A plan to transform a rundown low-rise Kaka'ako office building into residential condominiums with rooftop gardens got the OK yesterday from a state development agency.

Developer Cooke Clayton LLC estimated it could start converting the former NCR building at the corner of Kapi'olani Boulevard and Cooke Street into 47 residential units, some retail space and 100 parking stalls in the first quarter of next year.

The project includes renovating the building and extending its diamondhead wing to increase floor area by about 60 percent, a modification that would exceed building height and setback limits.

Cooke Clayton received approval to exceed a 45-foot height limit by 15 feet for part of the structure. That would allow new construction to match the building's existing 60-foot-high diamondhead wing. The diamondhead wing was built before current height restrictions were put in place. The developer also sought to encroach slightly into a 10-foot building setback on the property's mauka side.

No one opposed the requests at a public hearing last month held by the Hawai'i Community Development Authority, which regulates development in Kaka'ako.

Yesterday, the agency approved the exemptions, which it can do under planning rules to help facilitate development that enhances the community.

"It's a very unique project," said Daniel Dinell, agency executive director. "(The NCR building) is an eyesore."

Cooke Clayton partner Chris Deuchar said units will have ceilings from 10 to 16 feet, and top-floor condos are envisioned with plant-filled rooftop decks.

Units could be available for sale at the end of this year or early next year. Prices, which will in part be determined by construction costs, have yet to be established. Last month Deuchar told the agency he hoped units could be sold for between $425,000 and $650,000.

Deuchar said his target market is empty-nesters and young professionals — "people who don't necessarily want to live in the suburbs anymore."

Agency directors generally viewed the project as adding to the fabric of the community as an alternative to high-rise development that is sweeping Kaka'ako.

A presentation of the project before the Ala Moana/Kaka'ako Neighborhood Board this year drew generally positive feedback in part because of the project's lower density.

The former NCR building, named for an Ohio-based firm once known as National Cash Register Co., was built in 1958 and expanded in 1963, according to city records. National Cash Register bought the property in 1974.

In 1998, nonprofit labor welfare organization Unity House bought the site for $5 million, and held it mainly as an investment after deciding not to move operations to the building.

Cooke Clayton, a partnership involving the head of local contractor U.S. Pacific Construction Inc., bought the largely vacant property early last year for $6 million, and initially envisioned remodeling the building and using part of it as a new headquarters for U.S. Pacific.

Reach Andrew Gomes at agomes@honoluluadvertiser.com.