Mall Makeover

Three Neighbor Island shopping centers receive much-needed facelifts

April, 2003

Stephany Sofos can remember when Neighbor Island retail wasn’t such a dog-eat-dog industry. The local real estate consultant recalls, “In the old days, if you built it, customers would come.”

Today’s Neighbor Island consumers, whether tourist or resident, are much more discerning. That’s mainly because they now enjoy more retail options. Luxury shoppers can head to Wailea or Waikoloa for brand-name buys. Consumers with slimmer pocketbooks can choose from several discount and big-box retailers, including Kmart, Wal-Mart and Home Depot — most of which have set up shop on Maui, the Big Island and Kauai in recent years.

“There’s so much new retail that these smaller shopping centers are really starting to have stress,” says Sofos, president of SL Sofos LLC. Older complexes have had to step up their offerings to keep customers interested.

Recently, two local developers have invested millions of dollars to renovate three longtime Neighbor Island centers: Kukui Grove Center on Kauai and Azeka Place and Kihei Kalama Village on Maui.

MW Group Ltd. has devoted about $6 million to revamp the two Maui complexes, both located in Kihei. Unlike Maui’s luxury resort areas or business districts, Kihei is its own kind of town. It’s an eclectic and, arguably, overdeveloped hodgepodge of homes, resorts and office and retail space. Nevertheless, the area has several advantages over other Maui hotspots, insists MW Group Principal Steve Metter.

“It’s a place where a lot of locals live and many repeat tourists come, so we don’t see the volatile swings that Wailea does,” Metter says. “It’s a value-conscious population that’s less transient, because hotel workers tend to live there in the area. Also, there’s lots of time share, so you get more independent travelers. These visitors don’t just stay in the hotels; they go out.”

Kihei Kalama Village and Azeka Place lie within walking distance from each other. But the plans for each center couldn’t be more different. MW Group aims to make Kihei Kalama the town’s tourist center, while Azeka is designed mainly for the local community.

Azeka houses more than 50 dining and retail establishments. The 136,694-square-foot complex includes several residential essentials, such as Fantastic Sam’s and Kaiser Permanente. Now 75 percent leased, Azeka should be fully occupied by year’s end.

Unlike the earthy hues of Azeka, Kihei Kalama is painted an eye-popping blue. That may be partly why this 32,129-square-foot, open-air mall draws more foot traffic than any other Kihei complex. The complex also enjoys continually high occupancy rates, Metter says. Last year, his company added a new, two-story building to the property. The building’s top floor is occupied by new tenant Lulu’s, already one of Kihei’s most popular nightspots.

On Kauai, Grove Farm Co. Inc. has been busy giving Kukui Grove Center, the island’s largest mall, a $12 million makeover. The renovation started last year and should be completed in early 2004.

“This redevelopment is an opportunity to preserve the shopping center as the dominant, focal point of retail for Kauai,” says William Pratt, vice president of Commercial Brokerage & Leasing for Coldwell Banker, which handles the 21-year-old property. Kukui Grove’s renovation comes under the recent ownership of parent company Grove Farm. In 2000, the company was purchased by outgoing AOL Time Warner Chairman Steve Case.

Some areas of the mall have received complete face lifts, Pratt says. Its south entry will be lined with new retailers. The center will also gain a new building, which will house American Savings Bank and Beneficial Finances. These changes will increase the mall’s leasable square footage from 313,000 to 330,000. Prospective new tenants include Starbucks, Blockbuster and T-Mobile.

“We’re trying to recapture many of the local consumers who make it a practice to travel to Oahu to complete their shopping experience,” Pratt says.

Ultimately, increased competition among Neighbor Island retail centers will benefit consumers, Sofos says. “The pressure will be on the landlords of these smaller centers. But it’s better for local retailers and local people, because centers will have to innovate and stay interesting in order to survive.”

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