The acquisition by the state's largest landowner of landmark property in Moiliili is part of a long-range plan to turn the aging neighborhood into a thriving community in the shadow of the University of Hawaii's Manoa campus.
Kamehameha Schools' purchase of 1.7 acres beneath the shuttered Varsity Theatre and adjacent Varsity Office Building from Consolidated Theatres' parent Pacific Theatres this week gives the trust a total of 11.4 acres in the area, much of that along University Avenue and South King Street.
The area along the intersection is the closest commercial district to the Manoa campus, which is separated from the businesses by the H-1 freeway.
The idea of redeveloping the area into more of a college town has been batted around for 40 years. It last surfaced five years ago when former UH President Evan Dobelle said he would make creating a college town one of his top economic development priorities. Dobelle at that time had even suggested moving the University of Hawaii system offices from the Manoa campus to office space in Moiliili, something the current administration is not actively considering.
Kamehameha Schools stops short of saying its master development plans call for creating a college town. The trust is not expected to be finished with the master plan until early next year.
"Moiliili is the gateway to the University of Hawaii and we would like to strengthen our ties to the university community," said Tara Young, senior commercial asset manager for Kamehameha Schools.
The trust is not saying how it will redevelop the Varsity property, which includes the theater, an office building and a large surface parking lot.
The Varsity Office Building will continue to operate as-is, and Kamehameha Schools will make some improvements to address deferred maintenance, Young said. There are no plans to bring in a theater operator to reopen the 67-year-old Varsity Theatre, which closed on June 17, she said.
Kamehameha Schools has indicated it plans to redevelop Puck's Alley, the building at the mauka-Diamond Head corner of University and South King Street that it bought last year.
Other ground leases along South Beretania Street are due to expire over the next couple of years.
The trust already is moving ahead with two other projects along South Beretania Street, University Towne Square, which involves renovating two existing buildings and an unpaved parking lot at the corner of Isenberg Street, and University Towne Annex on the former Varsity Motors and Imperial Palace restaurant site.
University Towne Square has five retail spaces ranging from 393 square feet to 1,057 square feet, and a possible new building that could house a small drive-through coffee shop or dry cleaner, said Brooks Boror of Colliers Monroe Friedlander, which is handling the leasing. The Annex site is offered as a ground lease that could allow a fast-food or sit-down restaurant.
"The owners are foreseeing an opportunity to bring some new uses that would appeal to the students at UH and to the community," he said.
The two buildings are mixed-use, with several dozen apartments above long-unused retail space. The plan is to renovate the facade and the interiors. It is not known whether the apartment tenants, who are on month-to-month leases, will have to move out.
"The main focus right now is the commercial space that is on the ground floor of those two buildings that are right next to the open lot," said Kamehameha Schools spokesman Kekoa Paulsen.
The Varsity Theatre was the first of two area landmarks to close in the past two weeks. Longtime University of Hawaii hangout Magoo's Pizza in Puck's Alley is closing Saturday night after some 10 years at that location.
Magoo's owner Gilbert Sakaguchi is shifting his business to a takeout-delivery operation run from three trucks, one of which will be parked in the recently paved parking lot adjacent to Puck's Alley.
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