HILO, Hawai'i — University of Hawai'i officials are considering developing a prime plot of unused land next to the Diamond Head Theatre to try to make some money from it, perhaps by developing condominiums on the site.

In a briefing this week for the Board of Regents, university director of capital improvements Jan Yokota said the 2.49-acre parcel on Makapu'u Avenue next to Le'ahi Hospital has been identified for "further study" because it has the best short-term prospects for earning income for the university.

The property is across the street from Kapi'olani Community College, and a report to the regents indicated "rezoning of the property will likely be required in order to generate maximum redevelopment value."

The Board of Regents asked the university administration to compile a list of property owned by the university, and in 2001 the university hired the commercial real estate firm Kauwe and Associates to identify properties with the best earning potential.

The study focused on seven properties, including 29 acres next to the Pearl City Home Depot, land that is now used as an urban garden; about 10 acres across from the Manoa Shopping Center; 130 acres along both sides of Kamehameha Highway near the Turtle Bay Resort on the North Shore; and 605 acres of forest a few miles from Kea'au in Puna on the Big Island.

Two other large properties on the Big Island also were studied, but were later dropped because they have been selected as the sites of planned new community college campuses in Kona and Hilo.

The consultant prepared a conceptual plan for possible uses of the Le'ahi site along with projected construction costs and revenue projections, according to the report to the regents.

The university condemned the Le'ahi property in 1977, acquiring it from the Le'ahi Foundation. It is vacant, and is zoned for 5,000-square-foot house lots.

The consultant proposed selling or leasing the land to a developer for mid-rise condominiums to be marketed to senior citizens, or developing the land as an expansion of Kapi'olani Community College.

Given the strength of the current real estate market, the property could be "an excellent candidate" for lease or sale to a developer, and the university has already been approached by developers interested in the land, according to the report.

Reach Kevin Dayton at kdayton@honoluluadvertiser.com.