Posted on: Sunday, November 23, 2003

Iwilei revives as retail center

By Andrew Gomes
Advertiser Staff Writer

Up until a little more than a year ago Amy Watts avoided Iwilei like a bad part of town. Now the Windward O'ahu resident goes there once a week, even though the area still has many of the qualities she dislikes such as traffic, dirty industrial scenery and seedy looking businesses.

"I hate this part of town normally," she said. "You wouldn't have found me here for anything before this."

The "this" would be Costco, which opened in June 2002 on Alakawa Street. Tomorrow, the members-only retailer is scheduled to open a discount gas station sure to attract consumers like Watts to a place still dominated by warehouses, shipping containers and storage tanks.

Real-estate observers said Iwilei has gained new momentum recently with retailers and shoppers in much the same way Kaka'ako made its pivotal shift away from being an industrial neighborhood during the 1990s.

Costco didn't start the retail infiltration in Iwilei, but it has been one of the biggest catalysts, accelerating the shift advanced by Kmart, City Mill, Home Depot, Sam Choy's Breakfast Lunch & Crab, Signature Theatres and others.

There also have been previous failed attempts to make Iwilei more of a shopper destination in the mid-1990s, including the abandoned conversion of more than 200,000 square feet at Dole Cannery into a factory outlet mall, and the never-realized plan to develop an aquarium.

Cannery landowner Castle & Cooke since has leased property to Home Depot, which opened in 1999, and to Costco, while converting most of the former outlet stores to office use, though a few retail tenants remain.

Local real-estate broker Joseph Leonardo said that more retail businesses being established on former industrial sites in Iwilei will motivate other industrial land- owners to convert their properties to higher uses like retailing.

"What you're seeing is the central business district hub expanding both ways — diamondhead into Kaka'ako and 'ewa into Iwilei," he said. "That whole area is going to take off."

Steve Metter, a local developer who bought the tired Nimitz Business Center near Home Depot and Costco three years ago, is betting on the area's potential.

His firm MW Group spent $2.5 million remodeling the mixed-use complex, reconfiguring entrances and parking with the idea to lure more retailers to the 160,000-square-foot center.

"This area is becoming a dominant area where people shop because of Costco and Home Depot," Metter said. "That's a pretty powerful combination."

Now known as Nimitz Center, the complex improved its occupancy from 59 percent to 78 percent with new tenants such as Hawaiian Craft Supply, AAA-Hawai'i, catering and plate lunch establishment Kanak Attack, The Floor Store, beauty supply outlet B.O.S.S. and Hawaii Home Interiors/Hanalei Bay Designs.

Metter said he also didn't renew leases for "undesirables" including an adult video store and some questionable bar establishments that tainted the center's image.

Another major improvement in the area is the state's $17 million fishing village across the highway from Nimitz Center at Pier 38. Designed as Hawai'i's version of San Francisco's Fisherman's Wharf or Seattle's Pike Place Fish Market, the envisioned tourist magnet is expected to open next summer after a three-year delay because of problems with methane gas in the ground.

Despite all the retail additions, industrial real-estate broker Mark Ambard said it still will be difficult to erase the general impression of Iwilei as industrial, and get shoppers to traverse the area instead of going to one big-box store and then leaving.

"You don't see thriving strip centers in the outlying area," he said. "That's been a weakness in the big-box formula."

Ambard uses the example of Bougainville where few retailers fed off Costco traffic before it moved to Iwilei.

"Iwilei has a lot of potential, but I don't think it's going to be a slam dunk," he said. "It's going to be hard. I think Iwilei is where Kaka'ako was 10 or 15 years ago."

Watts, who works in Mapunapuna, said she might visit Iwilei more than just to shop at Costco if more stores moved in, but they would have to be convenient.

Rick McCauley, who lives about two miles away, also figures he'll expand his Iwilei shopping beyond his frequent trips to Home Depot or the occasional stop at New Eagle Cafe at Nimitz Center.

"The next big thing: gas," he said last week as he picked up a Costco membership application.

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