Star tenant illuminates opportunities at Honokawai market
Pacific Business News (Honolulu) - by Andrew Gomes PBN Staff Reporter
Honokowai Marketplace, a coming 80,000-square-foot West Maui neighborhood shopping center between Kaanapali and Kapalua, is rapidly signing tenants after landing anchor Star Markets Ltd.
The $8 million project by local development company KCom Corp. is racing to break ground this month and complete the project in nine months following two-and-a-half years of negotiations with Star.
Project coordinator Jack Watkins said 68 percent of the center is leased with another 22 percent covered by deals out for signature. The remaining 10 percent is being negotiated for or is without commitments.
A Pacific Cafe owner Jean-Marie Josselin is taking 6,800 square feet of prime stand-alone space for a microbrewery restaurant with sushi bar.
Other signed tenants include Pizza Paradisio, Alakai Clothing, Hot Shots Java Stop, condo interior package seller Hawaiian Interiors, Leola's Funwear, dry cleaner One-hour Martinizing, West Side Copy & Graphics and Maui Dive Shop.
Leases are out for signature or under negotiation with a bagel business, gas station, the local franchisee of a popular restaurant chain, a beauty salon, a video store, a time-share marketer and a recreational sports company.
The 840-square-foot average size of the center's 18 in-line retail spaces is attracting Maui businesses not wanting larger and costlier space, according to KCom President Valentine Peroff Jr. "It's not forcing [tenants] to take 2,000 or 4,000 square feet," he said.
Another factor in leasing success, according to Peroff and Watkins, is $250-a-square-foot rent with 4 percent step-ups annually on a five-year term with options. But the real draw is a $45-a-square-foot improvement allowance.
Peroff said the concept of a neighborhood center was arrived at after the local community association was asked about the area's needs. "That's how we really started the project and kept our tenant mix towards a neighborhood center," he said. "It was a good meeting and a good feeling."
Obviously lacking in the mix -- by design -- are high-end retailers that target high-spending Japanese tourists. Instead, anchoring the center is local super market chain Star.
Company President and Chief Operating Officer John Fujieki said ground was to be broken Aug. 18 for the 37,000-square-foot store, which will cost between $3.5 million and $5 million to get everything running. Star is handling construction.
The store, which should employ roughly 100 people, will premiere a new format for Star. Fujieki was reserved with details, but sources believe the store will be more than a full-service supermarket with deli, bakery and bank. A travel agency is said to be one new service planned for the store.
Peroff said the two-and-a-half-year negotiation period with Star, which commands a space comprising 52 percent of the center's gross leasable area, was a long and hard process. Fujieki said economic considerations made the process "very tough."
Fujieki said Star, which spent a few years considering the location and conducting studies, believes the new store's strategic location on Maui will have a captured local/tourist blend to draw from. The new store will also improve the company's position on expenses by spreading advertising and promotional costs.
Out of 10 stores statewide, Star's Kihei branch, built in 1979 and renovated in 1992, is the second largest at 38,237 square feet. Star has an older Kahului store as well on Maui.
Overall, Honokowai Marketplace was viewed as a well-placed and well-timed development. Grant Howe, managing general partner at Commercial Properties of Maui, said the location is good and despite more retail coming on line around the Island, other upcoming developments will pull from separate demographic areas.
Projects include the Hawaii-Texas partnership between Isle developer Bill Mills and big real estate investor Ross Perot Jr., which plans to acquire the 31,000-square-foot Wailea Village shopping center and turn it into a 120,000-square-foot luxury goods center with the likes of Louis Vuitton and Duty Free Shoppers.
Mills and Perot are also reportedly looking to develop a retail center geared toward Wailea residents. Wailea is south of Kihei below Maui's isthmus.
Another project is Maalaea Harbor Village, a roughly 80,000-square-foot development north of Kihei that should open in late 1998 with construction beginning early next year. This resort-retail project will be anchored by a world-class aquarium Maui Ocean Center, which is to open in February or March in advance of the retail center. A 300-seat interactive theater is also to be included.
Howe said strong tenant response at Honokowai Marketplace is indicative of the anticipation of success and future development around the area. Nearby residential development is increasing. And developed and undeveloped resort property lies makai of the center along the ocean.
Most of the 6.1-acre parcel just one mile north of Kaanapali, known as "pork chop" because of its shape, was purchased from Amfac/JMB Hawaii Inc. About an acre was obtained from Haseko (Hawaii) Inc. Its total purchase price three years ago was $7.6 million.
Architect for the project is Sueda & Associates Inc. SteelTech Inc., a separate company owned by Peroff is the contractor. Peroff's Pacific Commercial Realty is performing leasing.
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