Queen Emma Land Co. has rekindled plans to redevelop the land under its iconic International Market Place retail bazaar and a few neighboring parcels in Waikiki.

The nonprofit, income-producing affiliate of Queen's Health Systems said it will seek bids from developers to lease and redevelop about seven acres, including the marketplace, the Waikiki Town Center, Perry's Smorgy restaurant, the Food Pantry and also possibly the Miramar Hotel.

No deadlines have been set, but given the bid process and tenant leases, the 51-year-old marketplace wouldn't likely be closed until late 2010 at the earliest.

"We think this is the right time and the right thing to do," said Mark Yamakawa, president of Queen Emma Land.

The announcement comes five years after Queen Emma Land — then known as The Queen Emma Foundation — unveiled a plan to redevelop International Market Place and the adjacent Waikiki Town Center, in the middle of Waikiki between Kalakaua and Kuhio avenues.

The previous project, projected to start in 2005 and finish last year, entailed razing and rebuilding the aging retail landmark in a style similar to the original at an estimated cost of $100 million to $150 million.

That plan's elements included expanded retail space and a parking structure — as well as an amphitheater, hula mound, artisans, storytellers and an artificial stream replicating one cut off by the Ala Wai Canal. It largely drew praise for seeking to preserve an element of nostalgia and to honor the site's history as Queen Emma's garden retreat, amid fishponds and 'Apuakehau Stream.

But that project also involved risk for the nonprofit, which would have had to take on substantial debt in its effort to boost its tenant rental income and enhance the property's value. That led Queen Emma Land to halt the makeover plan in 2005 in favor of exploring options to renovate the retail complex.

Yesterday's announcement means the nonprofit will forego major risk and expense by making the marketplace and four adjacent parcels available to developers willing to finance development and own and manage the project under a ground lease that will guarantee Queen Emma Land income — though not as much as it stood to make owning and managing the entire project.

Queen Emma Land, which is being advised by international real estate investment banking firm Eastdil Secured, expects to distribute a request for proposals to interested developers later this month or early next month, and receive bids in the first quarter of next year.

"We're leaving it up to the developers to look at what may be the highest and best use," said Les Goya, Queen Emma Land vice president. "It's wide open."

Under existing zoning, the retail properties can be developed up to 260 feet and include retail and residential use. Hotel use would require a zoning change. The Miramar Hotel property is being included as a redevelopment option for developers, and allows hotel use up to 260 feet.

Two notable banyan trees on the parcels — one at International Market Place and one in the Food Pantry parking lot — must be preserved.

If the project proceeds as expected, redevelopment would force out, at least temporarily, but maybe permanently, roughly 200 tenants at the marketplace and adjacent retail parcels, including many small kiosk operators.

That's a prospect that David Kenney, owner of marketplace tenant Coconut Willy's Bar & Grill, isn't looking forward to.

"Here we go again," he said. "Everything's firmly set in Jell-O, as I like to say around here."

Coconut Willy's was to be displaced from and not return to International Market Place under the previous development plan, so Kenney leased space for a new location on Lewers Street at Waikiki Beach Walk, which opened earlier this year after a long delay.

But after Queen Emma Land canceled its prior redevelopment plan, Kenney extended his lease at International Market Place into 2010.

"It'll be interesting to see what comes down the pipeline," he said, adding that marketplace tenants are a close-knit family that again faces uncertainty with the new plan.

Kenney wondered whether developers will be able to finance such a big project amid turmoil in world credit markets that has severely restricted lending.

"Quite frankly, in this economic climate, I don't know who is going to put $200 million to $300 million up for this," he said.

Local retail industry analyst Stephany Sofos said that's a valid question. "A lot of projects are in holding patterns right now," she said.

But Sofos figures that such a rare opportunity to redevelop a large piece of Waikiki will attract significant interest.

"It's a very exciting project," she said. "You have a really great opportunity to re-engineer (a key piece of) Waikiki and set it for the 21st century. What's there is past its prime."

International Market Place was developed in 1957 by Paul Trousdale, Clint Murchinson Jr. and Donn E.R.G. Beach for $1.5 million on land leased from what was then Queen's Hospital.

Queen's acquired the leased-fee interest in 1998 following a dispute over lease rent, and since then has been contemplating redevelopment because of extensive termite damage and growing competition from new or revitalized retail projects, including Waikiki Beach Walk and Royal Hawaiian Center.

The 357-room Miramar Hotel was developed in 1962 on land leased from Queen's. The present owner, a Hong Kong company doing business locally as Miramar Hotel (Hawaii) Inc., has a lease for the property that expires in 2010. Ground leases also expire in 2010 for Food Pantry, a sister company to local grocery store chain Foodland Super Market, and the all-you-can-eat buffet restaurant Perry's Smorgy.

Queen's Hospital was established in 1859 by Queen Emma and King Kamehameha IV to improve the health of Hawaiians and Hawai'i residents through what is now The Queen's Medical Center and parent Queen's Health Systems.

Queen Emma Land helps perpetuate the Queen's healthcare mission, and is one of the largest private landowners in the state, with 10,441 acres on the Big Island and 2,168 acres on O'ahu, including 18 acres in Waikiki. The nonprofit distributed $17 million in each of the last two years to Queen's Health Systems.

"This project will help us continue to provide high-quality health care and to give back to the community," said Art Ushijima, Queen's Health Systems president and CEO.