Wal-Mart to buy
Keeaumoku
‘superblock’
It will build a store on 8.5 acres
By Rob Perez
along Keeaumoku, near
Ala Moana Center
Star-BulletinWal-Mart Stores Inc. has signed an agreement to purchase the vacant superblock site on Keeaumoku Street, an acquisition that would bring the world's largest retailer -- and greater price competition -- into the heart of Honolulu's urban core.
But Wal-Mart says it is still evaluating what kind of store it would build on the 8.5-acre parcel, presuming the deal goes through.
Whatever it builds -- a Wal-Mart, Sam's Club or a combination of the two -- likely will become the company's top revenue-producing store, have a major effect on retailers in the surrounding area, and be a boon for consumers looking for low prices, according to real estate brokers and retail experts.
"From a retailing perspective, it's going to be an absolute grand-slam home run," said Steve Sofos, president of Sofos Realty Corp. "You're smack in the center of the retail core."
Wal-Mart spokeswoman Daphne Davis yesterday said the company still is in the preliminary stages of determining the best use for the site and currently has no definitive timetable for development.
The retailer is continuing to evaluate the planned acquisition, and Davis couldn't say when the deal is expected to close.
Nelson Lee, an advisor to the Wichman Family Trust, which owns the superblock, wouldn't comment on details of the planned sale but said the land owner is pleased.
"We're delighted to have someone like Wal-Mart interested in the site," Lee said.
Whatever Wal-Mart chooses to develop will fit well with other retailing in the area, he added.
Neither Davis nor Lee would disclose a proposed purchase price.
Land in that area, however, has been selling for a minimum of about $90 a square foot, Sofos said. At that price, the superblock would be worth $30 million-plus --much more than what Wal-Mart typically pays for a store site, he said.But because the superblock is a prime location that will draw customers from the thousands of residents and tourists who live, work or shop in the urban corridor, any premium Wal-Mart pays easily will be offset by the sales volume the store will do, Sofos and others said. They predicted the location would become Wal-Mart's top seller.
"The urban core (population) density is phenomenal there,"' said marketing analyst Marty Plotnick. "Whatever Wal-Mart pays for (the site), they'll make it back."
If Wal-Mart follows through on its plan, the company will have succeeded where others have failed in recent years.
Since the late 1980s, several major developments have been proposed for the superblock, including a plan by Haseko Hawaii Inc. for a $400 million retail, luxury condominium and office project. But the developments -- riskier, more capital-intensive than a big-box store -- never got off the ground, largely because Hawaii's economy was so sickly for much of the 1990s.
Most recently, Forest City Development last year bailed out of a plan for a $100 million retail and entertainment complex there.
Bentonville, Ark.-based Wal-Mart already has three stores on Oahu, but they are outside the urban core. It has a Wal-Mart in Kunia and Mililani, plus a Sam's Club, a members-only discount warehouse, in Pearl City. It also has two Wal-Mart stores on the Big Island and one on Kauai.
Nationally, Wal-Mart is developing new superstores that include grocery and pharmacy operations. The company frequently is the target of critics who claim its pricing strategies drive small retailers out of business.
Sofos said retailers within a five-mile radius of the Keeaumoku site, including some at Ala Moana Center, would be most affected by a Wal-Mart store.
He sees Wal-Mart's willingness to pay a premium to venture into the heart of Honolulu's retail corridor as a signal that it intends to aggressively compete for business.
"They're throwing the gauntlet down to the retailing industry in Hawaii," Sofos said.
Consumers will come out ahead, he said. "It's going to benefit them because prices will be lower."
