Construction to begin next month on new commercial development in Pahoa

After several years on the drawing board, a planned shopping center in Pahoa is expected to begin construction next month.

Development of Puna Kai, the 9.93-acre property at the intersection of Kahakai Boulevard and Pahoa Village Road, has been in the works since 2012.

Ownership and management of the center is being handled by Meridian Pacific Ltd., an investment and development company with offices in Honolulu and San Francisco.

Puna Kai is Meridian Pacific’s first ownership project on the Big Island, owner and president Gary Pinkston said Tuesday.

The group previously handled financing for projects in Kona. On Oahu, Meridian Pacific owns and manages the Waipahu Town Center and also has owned Hawaii Kai Shopping Center, Koko Marina and Windward Mall.

“We’re always looking for outstanding real estate,” Pinkston said. “We like to operate in small communities, and Pahoa was excellent.”

Meridian Pacific is acquiring the property from current landowner B.T. Kuwahara.

Included in that contract is a lease to Sullivan Family of Companies, which will open a 35,000-square-foot Malama Market at the center. This will replace the current 12,000-square-foot Pahoa store, and will be the largest Malama Market in the state, according to a spokeswoman for Sullivan Family.

When complete, the entire Puna Kai center will feature 103,600 square feet of leasable space.

The most recent conceptual plan shows McDonald’s and The Coffee Bean & Tea Leaf as future tenants. A bank branch is expected to be part of the final group of lessees.

Pinkston said Meridian Pacific had several other letters of intent and leases awaiting signature, but could not yet release names. Consultant Jon McElvaney, who has been involved with Puna Kai since its initial stages, continues to work on the project, and a local engineer was hired as project manager.

Construction is expected to start in mid-March.

Site improvements are expected to be complete by the end of the year.

“It would be anticipated that the market and the stores would open second quarter of 2018,” Pinkston said. The timeline is in keeping with the original Malama Market announcement from last year.

“Everything in Hawaii always takes a little extra time,” Pinkston said. “With the weather and everything, it’ll take us a year to do the on- and off-site project.” Financing already is in place.

The total price tag for the project is about $30 million, which includes building an extension of Kahakai Boulevard, widening Pahoa Village Road and installing a traffic signal at the intersection of the two streets.

Both infrastructure improvements were part of the original project plans. There also will be a Hele-On bus stop along the Kahakai extension.

Original project cost estimates in 2012 were $20 million.

On Monday, Pinkston met with Hawaii County Mayor Harry Kim as well as representatives from the county planning and public works departments.

“We want to participate in the community,” he said.

Kim said he appreciated the “old Pahoa” style of building depicted in concept art, and that the project would be a benefit to residents who no longer would have to drive to Hilo or Keaau for shopping.

“This is for the whole lower Puna area,” Kim said. “We all know they have been through some very difficult times as far as Mother Nature is concerned.”

He said he made it “quite clear” to the new owners that the area came with considerable volcanic risk — in December 2014, the current Malama Market closed temporarily because it was in the path of the June 27 lava flow (the flow did not reach the store, which reopened in 2015).

“It’s very hard to think of another place that has been through so much trauma,” Kim said. “So there’s a really nice, I think, boost for them (the residents), that there are still people that have faith and confidence in lower Puna.”

Email Ivy Ashe at iashe@hawaiitribune-herald.com.