Kamehameha Schools plans to convert a four-story office and retail building at 680 Ala Moana Blvd. into loft-style apartments for rent to households at or below the median income level.

"This is a unique opportunity to provide newly constructed rental housing to Honolulu’s working families," Paul Quintiliani, Kamehameha Schools’ commercial real estate director, said in a statement. "The project aligns perfectly with Kamehameha’s vision of Kakaako as a robust and diverse neighborhood."

The building redevelopment is the first phase of Kamehameha Schools’ Kaiaulu o Kakaako master plan, approved by the Hawaii Community Development Authority in September 2009. The plan directs a shift over the next 15 years to a pedestrian-centric neighborhood with tree-lined thoroughfares, local manufacturing and retail and open community gathering spaces. The area now encompasses older office and industrial buildings.

The building, known by its 1960s-era signage as Six Eighty Ala Moana, will not be razed. Rather, it will be gutted and redeveloped to include approximately 54 apartment units, with the exact number pending completion of design work by Architects Hawaii.

Residents earning up to Honolulu’s median income will be eligible to rent the HCDA-designated "reserved housing." In 2006 the median income for a family of four in Honolulu was $71,300. Rents are expected to be at or below figures set by state reserved-housing laws.

"We think the location and layout of these apartments will be attractive to young professionals who work in downtown as well as students and faculty from the neighboring John A. Burns School of Medicine and the future Cancer Research Center," said Quintiliani. "As we begin to fill the neighborhood with residents and businesses that cater to those residents, Kamehameha is planting the seeds of a new community."

The new design will include 7,600 square feet of retail space on the ground floor and a roof deck with views of Diamond Head and Kewalo Basin. The deck also might have various amenities, including a hot tub and barbecue.

"It’s a positive step forward for the KS Kakaako master plan and a good adaptive reuse for an aging Class C office building that generated below-market rents and increased vacancy," said Mike Hamasu, director of the research and consulting division of Colliers Monroe Friedlander, which also manages the property. "Affordable rental housing is definitely needed," he said.

Kamehameha Schools has a signed memorandum of understanding with 19 trade unions under which local, unionized labor will be hired for the project.

"It’s historic to achieve an agreement of this magnitude with Kamehameha Schools," said Lance Yoshimura of the Hawaii Carpenters Union Local 745. "Their master-planned project in Kakaako will help Hawaii’s economy recover by employing thousands of workers during and after the redevelopment."

The Hawaii Building and Construction Trades Council is "proud to be a partner in this collaborative effort, and we are committed to providing the necessary highly skilled work force to ensure the success of this and future projects," said William "Buzzy" Hong, executive director.

The ground-floor retail footprint will not change, but existing ground-floor retail and office tenants will have to find new space during construction.

Construction is expected to begin by early 2012 but no sooner than June 30, 2011, said Kamehameha Schools spokeswoman Erin Kinney. Some tenants have leases that expire before June 30, but others with lease terms expiring after that date might have those leases terminated early, in accordance with clauses in those lease agreements.