The Waikiki Shopping Plaza was built on ¾ of a full block on Kalakaua Avenue between Royal Hawaiian Ave and Seaside Ave.
The remaining ¼ of the block was comprised of 3 structures built in the 1960’s and was encumbered by a long term ground lease when acquired by the family that owned and developed the Waikiki Shopping Plaza. The ¼ block is located on the hard corner of Royal Hawaiian Avenue, a major intersection patronized by all tourist trolleys serving Waikiki and access to two of Waikiki’s most prestigious resorts, the Sheraton Waikiki and Royal Hawaiian Hotel. The anchors were Bank of Hawaii and ABC store; two very good and credit worthy tenants. The ground lease expired right before the Great Recession. Conventional wisdom suggested riding out the storm and renewing tenants in place.
However, Jessika saw an unusual and unique opportunity. After considering several options to renovate, Jessika became the first broker ever hired by the family, to execute on a plan she presented to tear down all three existing structures. Understanding the rare event of having all tenant leases expiring at the same time and historically low building costs, the Waikiki Shopping Plaza was expanded for only 2x the cost of a major remodel, providing the owners with leasable space for the foreseeable future, instead of spending money on a cosmetic upgrades to stretch the life of already functionally obsolete structures. Less than five years later, another developer spent six times as much PSF to build the same amount of GLA a few blocks away where rental demand is lower.
Jessika was able to create two new global flagship opportunities for which she ultimately secured Victoria Secret (20k SF) and Sephora (6k SF) exponentially increasing the NOI above the former structures resulting in a 30% annual return and a three year payback of capital expenditures for the new construction. The upper floors were given an elevator bay directly on Kalakaua avenue, making it possible to lease the 3rd floor to Tanaka of Tokyo (an original tenant of the Waikiki Shopping Plaza on the 5th floor) and Buho Cantina on roof top of the new structure. Armani Exchange moved from the family’s other asset, the Waikiki Business Plaza to anchor the opposite hard corner of Kalakaua Ave and Seaside Ave in 12k SF. The transformation of the street level retail lead to a transformation of the rest of the building including the below ground floor food court into a Love Culture retail store which later became Japanese Food Hall and Tour Lounge and upper floor service retail office space.