself is just not a viable business in Waikiki."
Consolidated is considering retail and entertainment options, including showing IMAX films and regular movies at the IMAX theater. Yim said no timetable for redevelopment exists, though some industry observers believe Consolidated could begin work within two years.
The Queen Emma Foundation is also working on updating its International Market Place, though the foundation said it still has not made a decision on how or when to renovate or redevelop the retail complex.
Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.
