Change will open up Ala Moana possibilities

By Andrew Gomes
Advertiser Staff Writer

The departure of J.C. Penney at Ala Moana Center has created one of the biggest opportunities to refine the mall's tenant mix since General Growth Properties Inc. bought the center from Daiei Inc. three years ago.

A 181,000-square-foot, three-story space in the center of the mall doesn't become available often at the state's biggest shopping center, where retailers often wait years for space to open up.

General Growth said Friday that it has made no decisions about what to do with the prime location, but acknowledges that the space may be suitable for a large retailer such as Nordstrom, a mix of smaller tenants or a combination of the two.

"We're still weighing our options as to what we do with that space," said mall general manager Dwight Yoshimura. "It comes down to whether it's doable for us, ... (a tenant) and the community."

General Growth has been in negotiations to bring Nordstrom into the mall after a plan was scuttled by former department store Liberty House, which had a provision in its lease allowing it to prohibit the addition of another department store outside existing mall walls.

That objection was repeated by Macy's when it took over Liberty House's lease last year.

Retail analysts say the decision on filling the J.C. Penney spot will be between an anchor tenant such as Nordstrom — which generally does not pay much rent because of the amount of consumer traffic it attracts — or many smaller tenants that would pay the mall significantly more.

"I suspect General Growth will look for a large-tenant format — between 20,000 and 50,000 square feet — rather than a smaller-sized tenant," said Roger Lyons, retail services vice president at CB Richard Ellis Hawai'i Inc.

At the top of the list of prospective retailers General Growth may seek to fill its Ala Moana space could be Pottery Barn and Crate & Barrel, Lyons said.

Other observers said the space could provide opportunity for electronics retailer Best Buy and Macy's, which could open its home furnishings outlet in part of the space.

Mark Bratton, an agent with local real estate firm Colliers Monroe Friedlander, said both home and electronics categories are under-represented at the mall.

But most retail experts were certain late last week that Nordstrom will be the replacement.

"Ala Moana certainly needs a Nordstrom because it's a super-regional shopping center," said local retail analyst Stephany Sofos.

Nordstrom recently canceled a letter of agreement to build a full-line department store at Victoria Ward Centers, after General Growth bought the competing center in May.

Bratton noted that General Growth has an option to extend or cancel the lease of Shirokiya, in the same area as J.C. Penney, in September 2003, which could create an even larger re-tenanting opportunity.

"It's a huge opportunity for General Growth," he said. "It's got to be one of the best opportunities they've had in the last 10 years. It's going to increase their net income and the diversity of what they can offer there."

Advertiser reporter Frank Cho contributed to this story.