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Kona Commercial Property Owners Face Uncertainty as County Eyes Former Kmart Site for Events Center

·7 min read·👀 Watch

Executive Summary

Hawaii County is considering acquiring the vacant Kmart site in Kailua-Kona, potentially transforming it into an events center and impacting local commercial real estate values and development strategies. Businesses should monitor county planning decisions and potential shifts in local consumer traffic.

  • Real Estate Owners: Potential zoning changes, impact on surrounding property values.
  • Small Business Operators: Shifts in foot traffic, new opportunities or competition.
  • Investors: Evaluate risk/reward for commercial properties in the vicinity.
  • Tourism Operators: Potential new demand driver, but uncertain impact on existing infrastructure.
  • Entrepreneurs: New opportunities for event-related services or retail.
  • Action: Monitor county meeting minutes and public notices for decision updates.

Watch & Prepare

Medium Priority

If the county moves forward with the acquisition and development, businesses and real estate stakeholders will need to adjust their strategies regarding local amenities and commercial space.

Monitor Hawaii County Planning Department public notices and meeting agendas for updates on preliminary feasibility studies and acquisition discussions. If formal acquisition steps are taken, reassess lease terms, business strategy, and investment portfolios for properties near the Makalapua Shopping Center.

Who's Affected
Small Business OperatorsReal Estate OwnersInvestorsTourism OperatorsEntrepreneurs & Startups
Ripple Effects
  • →Increased demand for event services → higher operating costs for existing local businesses
  • →Potential traffic congestion → need for infrastructure upgrades impacting accessibility
  • →Shift in commercial property demand → potential revaluation of surrounding real estate
  • →Repurposing of large retail space → influence on future land-use planning decisions
Scenic aerial view of Kailua-Kona, Hawaii coastline featuring boats and lush greenery.
Photo by Daniel Torobekov

Kona Commercial Property Owners Face Uncertainty as County Eyes Former Kmart Site for Events Center

Executive Brief

Hawaii County is considering acquiring the vacant former Kmart site in Kailua-Kona's Makalapua Shopping Center to convert it into a dedicated events center for West Hawaii. This potential shift could redefine commercial real estate dynamics and create new opportunities or challenges for local businesses. Stakeholders should closely monitor the county's progress on this initiative.

  • Real Estate Owners: Potential zoning changes and evaluation of surrounding commercial property values.
  • Small Business Operators: Shifts in consumer traffic patterns and potential new demand for event-related services.
  • Investors: Reassessment of commercial real estate investment risk and potential returns in the Kona market.
  • Tourism Operators: Consideration of a new local attraction that could draw visitors but also strain existing infrastructure.
  • Entrepreneurs: Identification of new market niches for event support, catering, or related retail.
  • Action: Monitor Hawaii County Planning Department public notices and meeting agendas for updates on preliminary feasibility studies and acquisition discussions.

The Change

Hawaii County officials are exploring the acquisition of the long-vacant former Kmart store located within the Makalapua Shopping Center in Kailua-Kona. The stated intent is to convert this significant commercial space into a multi-purpose events center for West Hawaii. While currently in the consideration phase, the county's active exploration signifies a potential future land-use change that could have substantial implications for the surrounding commercial landscape. The timeline for a decision on acquisition and development has not been specified, but such government projects typically involve extensive planning, public hearings, and budget approvals, potentially spanning several years.

Who's Affected

Real Estate Owners

Property owners and developers in and around the Makalapua Shopping Center face a period of uncertainty. If the county acquires the site for an events center, zoning regulations may change, impacting current commercial lease agreements and future development potential for adjacent properties. Landlords should prepare for potential shifts in tenant demand, as businesses may reconsider locations based on proximity to the proposed center. The long-term value of commercial properties in the immediate vicinity could be influenced by increased traffic and the viability of the events center itself. Property managers will need to assess how this potential development aligns with their portfolio strategy.

Small Business Operators

Local businesses, including restaurants, retail shops, and service providers, could see both opportunities and disruptions. An events center could draw increased foot traffic and consumer spending to the area, benefiting establishments that can cater to event attendees. However, it might also lead to increased competition or changes in the existing business mix within the shopping center. Businesses reliant on current traffic patterns may need to adapt their offerings or marketing strategies to capture new customer segments. The long lead time for such a project means immediate operational impacts are unlikely, but strategic planning for potential shifts in the local economic environment is advisable.

Investors

For real estate investors, this development introduces a new variable into the Kona market. Properties near a potential major public venue could see an increase in value if the center proves successful and draws consistent crowds. Conversely, if the project faces delays, cost overruns, or fails to generate anticipated economic activity, it could depress surrounding commercial real estate values. Investors should conduct thorough due diligence on the county's commitment, funding sources, and the projected economic impact of the events center before making investment decisions. The viability of the project will heavily influence the risk-reward profile of commercial real estate in this specific sub-market.

Tourism Operators

Hotels, tour companies, and other hospitality businesses in West Hawaii may benefit from an additional draw for visitors. A new events center could host concerts, festivals, conventions, and other activities that might appeal to tourists, potentially increasing hotel occupancy and demand for local tours and services. However, the existing infrastructure, including road access, parking, and public transportation, will need to accommodate any additional visitor influx. Operators should consider how to integrate potential events into their offerings and be aware of any increased strain on local resources.

Entrepreneurs & Startups

Entrepreneurs and startups could find fertile ground for new ventures related to event management, catering, specialized retail, and support services for event attendees and organizers. The conversion of a large, vacant retail space into an entertainment venue signifies a potential shift in the demand landscape in Kailua-Kona. Founders looking to establish businesses that complement or support a large event facility may find a nascent market. Access to capital for such ventures would depend on the perceived viability and long-term success of the proposed events center.

Second-Order Effects

The potential for a large events center could lead to increased demand for local services and construction labor, potentially bidding up wages for skilled trades and hospitality workers. This wage pressure could then translate into higher operating costs for existing small businesses, particularly restaurants and retail outlets. Furthermore, increased visitor and local traffic to the Makalapua area could exacerbate existing traffic congestion challenges, potentially impacting accessibility for both shoppers and residents, and necessitating future infrastructure investment. The county's acquisition and development of such a significant parcel could also influence future land-use planning decisions for other large commercial or underutilized properties across West Hawaii.

What to Do

Given the early stage of this consideration, the recommended action level is 'WATCH'. The county has not made a final decision, and the process is likely to be lengthy.

Monitoring Key Indicators

In the coming months, Hawaii County officials will likely conduct preliminary feasibility studies, hold public information sessions, and discuss the acquisition process in open county council meetings. Key indicators to monitor include:

  1. County Planning Department Agendas and Minutes: These will detail any public discussions, proposed land-use changes, or preliminary assessments related to the Makalapua site.
  2. Public Notices: Look for any official announcements regarding public hearings or the initiation of environmental or economic impact assessments.
  3. Budgetary Allocations: For investors and entrepreneurs, tracking any budget proposals or appropriations for the acquisition and development of the site will indicate the seriousness of the county's intent.

Trigger Conditions for Action

While immediate action is not required, stakeholders should be prepared to act if certain triggers are met:

  • For Real Estate Owners: If the county council approves preliminary funding or enters into a purchase agreement, begin reassessing lease terms for commercial tenants and evaluating the long-term strategic value of holdings near Makalapua.
  • For Small Business Operators and Entrepreneurs: If a formal plan and timeline for development are announced, identify specific business opportunities (e.g., catering, event services, specialized retail) and develop business plans. Consider securing prime locations or partnerships early.
  • For Investors: If the county moves past the initial feasibility stage and towards acquisition, conduct detailed market analysis on the potential impact to commercial property values and rental rates in the Kona area. Consider diversifying portfolios if local market concentration is high.
  • For Tourism Operators: If a firm groundbreaking date is established, explore partnerships with the proposed events center for package deals or promotional activities.

No immediate action is required, but consistent monitoring of county proceedings will provide advanced notice for strategic adjustments.

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