Construction Industry Outlook 2015
What is the outlook for the construction industry in 2015?
What’s the temperature in the construction industry these days? Anywhere from lukewarm to hot, depending on who you ask. Those with distance from the industry may only see home prices continuously climbing (the average median home price on Oahu, in 2014, was $650,000; condos $350,000), new construction in buzz-word areas like Kaka’ako, renovations and expansions taking place in Waikiki, Ala Moana, and at the Kapiolani Medical Center, and big landmark projects such as HART getting closer to reality with deep planning phases underway.
Those in day-to-day trenches would likely balance that view by noting a slightly weaker finish to 2014 than what was originally projected. The downturn happened somewhere between securing a construction permit and beginning a project. Plenty of permits were issued—though far less than usual for the residential sector—according to the University of Hawaii Economic Research Organization (UHERO), but breaking ground was delayed on a number of those licenses. Certain niches, too, just took a hit all year long. Photovoltaic was estimated to be down by half.
But while 2014’s finish was slightly disappointing, there’s good news too. While 2014 showed certain stagnation, 2015 is poised for growth. Employment is expected to rise from a 1% gain in 2014 to a 6% gain in 2015. Many of the state’s large projects are expected to accelerate. And for all those permits that were awarded then left idle, construction is finally expected to break ground. It seems 2015 is the year where everything swings into motion.
Since its beginnings as a small sash and door business in 1935, Honsador Holding LLC has expanded and diversified, becoming a leader in Hawaii’s construction industry today. With 15 locations across the Islands and a lumber distribution hub in Portland, Oregon, the company provides building professionals and local homeowners with quality materials, sustainable building solutions, and expert advice.
“We believe that wood continues to be the best choice for home construction,” says Honsador Holding’s CFO Scott A. Choi. “In addition to being eco-friendly, lumber offers many advantages compared to a metal frame house: Wood is recyclable, renewable, biodegradable, abundant, possess energy savings-qualities, and is a sustainable building commodity. Not only is wood cost-efficient, builders tell us it is much easier to work with and offers excellent design flexibility and engineering options.”
Looking ahead, Choi believes Oahu’s housing crisis will continue to hold challenges for local homebuyers in 2015. “Affordability continues to be a big issue for prospective homebuyers due to lack of inventory, causing median prices to soar,” he explains. “As an alternative solution, Honsador has its Island Homes Collection, which are very affordable prepackaged home kits. There are a number of qualified builders statewide who specialize in constructing our pre-packaged home kits. There are over 30 models from which to choose. The system provides building plans that are complete and ready for permitting as well as a logical flow of predetermined material requirements to the home site. Honsador provides many builder friendly services one of which is bonding for qualified builders, which is typically required by local lenders.”
“Affordability continues to be a big issue for prospective homebuyers due to lack of inventory, causing median prices to soar.”
— Scott A. Choi, CFO,
Honsador Holding LLC
Cleaner Smarter Living
RevoluSun, Hawaii’s leading solar provider, has evolved into a one-stop shop for sustainable home technology. RevoluSun’s new location is a gathering place for eco-conscious homeowners, architects, building professionals, and residential home developers to meet and collaborate. RevoluSun’s showroom will feature its new “Smart Home” offerings, which include:
1. Sunbandit PV solar water heaters utilize innovative PV technology to deliver clean, reliable hot water by putting the energy of the sun to work without needing utility approval.
2. QuietCool Whole House Fans provide energy-efficient ventilation and cooling for the entire home and feature the best warranty in the industry.
3. Velux natural lighting solutions offer a wide variety of affordable, high-performance products that bring daylight into interior spaces and improve indoor air quality.
4. Clipper Creek EV charging stations are the workhorse of the industry and are compatible with any electric vehicle on the market.
5. RevoluSun Advanced Home Automation and Security offers energy management, home automation, video monitoring, keyless entry codes and locks and motion sensors.
6. IntelliFlo variable speed pumps lead the way in poolside savings with electricity bill reductions of up to $1,500 a year and energy savings up to 90% over traditional pumps.
“RevoluSun is Hawaii’s most trusted solar provider because of our commitment to quality products and installation,” states Chief Innovation Officer Eric Carlson. “We are excited to add an entire new line of products to help homeowners make their lives more enjoyable and efficient.” RevoluSun will be continuously adding to its Smart Home offerings and will hold regular, free educational seminars in its new space.
“We are excited to add an entire new line of products to help homeowners make their lives more enjoyable and efficient.”
—Eric Carlson, Chief Innovation Officer
While we’ll continue to see recovery in construction, there will also be a shortage of affordable homes in 2015.
In the first nine months of 2014, the combined value of permitted projects individually worth over $10 million – an indicator of construction activity – was $733 million, an increase of 73 percent over the previous year. Many 2014 permits were for foundation work. Vertical construction, which requires separate permits, will add significantly to project value totals and employment opportunities this year.
Unfortunately, our housing shortage will continue in 2015 because of limited construction activity and housing supply. The shortage not only throttles the industry, as the biggest source of work historically is residential, but also hurts Hawaii’s residents, who will face unaffordably high prices, and threatens Hawaii’s broader economic recovery.
“In the first nine months of 2014, the combined value of permitted projects individually worth over $10 million – an indicator of construction activity – was $733 million, an increase of 73 percent over the previous year.”
In 2014, we had an eventful year of meeting our goals and working with repeat clients, while developing new relationships along the way. This past year, we were able to add several notable projects in our Education portfolio with several new projects such as the HPU Aloha Tower Student Lofts, the Kamehameha Schools Community Learning Center at Ma‘ili, and the Tokai International College in Kapolei. These projects are special in that the spaces that these projects occupy are being put to great use to develop the future young minds of Hawaii. What were once bare fields and empty vacant spaces are now schools and learning centers that are essential to our communities. That’s what makes what we do special.
We feel quite optimistic heading into 2015 with a healthy backlog of exciting new projects that are set to begin. You can expect to see more of our work in Waikiki, Kapolei and West Oahu, and Maui. Swinerton’s success relies on building great relationships, meeting our commitments, and providing exceptional service to our clients. There certainly is a rallying sense of momentum within the company and we feel real good about the road ahead.
“This past year, we were able to add several notable projects in our Education portfolio with several new projects such as the HPU Aloha Tower Student Lofts, the Kamehameha Schools Community Learning Center at Ma‘ili, and the Tokai International College in Kapolei.”
Since its beginnings in 1902, Hawaiian Dredging’s mission has been to deliver valuable construction solutions on time and on budget through diligence, innovation, and teamwork. “We value each opportunity as very important. Working here in Hawaii, whether it’s a small or large project—we’re simply focused on our clients,” says Gerry Majkut, President of Hawaiian Dredging. “And we’re always looking towards the future in order to provide the highest level of service to our clients and the best opportunities for our employees.”
Hawaiian Dredging has five divisions—Building, Commercial, Heavy, Waterfront & Foundations, and Power & Industrial—and is Hawaii’s largest and oldest full-service contractor. “We offer clients the most cost-effective preconstruction services in the Islands,” says Majkut.
“We value each opportunity as very important. Working here in Hawaii, whether it’s a small or large project—we’re simply focused on our clients.”
— Gerry Majkut, President,
“Dozens of solar companies went out of business last year,” says Jim Whitcomb, CEO of Haleakala Solar, ticking off the numbers in his mind.
With so many companies closing up shop, it’s important to choose your solar company wisely. “My biggest recommendations to homeowners are to consider whether or not your provider will outlive their guarantee,” Whitcomb says.
Most of the solar products available today are of the highest quality, especially here in Hawaii where we have a very competitive market. But just because you have good materials you need to have someone to maintain and service them. Most importantly if there is a warranty claim, and the company that installed the system is out of business, it can be very difficult to get the warranty replacement.
With photovoltaic and solar water heating solutions, over 11,000 happy solar customers, and a dedicated service department, Haleakala Solar stands heads and shoulders above its competitors.
Visit www.HaleakalaSolar.com to learn more today.
“My biggest recommendation to homeowners is to consider whether or not your provider will outlive their guarantee. ”
— Jim Whitcomb, CEO,
Since its inception in 1921 as a partnership between two hardworking Hilo contractors, the Hawaii Planing Mill legacy has always been about helping Hawaii build better. While that partnership has grown in the past 93 years to include more than 250 owner-employees serving customers as HPM Building Supply, its relevancy has not changed. It’s still good business to understand Hawaii’s unique building needs and to meet them with quality products.
Through the long-term success of a business model that keeps construction spending in the local economy, the HPM team has become a statewide building force with four lumberyards and a top-notch metal roofing, truss and wall panel manufacturing facility on the Big Island, plus sales offices and warehouses in Kapolei, Oahu and Lawai, Kauai.
“Distributors like us really work hard on behalf of our customers. Ultimately our purpose is to help more people live more comfortable lives by reducing costs and widening home ownership to our population.”
— Michael Fujimoto, President & CEO,
HPM Building Supply
Hawaii-based Pacific Pump and Power takes pride in solving its clients’ tough problems. With a fleet of rental pumps, hoses and piping, the company strives to be the best solution for any building professionals’ servicing needs.
“Dewatering and sewer bypass are daunting tasks for a lot of people, and we are able to take that task and provide a solution that not only makes their lives easier but helps them sleep at night and often saves them money,” explains Paul Leonard, Pacific Pump and Power’s General Manager. “We are forecasting 2015 to be a very busy and positive year for the construction industry, which will in turn provide more jobs and therefor more spending. Between repairing aging sewer pipes and new construction, we are anticipating a good year.”
“Dewatering and sewer bypass are daunting tasks for a lot of people, and we are able to take that task and provide a solution that not only makes their lives easier but helps them sleep at night and often saves them money.”
—Paul Leonard, General Manager
Pacific Pump and Power