Hawaii: Ground-Up Shopping Centers on Rise Despite High Construction Costs
Construction costs in Hawaii are beginning to plateau after seeing year-over-year increases for the past several years. The market has seen gray shell retail building costs of about $275 per square foot; and to vanilla shell, another $80 per square foot to $100. Restaurants range from $300 per square foot to $350 to take them from gray to finished shell without fixtures. Remarkably, even with escalating construction costs, retail leasing and development are both extremely active. This, combined with retail vacancy of about 3 percent and record rents, has spurred a wave of new projects.
Some of the new retail projects currently under construction are:
Kilauea Lighthouse Village, Kilauea Town, Kauai — The center is a 47,000-square-foot development anchored by a 10,000-square-foot Market at Kilauea. Construction on Kilauea Lighthouse Village has begun and is expected to be complete in late 2017. It is owned by Hunt Development and leased by Colliers International.
Kahala Bowl Shopping Center, Honolulu – Anchored by McDonald’s, the 10,000-square-foot center is owned by Kamehameha Schools and leased by JLL.
Kealanani Shopping Center, Kapolei — This 20,000-square-foot center, anchored by Panda Express, is an outparcel of the Walmart in Kapolei. It is owned by Panda RG Inc. and leased by Colliers International.
Ward Village/Ward Village Shops, Kaka’ako — Various new retail developments have commenced near Downtown Honolulu (Block K and M & Ward Village Shops) under the direction of the Howard Hughes Corporation. The corporation owns and leases these developments, including one that is anchored by a Whole Foods (currently under construction).
2615 S. King Street, Honolulu — A mixed-use student housing development near the University of Hawaii with 20,000 square feet of retail space on the ground floor. It is owned by Honolulu Student Housing One LLC and leased by JLL.
Pu’unene Shopping Center, Kahului, Maui — This center, totaling 260,000 square feet, is anchored by a newly opened 141,000-square-foot Target. All phases are under construction. The center has available shop spaces, a 7,500-square-foot building pad and a 25,000-square-foot anchor position. It is owned and operated by TRC and leased by Commercial Consultants.
Hokulei Village, Lihue, Kauai — The Hokulei Village is a 125,000-square-foot shopping center anchored by a newly opened Safeway Supermarket and Petco. It is owned and operated by TRC and leased by Commercial Consultants. The center has available shop spaces and a 14,800-square-foot pad.
Keauhou Lane, Kaka’ako — The Keauhou Lane retail shops is the ground-floor retail component serving the Keauhou Lane Apartment Project (above the shops) and the attached 41-story Keauhou Place condo development. Anchoring the 34,000 square feet of shops and restaurants is a 13,000-square-foot Down to Earth Grocery Store. Completion is expected in 90 to 120 days. The developer is Gerding Edlen. It is leased by Commercial Consultants.
Recently completed retail projects include Alexander & Baldwin’s the Collection; DeBartolo’s Ka Makana Ali’I; Stanford Carr’s Foodland Kehalani Center; HRT Realty’s Safeway Maui Lani Center; Kamehameha Schools’ SALT; Castle & Cook’s 400 & 440 Keawe; Oliver McMillan’s Symphony; Taubman’s Waikiki International Marketplace; and Kamehameha Schools’ Kapalama Shopping Center.
Future planned retail projects include MW Group’s Kapolei Town Center; A&B’s Ho’okele Shopping Center; Meridian Pacific’s Puna Kai Shopping Center; Meridian Pacific’s Waikoloa Village Town Center; Kamehameha Schools’ Kahala Marketplace; Alexander & Baldwin’s Kailua Lau Hala; Haseko’s Ocean Point Shopping Village; Castle & Cook’s Koa Ridge; D.R. Horton’s Ho’opili; Robertson Properties’ KAM Drive In; Krausz Company’s Downtown Kihei; and Kona’s Keahu’olu Village.
— By Brooks Borrow, Principal Broker, CCI Hawaii. This article first appeared in the July 2017 issue of Western Real Estate Business magazine.