Given the time of year, International Market Place retailer House of Flys should be buzzing with holiday traffic. Instead, retail clerk Marissa Gullino stared pensively at a quiet cash register in a shop that was devoid of customers and surrounded by a sea of empty storefronts.
"We’re one of the last shops still open," said Gullino, who will lose both of her jobs when the market closes at year’s end to make way for an upscale redevelopment. "Every day more businesses are closing. This place has been dead since the Tree House Cafe shut down about two weeks ago. It’s slower at the hair-braiding kiosk where I work, too."
Founded around 1957 by Donn Beach (also known as Don the Beachcomber) and other partners, the International Market Place is going the way of other Hawaii legends from a bygone era.
For decades, the Kalakaua Avenue market was home to countless small businesses that found their niche selling things like volcano-shaped candles, plastic hula skirts and inexpensive aloha wear. The late entertainer Don Ho used to frequent the market’s tiki bars and showplaces.
And until now, the market had changed very little.
The termite-ridden market had not undergone major renovations since the last building went up in 1970. Two previous attempts to overhaul it failed.
In 1988, the largely immigrant population of market business owners nearly rioted at the state Capitol over a plan to demolish the market and replace it with a convention center. There was more acceptance in 2003 when the market’s landowner, Queen Emma Land Co., proposed a $150 million redevelopment.
But the landowner scrapped the plan in 2005 due to concerns it would be too risky for the nonprofit affiliate of The Queen’s Health Systems, which runs the Queen’s Medical Center.
"They’ve been talking about redevelopment for about 20 years," said long-time market tenant Tina Chang, who has run Tropical Collections Tee & Towel in the market since 1998 and is now readying her store for a move to King’s Village, another Waikiki location slated for redevelopment. "So many times before, nothing happened."
This time around, Queen Emma Land Co. and its redevelopment partners — Michigan-based Taubman Centers Inc. and San Francisco-based real estate investment firm Coastwood Capital Group LLC — appear to be moving full speed ahead. A new $350 million retail complex will emerge after the demolition of the market and the neighboring Miramar at Waikiki hotel and Waikiki Town Center.
Tenants of the center, which include Payless ShoeSource, Serino’s Pizza Waikiki, Maddog Saloon Waikiki and Saint-Germain Bakery, have to cease operations by Dec. 31, as does the Miramar and most of the International Market Place. However, about 19 stores and kiosks in high-rent spots fronting the market’s landmark banyan tree have received short extensions.
"A few extensions were given on a case-by-case basis so that they could capture the New Year’s business," said Taubman spokeswoman Rachel Ross.
Site activity on the roughly 360,000-square-foot open-air retail, dining and entertainment center is expected to start in February with construction slated for spring, Ross said.
"We expect to open in early 2016," she said.
THE NEW MARKET will look vastly different save for the banyan tree, which developers will incorporate into the 6-acre redesign.
The complex, which will occupy about the same-sized footprint as the Royal Hawaiian Center, will have about 750 parking spaces and 60 stores, including a three-level Saks Fifth Avenue and seven restaurants on a third-level lanai.
The development, which counts Gov. Neil Abercrombie and Mayor Kirk Caldwell among its fans, is expected to create a new gathering place in Waikiki. Proponents say it will create jobs, increase the value of surrounding properties, reduce crime in the area, bridge the gap between high-end Kalakaua Avenue retailers and Kuhio Avenue shops, and encourage other developers in Waikiki.
It has the support of the Waikiki Improvement Association and the Waikiki Neighborhood Board.
"Taubman has a reputation for doing quality work that fits into the local community," said the association’s president, Rick Egged. "I really believe that they will create a whole new set of opportunities for Waikiki."
Not everyone is cheering the change. Nearly 3,000 people have signed two anti-redevelopment petitions on change.org.
Repeat visitor Lil Perra of Canada said she, too, will be sad when the landmark market is gone.
"I’m glad I got to see it again before the final shutdown," Perra said. "I discovered the market on a visit to Hawaii 35 years ago. I’m happy the tree is staying, but there are so many high-end stores everywhere. I think it’s a shame to lose all of this to Saks."
Psychic Zabia Dolle, who has worked at the market sporadically for 25 years and owns the Enchanted Banyan kiosk, said redevelopment will drive current business owners out of the tight Waikiki rental market, costing hundreds of jobs.
About 100 full- and part-time employees work at the Miramar hotel, which has been in business since 1970. About 570 people work at the Waikiki Town Center and the International Market Place, which was home to about 130 businesses.
But Taubman projects that the new development will create about 1,000 construction jobs and roughly 2,500 permanent jobs.
Still, Dolle said, the transition could be painful.
"There’s not anywhere for most people to go," she said. "We had a meeting with a few Realtors and they suggested King’s Village, but it’s going to be redeveloped soon. Duke’s Lane was able to take quite a few people, but it’s gotten crowded and they are doubling or tripling rents."
Retail analyst Stephany Sofos said displaced market retailers likely will have a hard time finding affordable Waikiki space. A 1,000-square-foot prime location in Waikiki usually rents for $20,000 to $30,000 a month.
"Similarly sized, nonprimary Waikiki locations would rent for $5,000 to $15,000. But that’s if you could find it," Sofos said. "There’s a concerted effort among developers between Waikiki, Ala Moana and Kakaako to go higher-end. It’s getting difficult for smaller operations to start up."
In the old days, Sofos said, the market often served as a business incubator. She points to Crazy Shirts’ owner Frederick Carleton "Rick" Ralston, who was airbrushing T-shirts there in the 1960s, as one of its greatest success stories.
"The market gave immigrants and small startups opportunities," Sofos said. "With the redevelopment, I think it will be hard for current tenants to come back. The rents will be too high and I don’t think most will be what Taubman wants."
Ross said tenant announcements will come closer to the reopening.
"It’s too early to confirm which tenants will be back. We hope to have some kiosk opportunities in the center, but that has not been confirmed," she said. "For now, all leasing inquiries should go to Diana Milligan of Taubman Centers in Michigan."
Dolle said she wants to return to the market if rents are affordable, but the company has not given her any assurances.
"I’d love to come back in any configuration, but it’s still so uncertain," she said. "I could retire, but I’ve got three other people working for me and I worry about them. This is heartbreaking."
