Shopping Center Condo Conversion Puts Retail Space On The Market
In May of this year, Savio Growth Niu Valley (SGNV) LLC purchased the 211,447-square-foot property from its largest tenant, King’s Cathedral and Chapels. The Maui-based Christian church acquired the space previously occupied by Times Supermarket approximately 10 years ago and has continued to expand its ministry with approximately 124 churches worldwide.
Although still the owner of record, the church has entered into a contract to sell the shopping center to SGNV with the exception of its current 38,000-square-foot space.
Other tenants continue to occupy and do business in their spaces according to the provisions of their existing leases. They have been offered the opportunity to purchase their space once the condominium status of the shopping center has been approved by the state.
The church will retain ownership of its space and one of the existing 11 tenants has signed an agreement of intent to purchase when its lease expires and the condominization is completed. Other buyers, who are not currently tenants, have signed agreements to purchase specific spaces that will become available when leases expire and the existing tenant vacates. OrthoSport, a physical therapy, aquatic rehabilitation, and sports conditioning facility, has not yet confirmed future plans. Savio Companies President Peter Savio noted that the two-story building, which includes a swimming pool, is subdividable and could be attractive to an investor. He added that Jack In The Box is also available and 7-Eleven is not included in the transaction.
“This Niu Valley Shopping Center project is the most complex and challenging I’ve undertaken to date,” said Savio, who has completed condominium conversions of approximately 50 projects and 10,000 units over the years. “All aspects of the shopping center operation needed to be considered, some similar and some totally different from what we are dealing with in a residential condominium conversion.
Parking is a pivotal component of the redevelopment plan when you are dealing with retail operations that include shops, medical offices, restaurants and a wide range of services. The shopping center currently includes a parking lot with 235 parking spaces owned in common and maintained by the Association of Unit Owners, which is set up much like a residential condominium and responsible for the administration of the shopping center.
“We have offered the retail units at $240 to $420 a square foot, which includes parking and the land. Common area maintenance inclusive of security, utilities, insurance, lighting, landscaping, refuse collection and reserves for capital improvements is additional,” Savio noted. “Purchases can be either cash transactions or financed. Currently First Hawaiian Bank has agreed to do loans for buyers.”
Why buy rather than lease commercial property? According to Savio, the same rationale that applies to buying a home in lieu of renting also applies to offices and retail operations. “As the owner, you are in control and able to calculate future expenses and liabilities. The property also becomes a valuable personal asset. And you can renovate and remodel as needed, provided necessary permits are obtained and the architectural plans approved by an architect, engineer, and the AOUO.
“Property values are escalating in East Oahu. Right now rent for commercial space is $4 to $5 a square foot and climbing. Buying your own space makes sense when you calculate what your costs would be as a renter, not just today, but in the future,” Savio added.