The newest University of HawaiÊ»i Economic Research Organization (UHERO) construction forecast indicates that HawaiÊ»i construction activity continues at a healthy pace, with a modest pickup over the past year. New and pending projects, particularly high-rise residential building on OÊ»ahu, will sustain construction employment near its current level for the next several years. Planned large-scale public sector projects will provide additional support. The primary risk to this forecast is a falloff in demand that could come from weakening local and global economic conditions.
The number of issued building permits has fallen off this year. However, this reflects in part delays in Honolulu permitting.
There are a large number of condominium projects underway on OÊ»ahu or planned for groundbreaking, centered in KakaÊ»ako and near Ala Moana Center. Affordable housing is an important piece of this activity.
Home resale markets have softened over the past year, with a decline in resale volume on all islands. This is putting downward pressure on resale prices in most markets.
Large renovation projects and a few new towers are the focus of resort construction. The bulk of this activity is in WaikÄ«kÄ«, although major resort renovations are also underway on Maui and the Big Island. New hotel projects on KauaÊ»i have been stalled for now by financing difficulties.
The past five years have seen a considerable expansion of retail space, despite the structural challenges from online shopping.
Despite a steep falloff in government contracts awarded this year, there is considerable forthcoming public sector construction. The largest projects are on OÊ»ahu, including rail transit, planned redevelopments of Aloha Stadium and the Neal S. Blaisdell Center, and the expansion and updating of facilities at the Daniel K. Inouye International Airport.
An uncertainty that has been added to the mix is the City and County of Honoluluâ€™s crackdown on transient vacation rentals. The new enforcement actions have already reduced the available stock of visitor accommodations, which may support resort-related development.
While the outlook remains favorable for continued construction near current levels, the industry is not immune to adverse economic developments here or beyond our shores. The weakening local economy could undercut local demand, and the global slowdown is a concern for offshore demand and project funding. At the same time, lower interest rates are a clear positive, as is the resilience so far of U.S. consumer spending.
For a full public summary go to the University of HawaiÊ»i Economic Research Organization website and for a detailed analysis, subscribe to UHEROâ€™s Forecast Project.