State says construction industry expecting growth

State officials are forecasting boom years for the construction industry.


State officials are forecasting boom years for the construction industry.

Mark Richards, owner of the Maryl Group, which was founded in Kona and now operates statewide, can see where those predictions are coming from.

“At the moment on the Big Island, we have more work than we can handle,” Richards said. “I think we’ve finally come out of the biggest depression I’ve been through.”

Things started picking up three to four months ago, he said. Now, his high-end luxury home builders on the Big Island are booked for two years.

The state Department of Business, Economic Development and Tourism released this week the first statewide construction outlook in 14 years, projecting a 23.3 percent growth this year in new residential building permits, and another 13.5 percent growth for that sector next year. Much of that growth will be for single-family homes, which are expected to see a 26.3 percent increase in new permits this year.

The value of those residential permits is expected to be $1.29 billion for 2014 and $1.46 billion for 2015. Those values fall well below the 2005 industry peak of $2.26 billion, the report noted.

New permits issued this year for commercial and industrial projects are expected to increase 8.3 percent this year and 10.3 percent next year.

The value of government jobs is expected to grow by 17 percent next year, then 3 percent in 2015, the report said. Statewide, the number of construction jobs should rise 5.4 percent this year and 5.9 percent next year. The construction tax base will grow 12.4 percent this year and 8.3 percent in 2015.

“Over the past decade, Hawaii’s construction industry has gone through a full cycle of expansion and contraction,” the report said. “The previous construction cycles were led by residential construction. However, the current construction expansion phase that started in 2012 is led by activities in the addition and alterations category, one third of which were photovoltaic system installations.”

Richards said the state report’s projections for single-family homes might be a little aggressive. The problem that slows residential construction, he said, is the “absence of land residual.” That is, a developer can afford to build a house, but can’t make money on it when the cost of the land is factored in. Developers who have been sitting on property can probably afford to build new homes.

The market needs new inventory, the report said, noting a shortage of residential housing units.

“This shortage may drive up home price more in the next few years,” it said.


Growth on Hawaii Island has been slower than Oahu, the report said. The county recorded a 1.3 percent growth in residential permit values from 2012 to 2013, a 2.9 percent decline in commercial and industrial permit value and a 10.4 percent increase in additions and alterations permit value. Overall, the county reported a 3.8 growth in permit values last year.

Messages left with several construction companies across the island were not returned, or company officials said they did not want to be interviewed.

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