Posted on: Friday, July 30, 2004

Local investment company purchases Restaurant Row

By Andrew Gomes
Advertiser Staff Writer

After months of negotiations, local real-estate investment firm The Shidler Group has completed its purchase of Restaurant Row and associated office complex known as Waterfront Plaza from its Mainland seller.

A purchase price for the property on the edge of downtown Honolulu was not disclosed, but is estimated to be close to $75 million.

The seller was a partnership between Michigan-based Kojaian Management Corp. and The Witkoff Group of New York, which bought the property for about $47 million in late 2000 following a foreclosure.

Shidler Group managing partner Larry Taff said the firm plans to make $7 million to $8 million in renovations to the property, adding interior garden courtyard space and landscaping as well as lobby upgrades and other improvements.

"It'll make it a lot better looking and make it a lot cooler," he said. "I think people are going to be blown away with the changes we have planned."

Shidler Group will manage the property itself, replacing Colliers Monroe Friedlander, and has hired former Aloha Tower Marketplace general manager Paula Orr as property manager.

With the acquisition, which follows Shidler Group purchases of Honolulu office towers Davies Pacific Center and Pan Am Building, the company owns about 1.3 million square feet of office space on O'ahu, or nearly 10 percent of the market.

Waterfront Plaza has 415,000 square feet of office space and 90,000 square feet of restaurant and retail space anchored by Wallace Theaters, the Row Bar, Ocean Club, Ruth's Chris Steak House and Sunset Grill.

Former Hawai'i developer Bruce Stark built the complex in 1988 for $113.5 million. But after initial success, Stark lost the property to a lender at foreclosure in 1998 after a glut of office space, competition from the newer Aloha Tower Marketplace and struggling economies in Japan and Hawai'i thrust the project into financial trouble.

In late 2000, lender Teachers Insurance and Annuity Association sold the complex to Kojaian-Witkoff, which spent $1.7 million upgrading and leasing the property that is now about 94 percent occupied.

"We're excited about the potential of this property, and see many opportunities to turn a good property into a great one," Taff said.

Shidler Group, founded in 1972 by University of Hawai'i graduate Jay Shidler, owns and operates more than 6 million square feet of commercial property in Hawai'i, Texas, Arizona and California from offices in Honolulu and San Diego.

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