Oahu is a nearly 600-square-mile island paradise in the middle of the Pacific Ocean that is dealing with decidedly urban issues such as traffic jams and energy dependence.
“Much of 2007's legislative agenda relates to energy, water, land use, and sustainable development,” says David Bylund, a senior associate at Architects Hawaii in Honolulu, one of the island's oldest firms. “The city and county of Honolulu are deciding on a significant mass-transit solution that will greatly affect the quality of life.” They're also requiring all new municipal construction projects to be LEED certified. “The smart-energy trend is being driven primarily by two things,” says Tonya Dale, president of 4D Designs, a boutique architecture firm in the town of Kailua. “The cost of fossil fuels, which are extraordinarily expensive here, and a growing desire to convert to the renewable energy sources, such as wind, deep-sea water, and solar power.”
More than a passing fancy or good citizenship, though, mass transit and smart energy are good business, Bylund asserts: “Our economic engine is tourism, which depends on our natural environment.”
Job & Population Growth
Oahu's population of 929,000 is projected to reach 1,012,000 this year. Annual job growth has been increasing since 2001, to 3.2 percent in 2005. Government—both local and federal—and retail account for half the number of employees; another quarter work in hotels and other service-industry jobs. Almost 49,000 people are employed on the island's 10 military installations.
Construction is the fastest-growing job market on the island. “We need between 10,000 and 26,000 more construction workers in the next few years,” says Henry Eng, director of the Department of Planning and Permitting for the City of Honolulu.
Office Market
Most commercial space is located in Honolulu's Central Business District, which has 6.5 million square feet of rentable office space. Waikiki has 810,000 square feet of office space and about 1 million square feet of retail space. Class A office vacancy was 8.2 percent at midyear 2006, according to Grubb & Ellis|CBI Inc., a real estate broker. The overall asking rate was $2.56 per square foot per month.
Residential Market
The housing market is correcting and saw a 14.1 percent drop in sales value for single-family homes and a 20.5 percent decrease for condominiums from November 2005 to November 2006. Building permits dropped 51 percent over the same period, according to Hanley Wood Market Intelligence.
Market Strengths
- Proximity to key Asian markets
- One in five adults is fluent in a language other than English
- Honolulu is the only true metropolitan area in Hawaii
Market Concerns
- Aging workforce
- Weak mass-transit system
- Homelessness
Developable Land
There are 22,000 developable acres on Oahu, including 40 in downtown Honolulu. “There is a lack of developable land for industrial space, and office rents are not high enough yet to justify office towers,” explains Dennis Wiens, senior vice president for investment at Grubb & Ellis|CBI. “The highest and best use has been for condominiums recently.”
Development Incentives
The city-sponsored Community Facilities District uses bond funding for creating and maintaining such public services as streets, water, sewage and drainage, electricity, schools, parks, and police protection in newly developing areas.
Enterprise Zones across the island offer a reduction of state and county taxes for up to seven years for businesses satisfying certain hiring and other requirements.
Key Architects
Architects Hawaii
Major project: The University of Hawaii John A. Burns School of Medicine, a $150 million, 112,000-square-foot sustainably built structure
Founded in 1946, the firm has 99 employees and reported $25 million in 2006 billings.
Ferraro Choi and Associates
Major project: The $5.7 million, 19,200-square-foot Waipahu Intermediate School Cafeteria, a pilot LEED-certified project
Founding partners Joe Ferraro and Gerald Choi were the first two architects in the state to become LEED-accredited professionals.
Group 70 International
Major project: The $40 million mixed-use Ward Entertainment Complex, in a rehabilitated light-industrial area between downtown Honolulu and Waikiki
The firm was started in 1971 and now has 87 employees. It reported $22 million in billings for 2006.
Key Developers and Builders
Centex Destination Properties
Major project: Ko Olina Resort and Marina, a gated beach community of 685 townhomes, villas, and condominiums (Centex does not release project costs)
The division is part of Dallas-based Centex Homes, which operates in more than 90 U.S. markets in 25 states.
D.R. Horton, Schuler Division
Major project: Building up to 15,000 homes for first- and second-home buyers on 1,600 acres in Kapolei
Honolulu-based Schuler has built more than 8,000 homes in Hawaii since 1973.
Maryl Group
Major project: The five-acre, $9.6 million Hawaii Baptist Academy project, which features sustainable design to create energy efficiency
The Honolulu-based developer, which also has offices on the big island of Hawaii, has $60 million in projects currently in design or under construction on Oahu.
Forecast
Economic development officials expect to see more global companies setting up shop on Oahu. Says planning and permitting director Eng: “Because of our quality of life, political stability, and communication capabilities, Oahu is an excellent choice for global businesses that must be able to deal on the same day with markets on both sides of the Pacific Rim.”
