KAHULUI - After years of struggle from the Great Recession, Maui's construction industry is making a great comeback, at least with big projects, economist Leroy Laney said Friday.
"Maui is the only Neighbor Island that exhibits much in the way of current or near-term growth prospects in the construction sector," he told more than 100 business leaders Friday during First Hawaiian Bank's annual Maui County Business Outlook Forum at the Maui Beach Hotel.
"Maui construction jobs have shown an uptick recently, the only one of the four counties to see that kind of an increase," he said. "This is one of the reasons for overall Maui job gains. Most of the construction is commercial, not residential, so it's mainly bigger contractors that are doing well, with some continued shakeout among smaller ones."
Goodfellow Brothers crews work on A&B Properties’ 179-acre Maui Business Park Phase II along Hana Highway on Friday morning. In the first quarter of this year, there has been a 350 percent increase in private construction permits on Maui, compared with the same quarter last year, economist Leroy Laney said.
The Maui News / MATTHEW THAYER photo
Economist Leroy Laney gives an upbeat economic forecast for the state and island Friday morning during the annual First Hawaiian Bank Economic Outlook Forum at the Maui Beach Hotel. Laney said growth in construction jobs has helped Maui lead other Neighbor Islands in the economic recovery after the Great Recession that began in 2008.
The Maui News / MATTHEW THAYER photo
Laney reported that Maui County has seen a striking 350 percent increase in private construction permits for the first quarter of 2012, compared to the same quarter in 2011.
"Any time one sees that kind of surge, it's probably due to a few major projects," said Laney, economic adviser to First Hawaiian Bank and professor of economics and finance at Hawaii Pacific University.
He took special note of the following Valley Isle projects:
* Courtyard by Marriott - Maui Airport, the $16.5 million, 138-room hotel opened in July and was developed by A&B Properties and R.D. Olson Development. Laney said that the property should do well because of its close proximity to Kahului Airport and from being well-suited to several markets - interisland business travelers, state residents attending sporting events, flight crews and visitors who have missed or delayed flights.
* A&B's 179-acre Maui Business Park Phase II. Laney said that the project now under construction is zoned for light industrial use, also is near Kahului Airport and the harbor. He noted that lot closings are anticipated for late this year.
* The 255-room Andaz Wailea Hotel (the former Renaissance Wailea Beach Resort) will be a boutique accommodation and part of the Hyatt family of hotels, Laney said. It is scheduled to open in early 2013.
* The Maui Lani Village Center has added Walgreens and Marmac Ace Hardware to its commercial project that includes Paradise Beverage, Oceanic Time Warner and a new Mormon church.
* Kaheawa Wind Farm has added 14 wind turbines to the 20 existing ones above Maalaea, Laney noted, adding that Sempra U.S. Gas & Power has broken ground for eight turbines on Ulupalakua Ranch land on the southeast flank of Haleakala.
* The master-planned Honua'ula project in Wailea received environmental approval in July, he said. That development's plans call for as many as 1,150 homes above the Wailea Resort, a golf course, club house, retail and commercial businesses and 250 off-site homes.
* The state's planned consolidated car rental facility at Kahului Airport, which is down the pipeline, Laney said.
The economist did not mention ongoing construction of the $50 million Kehalani Village Center, where a new Longs Drugs store has been completed and will open soon.
Laney emphasized that Maui has done well in job creation as it recovers from the recession.
"The real story here is Maui, with the help of tourism, construction and retailing," he said. "At the deepest part of the Great Recession, Maui was bringing up the rear in job creation relative to other counties. Yet, it has made the greatest strides since then. Its level of jobs is now only 6 percent below the 2007 peak. The gap between Maui's jobless rate and the state rate has been narrowing steadily, the only Neighbor Island for which that is the case."
Laney said tourism in Maui continues to perform "very well."
"The island's 2012 growth rate in visitor arrivals and spending doesn't look quite as spectacular as it did in the immediate snapback from recession," he said. "Maui got its airlift back more quickly than Hawaii island and Kauai, so the fact that those islands are only now regaining their airlift makes their growth numbers now look stronger by comparison. Still, in every measured category - arrivals, visitor days, length of stay, total spending, person per day spending and person per trip spending - Maui continues to be up from 2011."
Laney noted more airline seats should be opening for Maui from Oakland, San Jose, Sacramento and Monterey, Calif.; and from Seattle, Bellingham, Wash., and Canada.
"Maui's comparative advantage among Hawaii tourism destinations, as well as tropical destinations elsewhere, still resides in its upscale image and in the choice it offers - in accommodations, activities, cuisine and other components of a quality vacation. So Maui can look forward to continued support from its main industry, even if other sectors falter due to cyclical conditions in the future," Laney said.
In Maui's residential real estate sector, the economist said that sales have picked up as the market has bottomed out with falling prices and low interest rates.
"It may be a buyer's market, but buyers who wait too long may lose the property," Laney said. "Inventories have declined almost 20 percent over the past year for both single-family and condo units. Short sales and foreclosures are being absorbed as the market returns to normal."
He also had positive news to report about Hawaiian Commercial & Sugar Co.'s 35,000-acre sugar plantation.
Laney said HC&S is the state's only surviving sugar plantation because of its size, and sugar production has been rising in recent years.
"While production is still below its target of 200,000 tons a year, it seems to be getting there," he said. "The plantation has achieved this mostly by bringing more acres back into production."
"Water availability is still a problem," he noted. "And HC&S has suffered under what has turned into a 12-year drought. With sufficient water and sunlight, sugar can be cultivated even in very poor soil. Thus, Maui's central valley is appropriate for sugar, but other farm crops that require better soil are not likely to make it."
Laney noted that HC&S management believes the plantation's future is in biomass energy creation, not food sugar. The plantation provides 5 to 6 percent of Maui's power generation, although it had generated more than that in the past, he said.
Also speaking to Maui business leaders was Jack Suyderhoud, professor of business economics at the University of Hawaii's Shidler College of Business. He is serving his fourth term on the Hawaii State Council on Revenues. He addressed national and international economic trends.
Suyderhoud said that most of today's troubled deficit economies are in developed countries such as the United States and parts of the European Union.
"These countries have seen their public debt levels explode in recent years to the point where their credit ratings have been downgraded," he said. "EU countries' public (that is to say government) debt has grown enormously since 2007. However, it has been worse for the U.S.: we have seen our public debt as a percentage of gross domestic product more than double between 2003 and 2011."
During a question-and-answer session, Suyderhoud was asked if there is a possible "painless" way out of the government's debt crisis.
"No," he said, later adding that economic growth is the most painless way forward.
U.S. unemployment has been stubbornly at 7 to 8 percent, he said.
"And that level of unemployment means there's a lot of human pain out there," he said.
* Brian Perry can be reached at firstname.lastname@example.org.