Two Waikiki commercial landmarks, T-Galleria by DFS and the Kyo-ya Restaurant site, are in various stages of reopening and poised for further development.

The T-Galleria by DFS, which caters to duty-free shoppers on one of the prime retail corners of Waikiki, closed in March 2020 but began the first phase of reopening about 2-1/2 weeks ago, according to B.J. Kobayashi, chairman and CEO of finance company BlackSand Capital and founder and senior partner for developer Kobayashi Group.

BlackSand Capital acquired the DFS building and the high-rise office portion of the building, which comprise 155,000 square feet of gross leasable area plus a parking garage, for $270 million in August 2021. Last year the company signed an 18-year, $300 million lease to rent 75,000 square feet of that space to DFS to use as a retail podium.

“DFS has had a history with Hawaii that goes back to the 1960s. It’s amazing what they’ve done to leisure and travel retail, and so to be able to extend that track record into the future with them is real exiting to us,” Kobayashi said Wednesday.

He noted that DFS made aesthetic improvements to the inside of the retail complex before its soft opening.

“For the limited time that they had, they’ve done a fantastic job — people love it,” Kobayashi said. “They have opened the beauty products, some of the apparel and some of the fragrances and some of the food and beverage products. Not all of the offerings are available yet, which is why they’ve termed it a soft opening. It’s reopening in phases.”

Kobayashi said discussions about further redevelopment at the site are taking place. A scenario might be an expanded partnership between BlackSand Capital, the Kobayashi Group and DFS, which owns 250,000 square feet of gross leasable space contiguous to BlackSand Capital and Kobayashi Group holdings, he said. Together the properties comprise a site similar in size to the Sheraton Princess Kaiulani near the intersection of Kalakaua and Kaiulani avenues, Kobayashi said.

“We’ve talked at length with them about having a much larger impact in Waikiki,” he said. “There’s a real interest for DFS and BlackSand Capital, the Kobayashi Group and LVMH (DFS’ parent company) to work together on something that would be mixed use, not just retail. Our property is zoned resort mixed use, which means you could do hotel, timeshare, retail, office — really, resort mixed use affords the most elasticity.”

BlackSand Capital and the Kobayashi Group also are moving forward on revitalizing a prime piece of Waikiki real estate that has been dormant since Kyo-ya Restaurant ended a near 50-year run in 2007.

For the immediate future, Kobayashi said he doesn’t intend to change the low-rise footprint of the former restaurant, which sits at 2055 and 2057 Kalakaua Ave. at the gateway to Waikiki, adjacent to Fort DeRussy, and has been a Waikiki landmark for decades.

“We don’t have the solution right now but I think we are going to be arriving in a plan in the next two or three months,” he said. “Some early conversations have discussed the potential of a luau, but it’s not finalized.”

Kobayashi added, “We don’t have a current plan that contemplates an intense high-rise building. We do not have that right now, but that’s not to say that that would not be considered.”

He said the former restaurant space actually is zoned for a hotel.

“If you had to do a hotel there, it would have to be 25 feet (high) or less, and so that’s the challenge. However, I think with the direction Waikiki is going in you never know. It might be a great location for a hotel that is taller.”

For many years the property served as a restaurant but in more recent times its future has been uncertain.

Kyo-ya, which was founded by Kenji Osano in 1960 as a subsidiary of Japan-based Kokusai Kogyo, Kyo-ya Co. Ltd., bought the Kyo-ya Restaurant in Waikiki in 1962. In 1991, after a $15 million investment, Kyo-ya introduced a new Kyo-ya Restaurant in a more modern building.

After Kyo-ya closed the restaurant, site activity ceased until 2015 when Best Hospitality LLC, a subsidiary of Tokyo-based Tsukada Global Holdings, purchased the property for $30.5 million and sought to build a 350-foot-tall condo-hotel tower.

That plan quickly ran into community opposition. Waikiki Neighborhood Board Chair Bob Finley said members unanimously opposed the high-rise project in a 15-0 vote.

Keola Cheng, director of planning at Wilson Okamoto Corp., is on the Waikiki Neighborhood Board’s Tuesday agenda to provide a site update termed the “Kalia Cultural Entertainment Venue.”

Finley said he has heard that plans may include putting in a short building with a stage and bars to support a luau.

“Somebody is going to put something in there. If they are willing to do something that is within the height limit and without variances, off the top of my head I’m not too upset about it,” he said.