The nation’s largest drugstore chain, Walgreen Co., wants to sell some valuable Honolulu real estate that includes a conceptual plan for a condominium tower connected or adjacent to its flagship store that is under construction.
Walgreens is offering to sell its new store, which the company would lease back, and an adjacent office building it owns along Kapiolani Boulevard and Keeaumoku Street across Kapiolani from Ala Moana Center.
The Deerfield, Ill.-based retailer recently retained commercial real estate firm Colliers International to market the properties without an asking price.
The retailer spent $39 million acquiring the sites several years ago as part of establishing its first store in the state.
That first store, which opened in 2007 in the remodeled space of a former Tower Records, was demolished to make way for a bigger, two-story flagship store with a three-level parking garage that is expected to open early next year.
As reported in July, Walgreens had the parking structure designed to support a roughly 20-story tower.
Colliers is promoting the site as an opportunity for a buyer to build a residential condominium or office high-rise, which it said could be as high as 400 feet, or about 40 stories, under interim city transit-oriented development rules because the site is within a quarter-mile of a planned rail station at Ala Moana Center.
The brokerage firm suggested one development scenario is to replace the office building, which is anchored by Heald College, with a 400-foot tower. Building a 250-foot tower on the Walgreens garage also is possible.
Walgreens also is offering to transfer the allowed tower density for its flagship store site to the adjacent property, which would not increase the height limit, but would allow a more dense building on the Heald College property.
"The site provides for various redevelopment options," Colliers said in marketing materials. "The demand and prices for new high-rise luxury residential condos in the urban core substantiate the construction costs."
Selling the land under the new store and the adjacent site is a way for Walgreens to recoup the capital it invested in arranging for the development of its flagship store, according to Mark Bratton, a Colliers agent.
Walgreens entered the Hawaii market initially by leasing the land under the former Tower Records store. To secure a possible site for a bigger store, the retailer bought the Heald College building in 2007 for $24 million. Then, in 2009, Walgreens bought the land under its Keeaumoku Street store and an adjacent KFC restaurant for $15 million.
The later purchase allowed Walgreens to position its new store on the corner of Keeaumoku and Kapiolani, which made the adjacent office property "excess real estate," according to Bratton.
