Ala Moana Nordstrom is finally under way

The 200,000-square-foot store is slated to open in early 2008

After nearly two decades of delays, Nordstrom Inc., the Seattle-based department store chain that some refer to as like the former Liberty House only better, yesterday broke ground on its first full-service store in the islands.

The long-awaited groundbreaking of the 200,000-square-foot Nordstrom, the largest of any in the United States planned during the past five years, begins a two-year expansion project for Ala Moana Center. Other key components of the center's repositioning include: an 800-stall parking garage, 25,000 square feet of additional new retail development along Kapiolani Boulevard and an expansion of the mall's third level by 45,000 square feet.

"We're pleased to open the first full-service Nordstrom in Hawaii, and selfishly we hope it will be their last," said Jeff Dinsmore, vice president of development for the Hawaii Region of General Growth Properties Inc., during a groundbreaking ceremony held at the site of the future three-story store, located makai of Kapiolani Boulevard and diamond head of Keeaumoku Street. More than two dozen businesses and a church were razed at the end of October to make way for Ala Moana's newest anchor tenant.

The opening of a full-service Nordstrom, equal to about half the size of Kahala Mall, will expand the company's presence in Hawaii and increase Ala Moana Center's leased retail space by 10 percent. The entire project, which is expected to be completed in the first quarter of 2008, could bring up to 15 new retailers to the center, which is already the top performer in Chicago-based General Growth's portfolio of more than 18,000 retailers operating in approximately 200 million square feet of retail space. It will also add 800 construction jobs, 750 retail jobs and $7 million in general excise tax to the state.

The addition of Nordstrom will make the "gem that is Ala Moana shine even more," said Bob Michaels, president of General Growth Properties, whose mere presence at the groundbreaking spoke to the importance of closing the deal.

"For over 15 years, I've personally been involved in discussions to bring Nordstrom here," Michaels said.

Hawaii holds lots of allure for General Growth and Nordstrom because of its unique consumer base, made up of equal parts tourists and residents, he said.

General Growth, the second-largest U.S. publicly traded real estate investment trust, has created the market stability many mainland chains seek and has led to a number of firsts for island retail, Michaels said.

"Having a large platform always helps," he said. "We've also been very fortunate to be blessed with great people here at Ala Moana."

Over the past six months, a dozen new stores have opened at Ala Moana Center. The new offerings, which include among others premier retailer Harry Winston, a two-story Louis Vuitton, and a DKNY, have ushered in a new era of retail in Hawaii, the likes of which have not been seen since the Japanese boom led to the creation of Waikiki's designer shopping district. In the end, though, locals may best remember General Growth for making good on its promise to bring consumers their Nordstrom fix -- even if it took almost 20 years.

"I guess perseverance pays off," said Pete Nordstrom, president of Nordstrom's full-line store group. "We made our first commitment to a full-line store here 10 years ago. This has been a long time coming, and we are grateful to our loyal customers and employees who have stayed with us along the way."

Honolulu Mayor Mufi Hannemann, who needs clothes for tall men, said he is just one of many local residents who are looking forward to Nordstrom.

"I'm personally very, very happy," Hannemann said, joking that he may become the tallest shopper at the Hawaii Nordstrom, a chain where he can actually buy clothes off the rack.

Like many other Honolulu shoppers, Hannemann said he discovered the retailer during a trip to Seattle. Many Hawaii people are familiar with Nordstrom because of their affinity for the West Coast, said retail analyst Stephany Sofos.

"When Liberty House was in existence, Nordstrom offered a higher level of merchandise and service," Sofos said. "When Hawaii people visited a West Coast Nordstrom they'd come back raving about the chocolate truffles and quality service."

The new Nordstrom in Hawaii will fill a gap between Neiman Marcus and Macy's, Sofos said.

"If Nordstrom can offer good quality at an affordable price with exceptional service, they'll have people in Hawaii running to them," she said.

In response to strong consumer demand, Nordstrom had been trying to open a Hawaii department store for decades, but ran into fierce resistance from Liberty House, Macy's local predecessor.

Although Hawaii's strong economic climate makes it an ideal time to open a Nordstrom in the islands, this deal wasn't based on timing, Nordstrom said.

"Our attitude has always been, let's get here as soon as we can," Nordstrom said.

Nordstrom, which was founded in Seattle at the beginning of the last century by John W. Nordstrom, a Swedish immigrant, has had an island presence for 39 years. The company employs about 80 people between its Nordstrom Rack and Nordstrom Shoes stores, both of which have been among the chain's top performers.

Permit issues, politics, opposition from competitors and difficulty finding the ideal space delayed the entry of a full-service Nordstrom, he said.

The opening of the full-service store will result in the closure of Nordstrom's shoe store at nearby Ward Centre, but the Nordstrom Rack discount store at Ward Village Shops will remain open. The new store will employ more than 400 workers, Nordstrom said.

The Nordstrom in Hawaii will be larger than most mainland locations, Nordstrom said, adding the company's department stores usually average between 140,000 and 170,000 square feet. Nordstrom operates more than 155 stores in 27 states, he said.

The company is currently not eyeing other Hawaii locations or expansion into Asia, but anything is possible if the market supports it, Nordstrom said.

"We're going to wait and see how we do at Ala Moana," he said. "We'll have to compete against the best stores in Hawaii."

General Growth may have had its fill -- for now

General Growth Properties Inc., the acquisitive, Chicago-based real estate investment trust that owns Ward Centers and Ala Moana Center in Honolulu and owns or manages a half dozen other malls in the state, may have had its fill in Hawaii -- at least for now.

"We love Hawaii; we've made a big investment here obviously," the company's president and chief operating officer Bob Michaels said yesterday at a groundbreaking for a new Nordstrom department store, which will be a centerpiece of the company's $100 million redevelopment of Ala Moana Center.

"If the opportunity presents itself, sure, we would love to look at other opportunities in Hawaii," Michaels said. But, he added, there is "nothing on the horizon that we are looking at right now."

That's not to say General Growth isn't growing. In addition to the Ala Moana expansion, the company is overhauling its Ward Centre property, adding new stores, giving face-lifts to existing properties and redeveloping its former Ward Village Shops to include a 67,000-square-foot Whole Foods Market, 175 apartments and 1,000 parking stalls.

The price tag for the Ward redevelopment adds up to another $150 million to $200 million, said Jeff Dinsmore, General Growth's vice president of development in Hawaii.

Dinsmore said this might be it for now.

"We're opportunistic," he said. "But we've got our hands full right now with what's going on."

In addition to the two shopping centers that it owns in Honolulu, General Growth owns Whalers Village on Maui and Prince Kuhio Plaza on the Big Island and manages Windward Mall in Kaneohe, Queen Kaahumanu Center on Maui and Kings' Shops on the Big Island, where it is also co-developing Queens' Marketplace.