KAPOLEI — Joanne and Travis Walker searched two years for the perfect spot to locate the business they had been operating out of the spare bedroom of their Waipi'o home.

They found it on the first floor of their new "live-work" townhouse at Nanala at Mehana, a new mixed-use community in Kapolei by D.R. Horton's Schuler Division.

The first floor of the Walkers' home will feature a 220-square-foot work room and a customer parking spot. The second and third floors comprise a three-bedroom condo unit for the family.

The idea of live-work units has won many fans in Mainland cities and, judging by its success at Nanala, the mixed-used concept is gaining popularity here as well.

Horton-Schuler is having a lottery for the second building at Nanala today. About half of the roughly 35 families in the lottery are vying for one of two available live-work units, Horton-Schuler officials said. Demand for the live-work units were equally high when the company held its first lottery in December.

Horton-Schuler division president Mike Jones said that up to one-third of the 1,100 Mehana homes are expected to be live-work units. Nanala is the first phase of Mehana.

The Walkers, who were awarded their live-work unit earlier, are relieved to be one of those getting a live-work unit.

"I was thinking of renting some office space Downtown for the business," said Joanne Walker, 28. "It was going to be at least a couple thousand bucks a month, so this is definitely a money-saver."

On top of that, she'll be able to wake up in the morning, shower, change, grab a bowl of cereal and walk downstairs into her office.

Mehana is located immediately south of the urban core of Kapolei, O'ahu's designated Second City, and therefore lends itself to mixed-use concepts like the live-work townhouse unit, Jones said.

"I think it helps with a fabric of the community too," he said. "Someone in one of these live-work units could do a little coffee shop and so we'd have places where people could gather instead of walling yourselves off from your neighbors. People can gather and talk — like we used to many years ago."

Other live-work units are being purchased by people who operate a photo studio and a beauty salon, Jones said, while a fourth unit was bought by a psychologist who intends to have a storefront.

The Nanala section of Mehana is expected to be completed in early 2010. Mehana is expected to reach full buildout in 2016-2017, but that is dependent on market conditions, Jones said.

The live-work units start at $489,000 while more traditional townhouse units start at $375,000.

Reach Gordon Y.K. Pang at gpang@honoluluadvertiser.com.