StarAdvertiser-article

September 21, 2015

Macy’s Kailua exit could mean big bucks for family

The Mahoes hope to sell their piece of the parking lot for $6.2M

By Andrew Gomes

The recent decision by Macy’s to close its store in Kailua after the upcoming holiday season will be a loss for many shoppers. But for one local family the departure could produce a multimillion-dollar windfall.

The family of the late Howell Kaliula Mahoe Sr. owns an odd piece of the Macy’s property and has decided to put it up for sale.

For more than 60 years, the Mahoe family has been a landlord to the department store that opened in 1946 as Liberty House and was converted to Macy’s in 2006. The family owns a midsection of the store’s parking lot, an area that contains about 90 of the 180 stalls serving shoppers.

After Macy’s decided not to renew its lease, Mahoe family members decided to put the 32,000-square-foot parcel on the market. It’s listed by brokerage firm Newmark Grubb CBI Inc. for $6.2 million.

Walton Mahoe said his father received the property in the 1940s or 1950s in a trade with Harold Kainalu Long Castle, the man who transformed Kailua from an agrarian outpost to a thriving residential community. Mahoe said his father owned land in Maunawili that Castle wanted, and agreed to accept what became a piece of Kailua’s commercial real estate core.

“Whatever (development deals Castle) made, we were part of it, too,” Mahoe said.

Mahoe’s father lived on Oneawa Street. He died in February at 82.

Macy’s could have extended its lease on the Mahoe family property until 2027. Not extending presented a good opportunity to sell the land, especially given that many parts of the town are undergoing redevelopment that includes a Target store that opened in March and the Ka Malanai condominiums nearing completion.

“We’d rather not sell, but the winds of change are there,” said Mahoe, who is a trustee of the property along with his brother, kumu hula Howell K. “Chinky” Mahoe Jr.

Alexander & Baldwin Inc., a Hawaii real estate and development firm that bought 70 percent of the commercial-zoned land and 90 percent of the retail property in Kailua from a company and foundation created by Castle, owns most of the Macy’s site, including the 59,000-square-foot store and two sides of the rear parking lot.

A&B has said it is considering options to make the best use of the Macy’s site with a goal of retaining the building’s character.

A&B is considered to be an obvious potential buyer of the Mahoe property, given that it owns all the land on every side of the Mahoe parcel. The Mahoe parcel has easements on adjacent A&B land for access.

The parking lot behind the Macy’s building is convenient but not necessary for any future tenants, in part because there is a three-story, 238-stall parking garage next door that was built in 2004.

Vanessa Kop, a broker with Newmark Grubb CBI, said retail and restaurant development are among considered uses for the Mahoe parcel, which is zoned for community business use and has a 40-foot height limit.

Kop said interest has been high from prospective buyers. “We do have some pretty good offers,” she said.

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