Get ready for the Kapolei "skyline."

Three office/retail projects under way in O'ahu's Second City could add as much as 900,000 square feet of leasable space to the region over the next few years.

Take the combined space offered by the Ke'eaumoku Sam's Club and Wal-Mart stores, about 310,000 square feet, multiply that by three, and that's just a little more than what's to be constructed in mostly office space within a one-mile radius in the heart of downtown Kapolei.

"That is really ambitious," said local real estate analyst Stephany Sofos.

Developers of all three projects, each of which will take up a square block, or about 3 acres, say they believe there is a big need for retail and office space that will only grow as more people move into the burgeoning West O'ahu region, requiring more services and jobs.

Kapolei Property Development, an affiliate of the James Campbell Co. that is master-planning the region, is also bullish on office space in the region.

"There is clearly pent-up demand for office space in Kapolei," said Brad Myers, Kapolei Property Development president. "This demand is heightened by the growing number of area residents who want to work where they live to improve their quality of life."

Myers said his company's own 125,000-square-foot Campbell Square has a vacancy rate of about 3 percent. And with the nearby State Office Building maxed out, even the state is leasing space at Campbell Square, he said.

"I think in the long run there's going to be a lot of demand in Kapolei," said Jamie Brown, president of Hawaii Commercial Real Estate LLC, leasing agent for Kapolei City Plaza. "The question is how long of a run is that. This project and all of them are all betting on the continued growth in population of West O'ahu. If you look at all the demographic projections, that's where things are heading."

Mike Hamasu, director of consulting and research for Colliers Monroe Friedlander, said the area from Pearl City to Kapolei is badly in need of office space. While the islandwide office space vacancy rate is at about 7.2 percent, he said, the Leeward region is running only 3.8 percent.

"And rents in those markets are escalating," Hamasu said. "That's probably why office space development is occurring."

Meanwhile, he said, the declining vacancy rate Downtown over the past four years is also resulting in increasing rents there.

FOUR TOWERS

Avalon Development Co., developer of the Kapolei Pacific Center, has perhaps been the most aggressive in pushing its project.

The project is next to the Kapolei Library and would have four towers of up to seven stories in height with about 300,000 square feet of leasable area. The company plans to break ground this fall and have the first tower completed about a year later, said Steve Kothenbeutel, Avalon development associate.

More than 60 percent of the project's first building has been leased, Kothenbeutel said. The first building will be about half retail, half offices, he said, and tenants big and small have shown interest.

"We're getting medical tenants, dentists — right now we're working with a real estate company," Kothenbeutel said. There also will be restaurants and other retail outlets on the lower two levels.

The other buildings will lean more heavily toward office space.

Leases are going for about $3.25 to $3.50 per square foot on a gross basis for office space, about $5.25 for retail, Kothenbeutel said.

The pitch has been simple, he said. "We've approached companies saying, 'Look, Kapolei is where your employees live, and your employees wouldn't have to spend two hours or more in traffic roundtrip per day. ... That would translate to better productivity for the company.' "

A 2005 survey done by the Omnitrak Group for Kapolei Property Development showed that 20 percent of Kapolei residents work in the region while 70 percent of area residents who don't work in Kapolei would like to.

UP TO 8 STORIES

The Kapolei City Plaza is being developed by California-based Kahl and Goveia on property next to Kapolei Pacific Center and behind Island Pacific Academy, said Brown of Hawaii Commercial Real Estate.

Two towers are envisioned — one of seven stories and the second with eight stories, including ground-floor retail, Brown said.

About 300,000 square feet of leasable space would be available in all, Brown said. At least the first building, which would take between 18 months and two years to build, would target primarily medical space, he said.

The Kapolei City Plaza would "look more like a downtown office building" with a larger, 20,000-square-foot floor plate.

"It's really envisioned as being a smaller version of Bishop Square Downtown," he said, with two towers, an ancillary amount of retail, a separate parking structure and a large amount of open space.

No anchor tenants have yet been secured, he said. Brown said discussions have begun with some prospective tenants, and signs are expected to go up in the next couple of weeks. "We are really just coming out of the starting block," he said.

Lease prices will be about the same as his neighbors, Brown said.

"We're all dealing with the same construction environment, and the construction cost is what's going to drive the rent," he said.

Brown said he also sees a heavily pent-up need. "The demand is going to come from tenants who want to be close to their customers and/or their employees that live out there," he said.

And even if rents end up higher than in Downtown Honolulu, Brown said, that would be offset by lower transportation and parking costs.

STILL PLANNING

Mark Richards, president of Maryl Group, said his company's as yet unnamed project, several blocks away from the other two projects and across the street from Kapolei Hale, is in the planning phase.

The concept would be similar to the newly built Hokua project in Kaka'ako: a single tower of up to the 150-foot height limit, with a retail podium, parking above it, and office space on top of that, Richards said. But of the three projects, the Maryl project appears the most fluid, and that plan could change.

"It could be one long, skinny (building) or two more square ones," he said. "It all depends on who we wind up with as tenants."

Richards said he expects about 50,000 square feet of ground-floor retail space and up to 250,000 of office space.

Construction is expected to begin in early 2008, and there would be a 12- to 14-month construction period, Richards said. He declined to give other details about the specifics of the Maryl project.

Richards said it may cost a prospective tenant a little more to come out to Kapolei than to rent an existing space in Downtown Honolulu.

But it would cost more to develop an entirely new space Downtown than in Kapolei "because the dirt prices Downtown are so much higher," Richards said.

So Kapolei would be advantageous for a company that would, for instance, be seeking a larger contiguous space, a space that needs to be shaped a particular way or in proximity to related businesses, Richards said.

"Trying to find a contiguous, large space in Downtown Hono-lulu is no longer feasible," he said. "It's better lifestyle for their employees, a little shorter commute and getting everybody in the same place, so you get synergy in terms of operations."

While all three project representatives declined to provide cost estimates, real estate analyst Sofos estimates each project is investing about $90 million.

"They are banking that Kapolei really is going to be the Second City, and with the (city's planned) mass transit going right through it, it makes it a no-brainer," Sofos said, noting also that the University of Hawai'i-West O'ahu campus and several major housing and commercial developments have yet to come up.

"They're betting on the future."

Reach Gordon Y.K. Pang at gpang@honoluluadvertiser.com.