Lehman Sells 2100 Kalakaua Ave. for $156M

HONOLULU-A 111,000-sf “luxury row” property at the gateway to the Waikiki beach resort and urban retail district changed hands recently for $156 million, which is about $15 million more than it cost to develop two years ago. Lehman Bros. sold the asset to a joint venture of New York-based Metropole Realty Advisors Inc. and Heller Properties of New York. Tenants at 2100 Kalakaua include Chanel, Gucci, Yves Saint Laurent, Coach, Tiffany & Co. and Tod’s, with Chanel and Gucci on 25-year leases for their respective 18,000-sf stores. The development is designed to resemble a collection of separate townhouse boutiques. The $1,405-per-sf purchase price reflects several things, including the long-term lease commitments, the high-end tenancy and its average sales volume, which Metropole CEO/founder Robert Siegel tells GlobeSt.com is in excess of $2,000 per sf. The price also reflects the going annualized rental rate for the spaces, which local brokers say is between $200 and $300 per sf. Two of the three-story retail spaces remain available, though negotiations are reportedly under way with prospective tenants for at least the first floor of both spaces. One of the spaces sits between Yves Saint Laurent and Coach, the other between Tod’s and Boucheron, a Gucci-owned high-end jewelry designer. If there is upper-floor space available after the additional retail tenants are secured, Siegel says he would like to round out the development with a high-end spa or restaurant, or both. “We are creating a property to fulfill a luxury experience,” says Siegel. “So in a perfect world it would include a spa.” In the few years leading up to Sept. 11, 2001, Siegel says sales in Kalakaua Avenue’s “luxury row” properties would reach $8,000 per sf. With tourism rebounding–every four days there is an influx of approximately 70,000 new visitors–and 9,000 additional hotel rooms planned over the next eight years, Siegel expects to see sales reach that mark once again.2100 Kalakaua Ave. is the second luxury retail property purchased by Heller and Metropole in less than eight months. The previous acquisition was 325-329 N. Rodeo Dr. in Beverly Hills, a 7,500-sf asset it acquired for $20 million or $2,666 per sf. Located in the heart of the city’s chic luxury retail district, it is occupied by tenants Giorgio and BCBG and is in a neighborhood with tenants like Gucci, Fendi, Ferragamo, Christian Dior, Tod’s, Brioni, Harry Winston and the future Prada flagship store. Metropole and Heller were represented in the Honolulu transaction by Sam Ross of Olshan Grundman Frome, their attorney for over 20 years. Richard Horowitz of Cooper-Horowitz was the mortgage banker who arranged the acquisition financing. Brenda Morey of CB Richard Ellis Hawaii Inc. will continue to serve as 2100 Kalakaua Ave.’s general manager.