Hawaii’s Big Island is finally coming into its own when it comes to retailing.
Retailers and developers, lured by affluent second-home buyers as well as tourists, are spending more than $170 million on new and expanded shopping projects on the island. About 245,000 square feet of retail space is to be completed by 2008 on the western side of the island alone.
The activity involves both luxury — Tiffany & Co. opened its first Big Island store last month at the Kings’ Shops — and the better and younger markets, including the debut of Tommy Bahama in June at the Shops at Mauna Lani and the arrival of Quiksilver and PacSun next year at the Queens’ Marketplace.
Macy’s West, which operates a 50,000-square-foot store in Kona, the major city on the island’s west side, also wants to expand, said Deena Nichols, Macy’s West regional senior vice president and director of stores for Hawaii and Guam.
All the activity represents a reversal of fortune for the Big Island, which hasn’t attracted the major retail dollars captured by the more populated Oahu and Maui. To be sure, Oahu is still a shopper’s mecca — home to the Ala Moana Center, the Waikiki retail district and Royal Hawaiian Shopping Center, among others — but the Big Island has come of age after a post-9/11 slump and a drop in average hotel occupancy to 65.1 percent in 2001.
Even as many of the 11,351 hotel rooms are being upgraded, occupancy stood at 72.8 percent through October, on par with 2005, according to the Smith Travel Research/Hospitality Advisors consulting group. Although an October earthquake caused tourist jitters and an estimated $73 million in damage, visitor numbers are holding steady and retail projects are on target, developers and tourism officials insisted.
“People are flocking here for the holidays, and I believe, for some, the allure of foreign vacations has lost its luster as people worry about safety and security, so Hawaii offers visitors a feeling of comfort,” said George Applegate, executive director of the Big Island Visitors Bureau.
And many tourists, mostly from the West Coast, are turning into residents. The Big Island has two active volcanoes, black sand beaches, rich Kona coffee and the twin Keck Telescopes, the world’s largest optical and infrared telescopes. But its major appeal is the Kohala Coast, a 20-mile stretch north of Kona International Airport that features luxury destinations, including the 1,350-acre Waikoloa Beach Resort.
Related Articles
You May Also Like
First among the retail newcomers is the Shops at Mauna Lani, a $30 million-plus retail center owned by Aloha Investment Group. Located at the Mauna Lani resort, the two-story, island-style, 80,000-square-foot complex opened in June with a 12,000-square-foot Tommy Bahama’s Tropical Café & Emporium and a handful of other stores. About 85 percent leased, the center opened a 1,300-square-foot Cache boutique in September and Ruth’s Chris Steak House in October, followed by about 20 to 25 tenants expected to open by the end of the year; another 20 are to launch from January to March.
The Shops at Mauna Lani, originally announced in 2001, suffered a setback after the 9/11 terrorist attacks and retail caution derailed leasing.
“It took a long time to lease and get on the radar of retailers,” said Eric Smith, president of Kaulana Corp., the center’s leasing agent. “Now there’s pent-up demand and more and more residents with less and less to do.”
With center projections of $600 to $800 in annual sales per square foot, those retailers on board are seeing the results at the cash register. Patricia Van Cleave, president of retail for Tommy Bahama, said sales have been “terrific” at the new location.
“We thought it would be a dry run, but we’ve been very happy to see that it wasn’t,” she said.
And there is plenty more to come. Construction is under way in the area on dozens of residential projects, some tethered to hotels with exclusive golf courses. Dell Inc. founder Michael Dell’s MSD Capital LP and Rockpoint Group LLC acquired the Four Seasons Resort Hualalai last June, giving the joint venture ownership of the hotel and the 865-acre master-planned community, which includes single-family homes, villas and two 18-hole golf courses.
“Our guess-timate is that more than 5,000 individual homes will be built in the near future in Waikoloa and a significant amount of that in the next five years,” said Mike Hamasu, research and consulting director of Colliers Monroe Friedlander Inc., a commercial real estate brokerage firm in Honolulu. “As a result, retailers see an opportunity to service not only tourists, but residents.”
Until now, the Kings’ Shops, a 75,000-square-foot outdoor complex at Waikoloa Beach Resort outside Kona, has been the sole shopping option for area tourists, along with a supermarket-anchored center about seven miles away. Generating sales of $1,100 per square foot with tenants such as Louis Vuitton, DFS Galleria and Macy’s resort specialty store, the Kings’ Shops is tweaking its mix to better reflect a total luxury palette.
Coach opened a 2,285-square-foot store there in June, replacing an art gallery, and Tiffany followed with the debut of its 3,000-square-foot location on Nov. 30 in a former restaurant. The new store, Tiffany’s fifth outlet in Hawaii, offers a full jewelry line, including diamond engagement rings, rare pearls, the Frank Gehry collection and a limited collection of tabletop items.
“We’re very excited to be opening on the Big Island, which has a growing economy being fueled by tourism and a growing population, making it the perfect time for us to take advantage of the conditions,” said Rae Seki, Tiffany group director for Maui and the Big Island.
The Kings’ Shops will add 25,000 to 30,000 square feet by 2008, most of which will be devoted to upscale apparel and accessories. The expansion will cost “well over” $40 million, said Cordell Lietz, president of CoastWood Capital Group, owner of the Kings’ Shops.
In tandem with Waikoloa Development Co., CoastWood Capital is also developing the $95 million, Colonial-styled Queens’ MarketPlace, a 135,000-square-foot shopping center across from the Kings’ Shops scheduled to open in fall 2007. Queens’ MarketPlace is 61 percent leased and will target the part-time homeowner with a 20,000-square-foot gourmet grocer, a hair salon, day spa and 4,000-seat performance space, along with apparel stores, including PacSun and Quiksilver. Lietz said he expects annual sales of $900 to $1,000 per square foot for the center.
“Kohala Coast is the future of Hawaii,” Lietz said. “Better luxury goods haven’t been serving this market, which has been more resort-oriented. But the customer is staying longer and is more affluent, so we are remerchandising the center in that direction.”