New rental housing and retail is coming to the Diamond Head side of Waikiki when Queen Emma Land Co. begins the long-anticipated redevelopment of a tired 2.5-acre tract of prime leasehold land.

The project includes a 450-unit, 260-foot high-rise tower to be built at the recently demolished Makittii Hawaii restaurant on the corner of Kuhio Avenue and Kanekapolei Street.

The project also involves renovating 50 units in four existing Kanekapolei Street apartment buildings, including the Waikiki Regents Apartments, Beachside Apartments and Queen Emma Apartments. A hundred affordable units would be reserved for those earning up to 80 percent of the area median income, currently ranging from $58,600 for singles, $67,000 for couples and up to $83,700 for a family of four.

The plan also calls for razing an existing Food Pantry on Walina Street and Kuhio Avenue. It would be replaced with 38,000 square feet of retail space on two levels but would preserve a “large exceptional banyan tree.”

Queen Emma Land, owner of the property and of the land under the nearby International Market Place, would give OliverMcMillan a 65-year lease as part of the deal. OliverMcMillan, developer of the Pacifica Honolulu and Symphony Honolulu, hopes to complete the project by the end of 2021. The developer’s plan is to keep Food Pantry open until the project breaks ground in the second half of 2019.

So far, concerns about displaced tenants and the temporary loss of Waikiki’s only full-service grocery store are the most pressing community concerns. Kirra Downing, spokeswoman for DTL Hawaii, the developer’s consultant, said apartment tenants have been notified of the upcoming redevelopment and pre-development timeline, which is roughly 18-24 months. OliverMcMillian also has started a preliminary dialogue with the incumbent grocer and intends to have a full-service grocer in the new project, Downing said.

Preliminary reaction to other aspects of the project from Waikiki businesses and residents has been mostly positive.

“It’s a tremendous workforce rental type of project that will allow people to work, live and play in Waikiki,” said Waikiki Improvement Association President Rick Egged.

Real estate consultant Stephany Sofos said Queen’s latest effort, along with its renovation of the International Market Place, continues the revitalization of a run-down section of Waikiki and will lead to additional pride and investment in the area.

“A lot of that area has been underutilized for so many years and hasn’t been upgraded, modernized or maintained. There were pockets of change in the neighborhood, but this creates a major improvement that will force others to improve,” Sofos said. “I’m especially impressed that they are executing this in a tasteful way by preserving bits of old Hawaiiana like the walk-ups and the banyan tree. They could have gone much larger.”

Waikiki resident Denise Boisvert-Jorgensen acknowledges project benefits but said she has concerns about adding another tower to her dense neighborhood.

“Finally, a developer that seems to care more about local residents who need rental housing, and less about real estate-hungry multimillionaires; kudos to them. Sadly, like most developers they seem to be obsessed with height and filling in quality-of-life open-air space with yet another high-rise in Waikiki. Did they even consider a neighborhood-friendly medium-rise?” Boisvert-Jorgensen said.

For years, Queen Emma Land, which generates income for The Queen’s Medical Center from land left to the hospital by Queen Emma in 1885, has sought to balance revenue generation with the community’s needs. Eric Martinson, Queen Emma Land Co. president, said this effort continues recent Kuhio Avenue corridor improvements like the International Market Place redevelopment.

“Revenue generated by the Waikiki improvements goes to support and advance the health care needs of the people of Hawaii. OliverMcMillan’s planned project offers yet another opportunity to upgrade the Kuhio corridor with a much-needed housing component,” Martinson said.