New zoning rule spurs rebuild at Waikiki site

A California company with ties to the development of Trump International Hotel Waikiki Beach Walk has bought land in Waikiki previously slated for a hotel, time share or residential condominium tower.

The company, Pacrep LLC, recently paid $15.5 million for the vacant 1.3 acres at the Ewa end of Kuhio Avenue, mauka of the retail complex on Kalakaua Avenue housing high-fashion boutiques including Chanel, Gucci and Tiffany & Co.

Jason Grosfeld, a principal of Pacrep and Trump Waikiki developer Irongate Capital, said the company is still formulating plans and isn’t prepared to publicly discuss ideas. "It’s just way early," he said. "Nothing’s been determined."

The previous landowner, K3 Owners LLC, proposed a 220-unit residential condo or time-share, or a hotel-condo with 140 hotel units and 120 residential units in a tower up to 300 feet tall.

But that estimated $125 million vision, first floated in 2004 and dubbed 2121 Kuhio, fizzled amid financial and real estate market troubles that began emerging around the time of the project’s anticipated launch in 2007 or 2008.

Work by K3 included an environmental assessment completed in 2006 and an endorsement from the Waikiki Neighborhood Board obtained on a 10-4 vote in the same year.

Zoning rules had previously restricted the property to commercial use with a 300-foot height limit, which meant K3’s plan required a zoning change from the City Council. But new laws adopted in December mean the site is now permitted for high-rise residential or commercial use.

Grosfeld said the flexible zoning attracted Pacrep to the property. "We love the area," he said.

Rick Egged, executive director of the Waikiki Improvement Association, said the purchase bodes well for part of Waikiki that in his view represents the next opportunity for concentrated redevelopment.

"This could be the beginning of the future for this particular area of Waikiki," he said. "We look forward to getting a new player in this particular neighborhood."

The 2121 Kuhio site has been vacant since the late 1990s when local developers displaced a collection of businesses, including landmark gay bar Hula’s Bar & Lei Stand, to make way for a retail complex.

An initial phase of the retail complex, 2100 Kalakaua, was built by Hono­lulu-based developer Honu Group and opened in 2002. But the second phase was never built. K3’s owners included principals of Honu and San Francisco-based Belrad Group.

Investment firm Lehman Bros., which went bankrupt amid the financial market downturn, also had a stake in the property.

Honu Group previously developed a neighboring property into King Kalakaua Plaza, which was once anchored by Niketown, Banana Republic and a celebrity-affiliated sports bar but is now empty.

Los Angeles-based Irongate and Grosfeld have been involved in several real estate development projects in Hawaii, including Trump Waikiki, which opened about two years ago. Irongate developed the Trump hotel-condo, which is managed by a company affiliated with New York developer Donald Trump.

Irongate also began work on a residential tower in Waikiki at the makai end of Ala Wai Boulevard, but sold the project in 2005 to another firm that built Watermark Waikiki. Irongate also tried developing an industrial subdivision on the site of the former Hawaii Raceway Park, but lost that property in 2010 to foreclosure.