According to the newest University of Hawaiʻi Economic Research Organization (UHERO) report, construction has accelerated in Hawaiʻi over 2016 and will approach its cyclical peak over 2017.
Jobs and income are now growing at double-digit rates, driven by strength across all major sub-sectors and, increasingly, all counties. Increments to growth will be much smaller going forward, and activity will begin to fall off by 2018 as the surge in resort and condo building wanes, costs for builders and homebuyers mount, and global economic conditions become less favorable.
- While the surge in high-rise construction in Kakaʻako/Ala Moana is not yet over, the focus for new Oʻahu home building will begin to shift westward to single-family development at Hoʻopili and Koa Ridge. Homebuilding on the Neighbor Islands has only recently picked up, and further growth is expected.
- Real estate sales have picked up sharply. Home price gains have been limited despite tight inventory, quick sales times and lack of new homebuilding.
- Commercial construction has been relatively strong, with resort-related development the biggest driver.
- The inflation-adjusted value of government contracts reached a ten-year high last year, propelled by improvements to harbors, airports and waste treatment facilities.
- Rising construction costs are a challenge for developers.
- In the first half of this year, there was a surge of nearly 5,000 construction jobs statewide as the newest wave of major developments added to a high volume of existing projects.
- A number of forces will limit further construction gains and ultimately precipitate the next industry downturn. These include deteriorating home affordability and rising construction costs.