FEATURE ARTICLE, MAY 2005

A NEW DAY FOR WAIKIKI
After a slump in the 1990s, developers have rediscovered Honolulu’s gold coast of Waikiki.
Haley Shuler

A favorite vacation spot among continental U.S. residents, the city of Honolulu on the island of Oahu is well known for its vibrant florals, endless sunsets and crystal-clear beaches. Among its most notable attractions is Waikiki Beach, one of the world’s most productive retail venues which draws in 4.5 million visitors each year.

“During the 1990s, many avoided Waikiki, believing it had become a mature, tired destination,” says Rick Egged, president of Waikiki Improvement Association. “Today, Waikiki is seen as a thriving focus of activity, entertainment and culture, thanks to public and private investment.”

Led by major city improvements to public areas like beaches and sidewalks, the private sector has invested over $600 million in the last 6 years with another $900 million to come in the next few years, according to Egged. Four hotels will be torn down and thousands of additional hotel rooms have been or are being renovated.

According to Madison Marquette Development, Waikiki contains over 30,000 hotel rooms and condominium units. And with visitors staying an average of 6 nights per trip, the area boasts over 25 million visitor days that generate over $1.01 billion annually in retail, dining and entertainment sales.

The revitalization has once again made Waikiki the place to be. “While total retail space will only increase by 15 to 20 percent, over 50 percent of the existing retail space will undergo either complete renovation as in new buildings or significant renovation,” notes Egged.

Western Real Estate Business profiled several of Waikiki’s premier developers and retail leaders to discuss the revitalization of Waikiki Beach.

International Market Place

The redesign of International Market Place will be based on Queen Emma’s Garden in the 1800s. The landscape will feature lush gardens and a stream that will wind through the property.

In the 1800s, what is now International Marketplace was the summer garden for Queen Emma and had a stream running through the property. As Waikiki became developed, it became an important piece of commercial property and was developed into International Marketplace in 1957 by Don Beach, who officially changed his name to Don the Beachcomber.

Don the Beachcomber played a big part in creating the tropical paradise image that Hawaii maintains today. Don was penned a “legendary mixologist” and is responsible for the creation of over 90 rum-based tropical drinks, including the infamous Mai Tai. His idea was to showcase the cultures of Hawaii and create a fun place that would display the food, drinks, entertainment and some of the more localized retail offerings in the area. This idea blossomed into International Marketplace, currently owned by The Queen Emma Foundation.

International Marketplace will shut down current operations for renovation this October. “We have a 24-month schedule to remove all the existing structures and buildings and create a new three-level, 240,000-square-foot marketplace that will stay true to the original strategy that Beachcomber had envisioned,” says Gilmore. “But we will update it to today’s standards in terms of merchandise and retail offerings.”

International Market Place will undergo a $125 million facelift this fall that will position it as an open-air, speciality retail center catering to tourists and locals alike.

Developer Madison Marquette will also handle leasing of the property. Retail Strategies is acting as the retail consultant and Architects Hawaii is the production architect.

“There’s a lot going on in Waikiki right now to ‘bring Hawaii back into Waikiki.’ This is the authentic site, where it all began,” Gilmore says. “We are trying to capture that past history of the garden and what it used to feel like with buildings that are unique in various Hawaii design. It also brings you back to that fun life that Don Beach had envisioned.”

International Marketplace, which is expected to open in 2008, will be an open-air, specialty retail center with more than 100 shops and restaurants. There will be no anchor tenants, but rather in-line retail stores. Store merchandise will include tropical lifestyle apparel, accessories, home furnishings and surfing apparel. Also, many local artisans and craftspeople will be able to showcase their Hawaiian creations in numerous carts and kiosks that will be located throughout the property.

With authenticity a top priority, International Marketplace will house a unique dining hall that emphasizes a fresh market experience with Hawaiian and Pacific Rim food. A 15-kitchen food hall, complete with banquet facilities, will be constructed on the third level and include 700 seats.

By recreating the historical character of the property, International Marketplace will cater to locals and visitors alike. “People often assume that we are going to go after the tourists,” says Gilmore. “We think it’s very important to attract the local market as well. But it’s a challenge in Waikiki because there is not a lot there for them.” Most of the merchandise is high-end or touristy and tacky, and parking is tough, according to Gilmore.

“The bull’s eye that you’ve got to hit is the local trade area that will come to International Marketplace because it’s fun and the environment is representative of what they like and what their place is about,” Gilmore says.

Waikiki Beach Walk

Characterized as the largest private development project to be undertaken in Waikiki, Waikiki Beach Walk is undergoing a $460 million redevelopment that will include an outdoor entertainment plaza, 40 new retailers, six restaurants and four hotels that will cater to visitors and locals alike.

The $460 million renovation of Waikiki Beach Walk will include the demolition of several low-rise buildings to make way for a 90,000-square-foot, two-story retail and entertainment center.

Originally developed in 1947, Waikiki Beach Walk has been in the planning for nearly 10 years. “Many of its buildings are old and obsolete, and the area badly needs rejuvenation,” says Campbell.

The development, which is situated on 7.9 acres, is bordered by Kalakaua Avenue, Lewers Street, Kalia Road, Beach Walk and Saratoga Road. “Lewers Street is presently congested and lined with low-rise buildings and it’s one of the busiest streets in Waikiki,” says Campbell. “With the removal of these low-rise buildings and construction of our new two-story retail and entertainment center, an open and pedestrian-friendly atmosphere will be created and be a very appealing place for tourists and local residents to gather.”

Five existing hotels and two smaller apartment hotel buildings will make way for the new Waikiki Beach Walk. Demolition of the buildings in the first phase began last month and the new retail and entertainment center will be completed by fourth quarter 2006. WBW Retail LLC, a partnership of Outrigger Enterprises and Hawaii-based developer Dick Gushman, are developing the $235 million Phase I.

The first phase will comprise a 90,000-square-foot retail complex that will cater to Hawaii-based tenants and contain stores averaging 1,000 square feet. The first two restaurants to sign leases for the retail component include Roy’s Waikiki, featuring world-renowned chef Roy Yamaguchi, and Wolfgang Puck Express, owned by Hawaii-based franchisee MRTK Pacific LLC, which includes partners Scott Rolles, Roger Mercier and Jerry Thissen. Both restaurants will offer indoor as well as outdoor seating. Other island retailers that have recently signed leases include Whaler’s General Store, ABC Stores, Maui Divers, TT&K Hawaiian Shirts, Malibu Shirts and Freaky Tiki Tropical Optical.

Through an extensive renovation of the former OHANA Reef Towers hotel, Orlando, Florida-based Fairfield Resorts will develop Fairfield Hawaii at Waikiki Beach Walk, which will comprise 195 one-, two-, three- and four-bedroom timeshare units. All units will feature full kitchens, washers and dryers, audio/video entertainment systems and whirlpool baths. Resort amenities will include an outdoor pool, exercise facility and computer library. The completed units will be operated by Outrigger Hotels & Resorts.

The twin-tower Embassy Suites-Waikiki Beach Walk hotel will be created through a large-scale renovation of the current OHANA Waikiki Village and OHANA Waikiki Tower hotels. The 421-unit development will comprise hotel rooms as well as one- and two-bedroom suites. The hotel, which is located on Beach Walk, will also include an outdoor pool and a multi-level parking structure.

The renovation of the existing OHANA Islander Waikiki will wrap up the redevelopment of Phase I. Located at the Kalakaua Avenue entrance to Waikiki Beach Walk, the hotel will undergo a major renovation of its 283 guest rooms as well as its public areas.

Outrigger Hotels & Resorts will develop Outrigger Reef on the Beach as part of the $225 million Phase II. The existing hotel anchors Waikiki Beach Walk on Waikiki Beach and will be completely renovated to create a full-service resort hotel with approximately 700 deluxe guest rooms. The redevelopment, which also includes improvements to public areas, is set to begin this September, with completion slated for mid-2006.

The proposed Waikiki Beach Walk masterplan also includes a 350-foot mixed-use tower on the corner of Saratoga Road, Beach Walk and Kalia Road. The prospective Saratoga Tower will be situated on a 49,250-square-foot site where OHANA Royal Islander and OHANA Reef Lanai hotels and Malihini and Hale Pua Nui apartments are currently located.

The aesthetic appeal of Waikiki Beach Walk infuses traditional Hawaiian culture with components unique to Outrigger’s business symbols. Campbell adds, “The architectural design by Altoon + Porter is truly spectacular with elements of our own company culture and heritage such as the sails and rigging from a canoe and beautifully lit glass wave canopies that combine the ocean and an outrigger canoe.”

Waikiki Beach Walk will redefine the Waikiki experience through its energy and open invitation to both visitors and locals.

The Center of Waikiki

Los Angeles-based developer Robertson Properties Group is underway on Center of Waikiki, a 30,000-square-foot specialty retail center set on 1 acre on Kalakaua Avenue in the heart of Waikiki.

“This is a premier location in the heart of the Waikiki shopping and entertainment district,” says Greg Swedelson, vice president for Robertson Properties Group. “It has an unparalleled customer base, with foot traffic on Kalakaua exceeding 25,000 people per day.”

The Center of Waikiki will replace the Waikiki Theatre, which was constructed in 1936 and later turned into the Waikiki 3 Theatres. The development will be one component of a larger property owned by Robertson Properties Group that includes an existing 420-space parking structure, a 14,000-square-foot multi-level space that will be redeveloped for entertainment use and a 26,000-square-foot building located at 333 Seaside Avenue that is currently being leased out.

The two-story, $10 million Center of Waikiki will include a 6,300-square-foot Whaler’s Market, which is a local chain grocer, and a 5,500-square-foot Footlocker on the ground level. The top floor of the development will include a 7,000-square-foot California Pizza Kitchen and a 5,500-square-foot Steak & Seafood restaurant.

In addition to the restaurant and retail appeal, the redevelopment is situated next to and will incorporate and expand the open bazaar market Duke’s Lane.

Architects Hawaii Limited designed the redevelopment, which should take about 14 months to complete for a spring 2006 opening. General contractor Pankow Companies recently began demolition of the existing structures and has started construction.

Royal Hawaiian Shopping Center

The Festival Companies is underway on the $84 million redevelopment of Kamehameha Schools’ 290,000-square-foot Royal Hawaiian Shopping Center, located on Waikiki’s famed Kalakaua Avenue.

Centuries ago, Princess Bernice Pauahi Bishop, founder of Kamehameha Schools, spent much time on the grounds formerly known as Helumoa, which Royal Hawaiian Shopping Center now rests upon. The property’s cultural heritage and legacy of Princess Pauahi will be the focal point of the redesign and give visitors an experience unique to Waikiki.

The four-level Royal Hawaiian Shopping Center, which will remain open during the revitalization, extends over three city blocks, with 1,911 linear feet of frontage on Kalakaua Avenue. The bottom two levels will comprise lifestyle and luxury zones and the second level will feature a nine-tenant food court. The third level will contain destination restaurants and entertainment components, while Level Four will include showrooms and an additional entertainment zone.

A 30,000-square-foot area once known as King’s Grove because it was the residence of King Kamehameha I and later his benefactress Princess Pauahi, will be renamed Royal Grove after the redevelopment. The Festival Companies will demolish three levels of existing bridges to bring the focus of the area on a magnificent, native banyan tree.

The four-level Royal Hawaiian Shopping Center will comprise a nine-tenant food court and destination restaurants, as well as lifestyle, luxury and entertainment zones.

Restaurants will flank the Royal Grove on the third level and lanai dining areas will be created throughout the project.

The streetscape design will comprise coconut palms located in mounded grass areas and random flagstone paving replacing the existing sidewalks and extending into the center.

This is the first redevelopment that the 24-year-old center has gone through, and it is a major one. Kicking off the redevelopment, The Cheesecake Factory opened in 2003. While The Festival Companies is busy redeveloping the look and feel of the new center, retailers are building new stores. Cartier, Hermes, Lush, Quiksilver and Bulgari have already built new stores at the center. Ferragamo is building a new store that will open in spring 2006, and Fendi also has a store under construction.

“The leasing strategy for the center focuses on bringing in a fresh new mix of exciting national and unique retailers, anchor restaurants and entertainment venues, combined with a variety of local tenants to attract visitors and locals alike,” says Rosalind Schurgin, principal of The Festival Companies. “Our plan combines lifestyle and luxury retailers to create a world-class shopping destination which targets the global tourist market.”

Kamehameha Schools, the center’s owner, is the largest landowner in Hawaii. The private charitable trust was founded and endowed by the legacy of Princess Bernice Pauahi Bishop. Kamehameha Schools is the sole beneficiary of the Bernice Pauahi Bishop estate, which has a value estimated at $6.1 billion. The trust operates a statewide educational system that has more than 5,700 students of Hawaiian ancestry enrolled at campuses on three islands.

©2005 France Publications, Inc. Duplication or reproduction of this article not permitted without authorization from France Publications, Inc. For information on reprints of this article contact Barbara Sherer at (630) 554-6054.