The $535 million Waikiki Beach Walk complex by Outrigger Enterprises is roughly a year old as marked by when most tenants opened in the improvement project's retail centerpiece. But major pieces of the master plan — two hotel renovations and the Trump International Hotel & Tower — are still emerging.

The first year was successful beyond expectations for some Beach Walk tenants such as Roy's Restaurant, Ruth's Chris Steak House, Yard House and the Wyndham Vacation Ownership time-share, although a couple retailers weren't as fortunate and have closed.

As the biggest improvement project in Waikiki's recent history, the Outrigger redevelopment between Lewers Street and Beach Walk makai of Kalakaua Avenue is maturing and has yet to hit full stride.

Three parts of the six-part master plan, which are expected to add more energy and customer traffic to Beach Walk, aren't slated for completion until next year.

At the same time, another big improvement project nearby — the $85 million renovation and retenanting of Royal Hawaiian Shopping Center — is coming on line piecemeal and introducing retailers and restaurants competing with Beach Walk.

P.F. Chang's China Bistro, for instance, opened last week at Royal Hawaiian Center fronting Lewers, joining Señor Frog's and many new businesses at Waikiki's largest shopping mall.

A PLACE TO SHOP, DINE

Some observers believe the two adjacent retail complexes combined with a host of luxury retail stores nearby and a planned Hard Rock Cafe mauka of the Trump tower site will define the Lewers Street area as the dining and shopping core of O'ahu's main urban resort.

Rainer Kumbroch, president of Roy's restaurants in Hawai'i, said the Waikiki Roy's last year achieved the highest sales among all seven Roy's in the state, and was in the top three for the chain with 35 restaurants internationally.

"It was a great decision to go into Beach Walk," Kumbroch said. "We love being there."

Randy Seki, operations vice president of the Hawai'i affiliate of Japan-based restaurant company WDI Corp. that runs Taormina Sicilian Cuisine at Beach Walk, said the 84-seat "high-end casual" restaurant that's been open six months is on pace for $2.5 million in sales this year.

"For this size of restaurant, that's good," he said. Seki added that about 60 percent of customers are local residents.

At Yard House, a California-based restaurant chain that serves 130 draft beers in its Beach Walk location, the split between kama'aina and tourists is dominated by around 80 percent local customers, estimates company CEO Steele Platt.

"I think the locals have gravitated to Waikiki Beach Walk more than to other spots in Waikiki," said Platt, who was largely raised in Hawai'i. "I think Outrigger did a great job. They took away the concrete jungle, and gave us some breathing room."

Platt said last year sales at the Waikiki Yard House topped $12 million, or second best in the chain of 19 restaurants, though a Las Vegas Yard House that opened two weeks ago is on pace to earn $18 million in its first year. Platt added that he's asking to expand the restaurant so he can add 20 to 30 more tables.

HIGH OCCUPANCY

One factor Beach Walk tenants said helps business is higher-than-average occupancy at the project's hotel and time-share properties.

The 369-unit Embassy Suites hotel, which consists of one- and two-bedroom suites converted from two old Outrigger hotel towers with 880 rooms, has occupancy in the upper 80 percent range. Average hotel occupancy in Waikiki last year was 77.5 percent.

"It's performing like an on-beach hotel even though it's off-beach," said Mel Kaneshige, Outrigger's executive vice president for real estate and development.

At Wyndham, sales in the 195-unit time-share converted from the former Ohana Reef Towers hotel are on pace to roughly sell out by this summer. Based on typical one-week intervals per room, there would be about 10,000 sales, though Wyndham sells points that allow for more or less than one week of use.

Michael Turolla, Wyndham Vacation Ownership senior vice president for the Pacific, said occupancy at Beach Walk has been above 90 percent.

"All of our people are feeding into the Beach Walk project," he said. "The partnership with Outrigger has worked very well."

However, as is common in any retail center, not all Beach Walk tenants have done well. Virtual Turbulence, a store that inserted images of customers into action video footage like skydiving or surfing, closed after several months and in December was replaced by Thor Store, an art gallery featuring largely tiki-image paintings of Thomas Thordarson.

TENANT CHALLENGES

Another tenant, apparel and body products boutique Bernards of Hawaii, closed in January and is expected to be replaced by another apparel retailer soon.

One restaurant anchor, the 5,400-square-foot Holokai Grill, has reduced operating hours and been listed for sale by its owners, who also operate Tiki's Grill & Bar at the ResortQuest Waikiki Beach Hotel.

One of the challenges for Beach Walk is convincing local residents that parking is available at a reasonable price.

Outrigger provides Beach Walk parking at Wyndham and Embassy Suites garages. Initially, Beach Walk parking was $5 for three hours, but was raised to $6 for four hours. All parking is valet only, excluding tip, and requires validation.

To encourage more people to visit Beach Walk for lunch, Outrigger in September began offering free weekday parking at Embassy Suites from 11 a.m. to 3 p.m. for patrons spending $10 or more at a Beach Walk restaurant.

Beach Walk has had strong success attracting tenants, but is not 100 percent occupied. Of the roughly 45 tenant spaces at the project, all have been leased except a 440-square-foot spot at the corner of Kalia Road and Beach Walk across from the Trump tower site but on the back side of the Beach Walk retail complex.

WAITING GAME

Also, one tenant that signed a lease very early in the project, Coconut Willy's Bar & Grill, has been delayed from opening in the bottom of a Wyndham tower by about eight months. David Kenney, Coconut Willy's president, said infrastructure work in the time-share building postponed his long-awaited opening.

As of Friday, Kenney was still waiting for a permit from the city to open. "I'm the last to open," he said with a mix of disappointment (at the delay) and excitement (at the prospect of being the only Beach Walk tenant that will be open until 4 a.m.). "We're the only 4 o'clock nightclub on this block," he said.

A handful of initial tenants at Beach Walk opened in December 2006, and by last April more than half were open, including the Wyndham time-share and Embassy Suites hotel. But three pieces of Outrigger's six-piece master plan are still under construction.

IN THE WORKS

Last week, the budget 280-room Ohana Islander Waikiki Hotel fronting Kalakaua Avenue closed for a more than $40 million transformation into a 131-room luxury boutique hotel.

Kaneshige of Outrigger said plans call for enlarging the Islander's small rooms to almost 600 square feet and creating a rooftop bar and pools atop the 20-story tower.

The Islander's current pool area, part of which is above a Quiksilver store at Beach Walk, will become a fancy restaurant.

Kaneshige said Outrigger's strategy is to open the first luxury boutique hotel in Waikiki, given that the Halekulani is a large luxury hotel and the W Honolulu Diamond Head is outside Waikiki.

"We think there's a crowd that will be looking for this kind of room," he said. "We think the guys who fly in private jets to Maui and the Big Island are going to be thinking 'We've heard about what's going on in Waikiki. ... Let's go to Waikiki for one or two nights to see what this is all about.' "

A new name for the hotel has not been chosen, but it won't be branded an Outrigger or any other hotel chain moniker. "We think a brand is not necessary," Kaneshige said. "It will be one of a kind."

The property is projected to open in late summer 2009.

A second unfinished piece of Beach Walk is the Trump project, a 464-unit condominium-hotel that sold out of units for an average $1.5 million. The planned 38-story structure has risen about 15 floors, and is slated for completion in August 2009.

The third unfinished piece of Beach Walk is a $110 million renovation of Outrigger's flagship hotel, the Outrigger Reef on the Beach. The hotel's two towers with a combined 836 rooms will become 639 rooms when completed.

Work on the makai Ocean Tower with 200 rooms was completed late last year. The mauka Pacific Tower is closed and the first five floors are expected to reopen in September. The whole tower with 439 rooms is slated to be operating by February 2009.

Outrigger Reef lobby improvements include a recently completed giant A-frame canoe hale suspending a 100-year-old koa outrigger canoe. "That's going to be the new iconic entrance," Kaneshige said. "We want it to be the landmark so you know where you are."