hawaii

The tourism and hospitality sectors play unsurprisingly large roles in Hawaii’s construction market.

Recently, however, spending has grown in more inward-looking areas like healthcare and infrastructure. The market remains quite active, and the value of new private building permits issued over 2023 has approached $4 billion. In the Public sector, meanwhile, the largest project is the extension of Honolulu’s rail system, the Skyline, to connect Kapolei with the city’s downtown. There are also several transit-oriented developments going up around the proposed stations. Parts of Maui (Lahaina) were destroyed by wildfires that struck over the summer, and rebuilding efforts are expected to take years. The labor market, which is traditionally constrained, is even more so.

Many of the issues in Hawaii’s construction market stem from its position at the rough center of the Pacific Ocean. It is home to the US Navy’s Pacific Fleet and 13 telescopes on Mauna Kea. It cannot cheaply bring labor in from nearby, meaning that labor costs spike when the market is active. All of this has conspired to paint a somewhat mixed picture of the market: robust underlying demand for new projects beset by environmental concerns, supply chain constraints, high labor costs, and permitting issues. On Oahu, home to roughly 70% of Hawaii’s population, issues getting projects out of the planning phase stem from bureaucratic processes. The Honolulu city’s Department of Planning and Permitting (DPP) is still overwhelmed with requests, causing backlogs to swell to more than a year. The DPP vacancy rate is almost 25% as they adopt new technologies to address the backlog and the situation is unlikely to change until the adopted technologies are in place. We expect this to continue frustrating developers on Oahu for at least the next few years.

* Other structures include religious buildings, amusement, government communications, and public recreation projects.
Source: BuildMarket

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