Posted on: Tuesday, May 11, 2004
Kapolei shopping center draws offers
By Andrew Gomes
Advertiser Staff Writer
The developers of the 18-month-old Marketplace At Kapolei are considering selling the neighborhood shopping center after receiving unsolicited offers from real estate investors.
The Gresham Co. Inc., a Maui-based real estate firm that partnered with Honolulu and Arizona companies to develop the roughly 40-tenant center for $10 million, recently listed the leasehold property for sale at $20 million.
Real estate experts said the unsolicited offers for the marketplace — which includes Blockbuster Video, Fun Factory and L&L Drive Inn — are part of a trend of heightened interest from primarily Mainland real estate investors trying to buy commercial property in Hawai'i. Creating the demand is the state's strong economic rebound combined with low interest rates and relatively scarce available quality property on the Mainland.
Last year, Mainland investors dominated Hawai'i commercial property sales — which totaled $2.1 billion, or more than twice as much as the year before, according to a report by local real estate firm Colliers Monroe Friedlander tallying transactions valued at more than $1 million.
Kevin Crummy, managing director with Eastdil Realty in Santa Monica, Calif., recently told a group of local real estate executives that last year's $480 million sale of the Damon Estate's 224-acre O'ahu commercial property portfolio attracted many Mainland buyers who continue to seek investments in the state.
In turn, property owners hoping to cash in on the competing interests have responded by making property available for sale, including several Neighbor Island hotels, the commercial part of downtown Honolulu high-rise Harbor Court, Whalers Village shopping center on Maui, Waikele Center in Central O'ahu and two acres of land under and around the Wave Waikiki nightclub.
Some of the activity has been in O'ahu's growing "second city" of Kapolei. Chicago-based Walton Street Capital LLC recently bought 35 acres at Campbell Industrial Park for $27 million, and California firm Jupiter Holdings LLC agreed to buy 91 acres at Kapolei Business Park for an undisclosed price. Both firms were unsuccessful Damon portfolio bidders.
"It seems like it's the opportune time (to sell)," said Bill Gresham, a principal with Marketplace At Kapolei partner Gresham Co.
Honolulu-based Pacific Acquisitions Ltd., another partner in the marketplace, said it hopes to sell the center to parties it has relationships with, though it would not identify prospective buyers or say how far along sale discussions are.
The marketplace site was originally envisioned as a second phase to the adjacent 134,000-square-foot Kapolei Shopping Center, which opened in 1992 with Kapolei's first business, Safeway. But the state's economic stagnation through the rest of the 1990s stalled the project.
The Gresham Co., Pacific Acquisitions and Phoenix firm Huco Pacific Development responded to growing shopping and dining needs of the master-planned community, and leased the 6.5-acre site from Campbell Estate, broke ground in December 2001 and opened the 64,108-square-foot marketplace a year later.
Today, the marketplace is 91 percent leased and has a projected net operating income of $1.7 million this year, according to the seller.
"It's been a home run," said John Morioka, a principal of Pacific Acquisitions. "If we had to keep it, it's a great property to keep, but the offers we have seen really piqued our interest."
Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.
