Retail in future for Waikiki three-plex
By Andrew Gomes
Advertiser Staff Writer
Five months after the curtain fell on Consolidated Theatres' Waikiki three-plex, an affiliated real estate development firm is preparing to convert the prime property to retail, demolishing the Waikiki III to build a low-rise shopping complex.
The plan by Robertson Properties Group involves leasing the vacant Waikiki I and II theaters to a large retailer and expanding Duke's Lane to roughly double the number of kiosk vendors.
Dubbed "The Center of Waikiki," the estimated $10 million to $15 million project would replace the three theaters hastily closed last November and add to Waikiki's gradual retail renewal of recent years.
Robertson Properties hopes to start building next spring for a late 2004 or early 2005 opening, though the timetable will be determined by retailer interest, said Jon-Eric Greene, a senior vice president with local commercial real estate firm Colliers Monroe Friedlander, representing the developer.
The move represents a decision by Robertson Properties not to wait for greater redevelopment opportunities — a delay that Consolidated officials had said last year was planned to maximize the property's value.
Since 1990, redevelopment proposals for the site have included a 19-story retail/office complex and a $142 million plan to replace the three theaters, its parking structure, Duke's Lane kiosks and possibly Consolidated's IMAX theater with a 287,000-square-foot retail and entertainment center.
Local real estate professionals said the much smaller current project, at 71,000 square feet to about 91,000 square feet, is a less risky plan more appropriate for today's market.
"I think everybody sees that the era of a developer coming in and doing the mega project is over," said Steve Sofos, president of Honolulu commercial real estate firm Sofos Realty Corp.
"The problem is Waikiki is swimming in retail space right now," he said. "Doing this project will be a good project for (Robertson Properties) for the next 10, 15 or 20 years, and then after that they look at it and decide if they want to redo it."
Vacant Waikiki retail space had been increasing in the last four years, reaching about 15 percent last September. Since then, it has rebounded to around 13 percent, said Mike Hamasu, research director for Colliers.
The vacancies reflect a shrinking market of free-spending Japanese visitors and a weakened Mainland economy, both heightened by the 9/11 terrorist attacks and Iraq war. Major expansions in recent years by Victoria Ward and Ala Moana centers also have stolen some of the retailing power of Waikiki.
Still, a few planned retail additions in the state's tourism hub are moving along. The two largest are the renovation of Royal Hawaiian Shopping Center and the creation of about 80,000 square feet of retail and entertainment venues as part of a $300 million effort by Outrigger Hotels & Resorts to improve and expand its property on Lewers Street.
Major retail additions in Waikiki in the last couple of years include the $65 million, 70,000-square-foot Galleria shopping center by travel retailer DFS-Hawai'i and the $140 million, 110,000-square-foot luxury retail townhouse by Honu Group.
But Waikiki's retail renewal has mostly been a patchwork of smaller additions, such as the renovated ABC Stores, Local Motion, Macy's, and upgrades at hotels Hyatt Regency Waikiki and Aston Waikiki Beach Hotel.
Robertson Properties is looking for four to six tenants to lease 45,000 square feet spread over three stories fronting Kalakaua Avenue, possibly including restaurants on the top level. The Waikiki I and II building is 26,000 square feet, but tall enough to add a second floor of 20,000 square feet.
The number of Duke's Lane tenants is projected to increase from about 65 to as many as 145. And the existing 435-stall parking structure would remain available for use.
Greene said a tenant mix has not been determined, though the complex is expected to attract retailers of moderate-priced merchandise.
"We've kind of gone out to the world — upscale and moderate price-point tenants," he said. "We'll evaluate all the interest and make a decision which way to go."
Monthly asking base rent for a 10-year lease is $5 a square foot for upper floors and $15 a square foot on the ground level fronting Kalakaua, which translates to $30,000 for a 6,000-square-foot upper-level space and $90,000 for a ground-level space the same size.
Greene said the project is in the initial stages of leasing and no retailers have committed yet.
Robertson Properties has developed several retail centers on the Mainland, with tenants including Linens 'N Things, Barnes & Noble, Pier 1 Imports, Macaroni Grill, Applebee's restaurants and department store Kohl's.
Its projects include a $20 million, 130,000-square-foot Thousand Oaks, Calif., retail center that broke ground in February, a $40 million, 276,000-square-foot center in Ventura, Calif., recently completed and a $100 million, 210,000-square-foot center in Hollywood.
The company was established in 1992 as an offshoot of Consolidated's California-based parent, Pacific Theatres Corp., mainly to redevelop the company's aging movie theaters. In recent years, the firm has developed or acquired retail, office and industrial buildings from Colorado to California, focusing on building community retail centers in Southern California.
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