Michael Young
Even before the dawn of the new year, four new tower cranes have already been added to the metro Honolulu skyline, according to a recent Rider Levett Bucknall (RLB) Crane Index, which tracks high-rise residential construction around the world.
“The pace of residential construction in Honolulu is unwavering,” says Erin Kirihara, RLB executive vice president in North America and director-in-charge, Hawaii region. “Developers remain favorable to large-scale housing projects spanning luxury homes to communities that serve low- and moderate-income families.”
Demand is high. But according to some experts, project funding in certain sectors may be drying up.
“We anticipate higher interest rates may unfortunately potentially slow down the development of affordable housing in Hawai‘i,” says Michael Young, president and CEO of Albert C. Kobayshi Inc. and incoming 2024 General Contractors Association of Hawaii president.
Equally concerning is the state’s skilled labor shortfall. In 2024, Kirihara says the industry “will need to fill approximately 2,000 jobs to … support the pipeline of work that is anticipated over the next 12 to 24 months.”
How these market forces will play out is uncertain. Meanwhile, Hawai‘i’s construction pipeline is pumping.
According to the Department of Business, Economic Development and Tourism (DBEDT), “there has been a 36 percent increase in the value of both private and public building permits issued for all islands over the past year, signaling a tangible uptick in construction activity to come,” says RLB’s Kirihara. “The state’s lower-than-national-average unemployment rate provides a stable economic foundation along with forecasts from DBEDT that predict growth in GDP, visitor arrivals and expenditures in 2024, further supporting the industry.”
Local building leaders remain positive as well.
Hunt expects to complete the new $120 million Daniel K. Akaka Department of Veterans Affairs Community-Based Outpatient Clinic in 2024, currently underway by Nan Inc. in Kalaeloa. PHOTO COURTESY NAN INC.
Josh Magno
Glen Kaneshige
Gerry Majkut
Steve Colón
“The construction industry is expected to remain strong in the coming year,” says Josh Magno, Pacific Resource Partnership (PRP) programs director.
Glen Kaneshige, Nordic PCL Construction Inc. president, agrees: “Military, public education, light industrial and affordable housing developments should continue to be strong and grow in 2024,” he says.
Likewise, Hawaiian Dredging Construction Co. Inc. President J. Gerry Majkut feels “the housing and infrastructure sectors should continue to grow along with the federal Department of Defense sector.”
Developers are already moving ahead.
“James Campbell Company [JCC] will continue to focus on the expansion of critical infrastructure near the Kalaeloa Barbers Point Harbor throughout 2024,” says Peter Phillips, JCC manager, Projects & Construction, Kapolei Properties Division.
Similarly, Hunt Development Group Hawai‘i “is continuing the exciting work at Kalaeloa,” says Steve Colón, Group president.
Hunt will be completing the new Veterans Affairs clinic as well as land development related to Ka‘ulu by Gentry, a new 390-unit workforce housing project.
2024 Wild Cards
Hawai‘i construction leaders are keeping a close eye on three likely impacts to projects next year.
HIGH INTEREST RATES
“We see limited activity in the private and military housing sectors until interest rates start coming back down.”
– Steve Colón, Hunt Development Group Hawai‘i
“Construction in the hospitality sector is likely to face challenges in the coming year due to the increasingly complicated financial sector and ongoing delays in project permitting.”
– Zach Taylor, Layton Construction Co. LLC
SKILLED LABOR SHORTFALL
“Our local resources will be stressed by the shortage of skilled labor and project management with large federal and infrastructure projects coming online next year. Construction on the mainland will continue to be very busy and thus, off-island resources will not be a viable solution.”
– Thomas Diersbock, Hensel Phelps
“As part of the effort to attract new workers into the field of construction, the Hawai‘i Regional Council of Carpenters, the Hawai‘i Carpenters Apprenticeship and Training Fund [HCATF], and Pacific Resource Partnership are promoting a new five-week pre-apprenticeship program that provides 40 hours of preparatory training and 160 hours of paid on-the-job training that is credited toward direct entry into an HCATF apprenticeship.”
– Josh Magno, Pacific Resource Partnership
MAUI WILDFIRE RECONSTRUCTION
“We don’t know the full economic impact of the Maui fire to the local economy, but the anticipated revenue reduction may restrict capital improvement program budgets during next year’s legislative session.”
– Glen Kaneshige, Nordic PCL Construction Inc.
“Even before the tragic fire of Aug. 8, construction was already expected to reach a 30-year high. However, with the Lāhainā disaster, billions of dollars will be added to the rebuilding effort.”
– Josh Magno, Pacific Resource Partnership
The future Ka‘ulu by Gentry, a new 390-unit workforce neighborhood developed in partnership with Hunt, is one of many residential developments under construction in 2024. RENDERING COURTESY GENTRY HOMES
Cheryl Walthall
INFRASTRUCTURE CONSTRUCTION
The Honolulu Authority for Rapid Transportation expects to issue its contract award and notice to proceed in mid-2024 for Skyline’s last segment from Middle Street to Halekauwila Street. The new, three-mile City Center Guideway will encompass six stations.
In the rest of the transportation sector, $1.2 billion in federal funding could spark nearly 60 new projects next year.
“The lion’s share of this — $935.2 million — has been allocated for roads, bridges, public transportation, ports and airports,” says Cheryl Walthall, GCA of Hawaii executive director. And while actual project awards can be delayed for various reasons, “many federal projects will continue to be released at a feverish pace,” says Thomas Diersbock, Hensel Phelps regional vice president.
“Federal spending at a level not seen in decades will continue for the next five to seven years,” he adds.
Ryan Nakaima
MILITARY CONSTRUCTION
“Military construction has always been a leading sector in supporting Hawai‘i’s construction industry and 2024 is no exception, with a notable forecast under the U.S. Army Corps of Engineers and an upcoming $8 billion multiple award construction contract that Naval Facilities Engineering Systems Command just released for Hawai‘i and Wake Island,” says Ryan Nakaima, Nan Inc. vice president. “We are actively pursuing projects across all sectors, which include public and military projects in Hawai‘i, Guam and Kwajalein.”
One of Hawai‘i’s leading 2024 military projects is the $3.42 billion construction of Dry Dock 5 at Pearl Harbor.
“The project is estimated to create an estimated 2,500 new jobs locally during the construction period,” says Walthall. “It is targeted for completion in 2027, and according to the Navy, is the first of many investments.”
Hawai‘i’s luxury residential sector is expected to remain strong next year with projects like Armstrong Builders’ La‘i Loa luxury condominiums in Wailea, Maui. PHOTO COURTESY DAVID FRANZEN
Leonard K. P. Leong
James Keller
RESIDENTIAL CONSTRUCTION
“Construction activity will be robust in the affordable housing sectors locally in Hawai‘i in 2024,” predicts Hunt’s Colón.
Next year, “Hunt Capital Partners … will deliver six affordable housing projects across Hawai‘i, Maui and Kaua‘i that encompass more than 420 total units,” he says.
Hawai‘i island will see 236 new units, Maui will see 36 and Kaua‘i will see 156.
Nordic PCL has started construction of the 25-story affordable Halawa View Apartments near Aloha Stadium, says Kaneshige, “and we are keeping our eyes open for similar opportunities in 2024.”
In the market-rate sector, Royal Contracting Co. Ltd. is already deploying site prep crews for new 2024 neighborhoods at Ho‘opili, Koa Ridge and Gentry in Kalaeloa.
“We expect work to remain steady,” says Leonard K. P. Leong, Royal Contracting president.
Back in town, new market-rate and ultra-luxury residential towers are going up. James Keller, Armstrong Builders LLC president, feels Hawai‘i luxury residential construction is “going to remain strong in 2024.”
In addition to closing out La‘i Loa’s 75 luxury condominiums in Wailea on Maui, “we also have multiple projects underway at Kohanaiki in Kona, and will be starting Hale Alani Phase 2 beginning in 2024. Projects underway include Hinahina Phase 2, a design-build project and several luxury residences in the Panana neighborhood of Kohanaiki,” says Keller.
Layton’s Maui Coast Hotel Expansion is a six-story, 170-room project that will include an entrance lobby, a pool and deck and other attractions. PHOTO COURTESY LAYTON CONSTRUCTION CO. LLC
Zach Taylor
Aaron Yamasaki
COMMERCIAL CONSTRUCTION
In Hawai‘i’s commercial sectors, says PRP’s Magno, there’s the possibility of new transit-oriented development, including pending approval of the New Aloha Stadium Entertainment District and demolition of the old stadium.
Tourism also remains a significant contributor to Hawai‘i’s economy, and Layton Construction Co. LLC is moving on several hospitality projects in 2024, including Coco Palms Resort renovations (Kaua‘i), Montage envelope replacement (Maui), Maui Coast Hotel expansion and the Element Hotel (O‘ahu).
“The Layton Hawaii team is focusing on the Maui Coast Hotel Kihei,” says Zach Taylor, Layton construction manager. “It is a six-story, 170-room hotel expansion that will include an entrance lobby, a pool and deck, a one-story restaurant, retail and/or meeting space building and two parking areas.”
In Waikīkī, Swinerton Builders is busy with a conversion of the Outrigger Beachcomber Showroom. In the education sector, Swinerton’s 2024 projects include graduate student residences and a Student Success Center at the University of Hawai‘i at Mānoa. Swinerton also sees continued work in healthcare.
“We predict bullish growth for the healthcare construction market in 2024, which we expect to be sustained over the next decade,” says Aaron Yamasaki, Swinerton vice president and division manager. “Hawai‘i’s major healthcare providers have kicked off construction on multiple, long-term, phased overhauls at various facilities throughout the state.”
Yamasaki also expects “a slight pull-back in retail construction in 2024.
“However, Hawai‘i locations boast strong sales numbers for our national, big-box retail clients, and we are still seeing continued interest from those clients,” he says.
These include Macy’s, which engaged Swinerton for demolition and shell renovations at its Windward Mall location.
Next year, Swinerton Builders will focus on the Graduate Student Residences project at UH Mānoa. RENDERING COURTESY NAC ARCHITECTURE
Swinerton Builders will remake Sinclair Library as UH Mānoa’s Student Success Center in 2024. RENDERING COURTESY G70
The James Campbell Co. is building a new 102,000-square-foot warehouse in Harborside next year as well as a new highway linking the expanding industrial area to a nearby freeway. RENDERING COURTESY THE JAMES CAMPBELL CO.
INDUSTRIAL
CONSTRUCTION
JCC’s Phillips says the company “is constructing a 102,000-square-foot warehouse facility [on O‘ahu and] seeks to expand its on-island industrial portfolio with this and subsequent warehouses it has planned for the future.
“This concept of warehouse development over the next five-plus years is based on the strong market demand and low tenant vacancy rates seen in the project area.”
Roy Y. Shioi
NEIGHBOR ISLAND CONSTRUCTION
Roy Y. Shioi, president of Kaua‘i-based Shioi Construction Inc., says his company will focus primarily on two Kaua‘i residential projects next year: Koloa Village Condos, with 60 units in 15 four-plex buildings, and Uahi Ridge.
In Uahi’s first phase, Shioi will build eight three-story buildings with 96 units; the project’s second phase includes five three-story buildings with 60 units.
“We see the affordable/multi-family housing and commercial sectors keeping us busy in 2024,” he says.
