Last month Randall Hew sent me an essay written by Donald Graham in 2008 about building Ala Moana Center. He was the point person in its creation. It’s fascinating and has given me some insight in building what they call “Hawaii’s Center.”
Mosquitoes and ducks
For instance, the land was once held by Bishop Estate (now Kamehameha Schools). The estate rarely sells its land, but Graham gives a reason why it did in 1912.
“The Bishop Estate trustees had received complaints from neighbors about the mosquitoes and duck farmers,” Graham said. Walter F. Dillingham purchased 100 acres of swampy land that extended from Waikiki to about Ward Avenue.
Dillingham’s company had a contract to dredge the Ala Wai Yacht Harbor. He used the dredgings to fill the swamp. He sold 50 acres and leased the other 50 to the Army during World War II to use as a lumberyard.
“When asked why he had purchased it for $25,000, he said, ‘Maybe it will be worth something someday.’”
What’s a shopping center?
Nearly 40 years later Walter Dillingham’s son, Lowell, told Graham he planned to build a shopping center on the 50-acre site. Graham didn’t know what a shopping center was — there were few in the U.S. — and asked him to explain it.
“He said our shopping center was planned as a recentralization project, not a decentralization project.”
From the early 1800s downtown Honolulu had been the main shopping area on Oahu. Starting in 1868 the area was served by horse-drawn streetcars, but after World War II private automobiles were taking over and free parking was required. There wasn’t enough downtown.
“His vision was a mall where the successful merchants from the Fort Street area and other newcomers could locate with adequate free parking,” Graham said.
Based on Orchard Mall in Chicago area
Dillingham hired Skidmore, Owings & Merrill, the world-famous architects from Chicago, and they based their design on the “Old Orchard” mall plans in Skokie, Ill. It was a one-story outdoor structure.
Graham thought a single-level mall would not make financial sense, and an architect they consulted, John Graham (no relation to Donald) in Seattle, agreed. He suggested a double-deck center.
Smart lender
Dillingham’s vision would require much more money than could be raised locally. “We had to locate a lender who had the capacity and the smarts to come out in the middle of the Pacific Ocean for a shopping center loan.”
The Equitable Life Assurance Society of New York was chosen. Its directors initially turned down the idea. One said, “I don’t see why we’re making the largest loan west of the Hudson River when we don’t even sell insurance in Hawaii.”
Donald Graham got insurance information for the company that showed the market was huge and that Equitable was qualified to sell here. “‘Their maka (eyes) popped outside their head,’ to use an old Hawaiian expression,” Graham said.
“The following year, Equitable approved our jumbo loan of over $70 million in 1950 ($750 million in 2021 dollars) in faraway Hawaii. And I thanked the Hawaii insurance commissioner for his help, and Equitable started selling insurance in Hawaii.”
Loan guarantee
Dillingham designed the mall with local companies in mind, but Equitable rejected most of them as poor credit risks. Lowell decided that Dillingham would have to guarantee all the local tenants.
Pre-Pilgrims
“Equitable then wanted to see financial statements of all the tenants. We even had to get one from the Shirokiya department store in Tokyo.
Shirokiya was insulted. It said, “We have been in business for over 300 years, since the middle 1600s, which was about the time of the Pilgrims in your country.”
“When I repeated this to Equitable in New York, they were amazed and laughed,” Graham mused.
The Ilikai
Dillingham needed a great deal of startup capital for the mall. To get it, they sold a project they had just begun. It was a condo on Ala Moana Boulevard called the Ilikai. The purchaser was Honolulu Star-Bulletin owner Chinn Ho.
“Ho was going to convert our condo into a hotel on this property. We sold the land and the concept to Chinn Ho, with the exception of the 350 condo units we’d already sold.
“We had sold the condos for $26,000 fee simple. Now they’re over a million dollars. This is the way we got the pre-construction funding for Ala Moana Center.”
Buses
Graham thought city buses would be essential, but Henry Weinberg’s Honolulu Rapid Transit Co. didn’t agree. Its bus routes on Ala Moana and Kapiolani boulevards were close enough, they felt.
So Graham chartered them to run onto Kona Street. After a year, Weinberg said, “We want to take back the buses that you have pioneered. You have figured out that the most profitable line in the whole bus system is the No. 8 line to Waikiki.”
Graham said, “We didn’t want to be in the bus business. We only wanted to prove that if we put in buses, they would pay for themselves. We left it at that.”
Sears
Ala Moana needed a large anchor tenant that would convince downtown stores to relocate to the mall and show Equitable that the populace would shift its shopping habits.
Many national chains, such as Marshall Field, said no. It would be too expensive to open a branch in Hawaii, service it and promote it, they said.
Dillingham then thought of Sears. To give it a push, Dillingham bought a lot Sears used for parking next to its Beretania store, squeezing them. It worked.
Graham made a deal with Sears to purchase its old store for $1.5 million, with the stipulation that it not be sold to another retailer. Graham sold it to the city for its Police Department for $2.5 million, which negotiated a $250,000 cash discount.
Sears said it had plans ready for a Pasadena, Calif., two-level store, and Dillingham adapted it to match the rest of the mall.
Ala Moana Building
Originally, the Ala Moana Building was going to be where the escalators are today in the middle of the mall, with the La Ronde revolving restaurant on top.
However, Graham was concerned that people would stay at the restaurant for over an hour and fill the parking lot, so the building was moved mauka of the center.
Phase 2
Ala Moana’s first phase opened in 1959. It extended from Sears to the center stage area. Phase 2 opened in 1966 and extended Diamond Head toward the Ala Moana Hotel.
Lowell Dillingham wanted Liberty House to be its anchor, but it said no. It had been in the downtown area for over 100 years.
“Liberty House had decided that they would stay at Fort and King streets ‘until grass is growing on the street,’” Graham said, but Lowell was on its board of directors and somehow persuaded them to anchor Phase 2.
Hard lines, soft lines
Sears put “hard lines” — tools and appliances — on the street level, and soft lines — clothes and household goods — on the mall level, so Dillingham initially followed its lead with other retailers.
Queen Louise
Walter Dillingham’s wife, Louise, told Graham she was unhappy with the project. “‘Queen Louise’ spoke to me,” Graham said, “waving her finger at me saying, ‘I drive along Ala Moana Boulevard frequently and look at Diamond Head. But since we built that awful big concrete building, I can’t see it anymore.’
“I said, ‘Your son told me to build it. Take it up with him.’”
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