A resurgent construction industry in Hawaiʻi is building the state’s economy, even as tourism falters, and offers hope of boosting Maui’s recovery from the devastating August 2023 wildfires.
This optimistic outlook comes from the Hawaiʻi state Department of Business, Economic Development and Tourism’s recent second-quarter statistical and economic report. “The growth in the construction industry will offset the stagnation in tourism this year, and we expect the tourism industry will rebound starting in 2026,” said DBEDT Director James Kunane Tokioka.
In the report, DBEDT lowered this year’s state economic growth projections to 1.2%, down from 1.7%. The half-percent drop stemmed from the projected impact of tariffs on international imports, a slowdown in tourism, persistent consumer inflation and increasing uncertainty in both national and international economic policy.
State economists expect Hawai‘i’s economy to grow by 1.5% in 2026, with steady growth to 1.8% in 2028. The state’s labor market was forecast to remain stable. Tourism sectors, including accommodations, retail trade, recreation and food services, reached only 94.3% of their pre-pandemic, gross domestic product levels by the end of last year. In contrast, non-tourism sectors grew by 4.4% over the same period.
“Although Hawai‘i faces short-term economic challenges — including softening tourism, inflationary pressures and continued uncertainty in global markets — we remain confident in the state’s long-term economic resilience and are optimistic to see that most of our industry sectors are adding jobs,” Tokioka said. “As of April 2025, our non-agriculture payroll jobs numbered 652,900, representing a 99.3% recovery from April 2019, the highest recovery rate since April 2020.”
The department touted the health of Hawai‘i’s labor market was being “one of the best in the nation” in the first four months of 2025, with its unemployment rate ranked fifth-lowest based on the seasonally adjusted rate and ranked second-lowest based on the not seasonally adjusted rate. Hawai‘i payroll job growth ranked the fourth-highest in the nation during this period.
For Andrew Pereira, director of public affairs for Pacific Resources Partnership, a prominent construction industry advocate, construction growth means jobs, especially for carpenters.
“It’s encouraging that overall the latest report shows that we’re really at a record level of construction payroll jobs, right around 40,000 (statewide),” Pereira told Maui Now. “We’ve reached a record number of folks working in the construction industry, so that’s very encouraging.”
On Maui, the first quarter of this year saw 4,800 construction jobs, a figure consistent with last year’s total, according to DBEDT and state economist Dr. Eugene Tian. The employment levels for the past two years come on top of steady increases from previous years, with annual job growth ranging from 4,200 in 2021 to 4,600 in 2023.
“On Maui specifically right now, I can tell you that (with) the Carpenters Union, we have 60 journey-level carpenters on the bench right now and 40 apprentices on the bench,” he said, indicating a current supply of skilled workers awaiting projects. “Those are our folks still . . . waiting for a job so that they can get out at work. That’s about the average, really, that we’ve been experiencing over . . . the last few quarters, so nothing really to get alarmed about, but we do see good signs in the future.”
Overall, the state saw an 89.8% increase in residential units authorized in the first quarter of 2025. Maui County ranked third among counties at 23.9% growth in approved residential units, trailing Honolulu (133.9%) and Hawaiʻi County (74.2%), but ahead of Kauaʻi County (10.6%). Total construction spending on Maui in the first quarter amounted to $165 million, including $36 million for single-family homes, $22 million for Maui County projects, $21 million for commercial, and $5 million from state of Hawaii projects. Total Maui construction spending for all of 2024 reached $866 million.
Wildfire recovery
While construction serves as one of Hawaiʻi’s three economic pillars, alongside tourism and military spending, its role is uniquely critical on Maui, especially as residents recover from the August 2023 wildfires, which devastated Lahaina and destroyed more than 2,200 buildings. Rebuilding has been painstakingly slow, with construction costs mounting.
“At first, the floor on that rebuild was about $5.5 billion, but we’ve heard estimates upwards of $7.5 billion now for the full rebuild in Lahaina,” Pereira noted.
A critical piece of the puzzle for Maui’s construction future lies in tapping $1.6 billion in federal Community Development Block Grant Disaster Relief funding.
“Part of the forecast for the construction industry on Maui will entail how fast the administration of Mayor Bissen can decide on which projects get this CDBG disaster relief grant funding, and how quickly he can get shovels in the ground for those projects,” Pereira said.
PRP advocates for strategic investment, he said.
“It would be smart to use that money to invest in infrastructure that allows home builders to actually build more units on Maui,” he said, adding that means “water infrastructure, roads and sewer infrastructure, even electrical infrastructure.”
Looking at the Maui County budget, pending second-and-final reading on June 3, Pereira said he found encouraging signs for public works.
“The total budget right now is about $471.8 million for capital improvements, and of that, 45.2%, or $213.4 million, is for specifically public works projects,” he said. “That’s very encouraging, and again, it’ll come down to how fast these projects can clear all of the encumbrances and entitlement that they are required to get and get the shovels in the ground so we can get folks on Maui working.”
The Maui County Council’s Budget, Finance and Economic Development Committee’s report on the County’s fiscal 2026 budget details capital improvement projects. (See report here, Pages 22-24.)
Military construction at South Maui high-tech park
One project that will provide a “big boost” for Maui’s construction industry, Pereira said, is the US Army Corps of Engineers’ more than $90 million project to build a Secure Integration Support Lab Maui Research and Technology Center at the former Maui Research & Technology Park in Kīhei, now called LĪPOA.
The Maui high-tech park aims to host world-class research and development in areas such as space domain awareness, astronomy, sensor development, disaster mitigation, artificial intelligence, supercomputing, software development and creative arts. In May 2022, the 15th Space Surveillance Squadron became one of the inaugural units of the US Space Force’s Delta 2 located at LĪPOA.
According to the LĪPOA website, the squadron’s Secure Integration Support Lab will further support its capabilities in cutting-edge research and development.
In December, Hensel Phelps Construction Co. was awarded a $93.8 million contract to build the new laboratory. Work began late last year, and the facility is expected to be completed in February 2027. Hensel Phelps is one of the carpenters union signatory contractors, according to Pereira.
Construction challenges
Regarding Maui County’s capacity to expedite projects, Pereira said the Council has the power to lower regulatory obstacles.
“They can look at the regulatory burden that our home builders are facing on Maui County and do a lot to kind of ease that burden and make sure that projects get off the ground as quickly as possible,” he said. “The quicker that they can get to any kind of regulatory hurdles out of the way… the faster Maui’s economy will recover.”
DBEDT reported that Hawai‘i home sales — after increasing 15.1% in 2024 — decreased 27.2% in the first quarter as recorded by the Bureau of Conveyances. Sales fell 23.7% for single-family homes and dropped 30.4% for condominiums.
The average sale price of single-family homes statewide was $1,225,797 during the first quarter of 2025, representing a 7.8% increase compared to the first quarter of 2024. The average sale price for condominium homes was $742,968, representing a decrease of 1.6% from the same quarter a year ago.
Supply and demand for construction labor
Looking ahead, the demand for construction workers could outstrip local supply.
Pereira said it’s possible local construction projects will require flying in workers from other islands, or even the US Mainland, to fill Maui’s needs. However, he said worker training is a top priority.
Flying in workers from the Mainland would be “a waste of opportunity cost,” Pereira said, “and that’s why we’re working so hard to recruit as many new members for the Carpenters Union as possible.”
Residents interested in training as carpenters can visit hicarpenterstraining.com.
Modular homes and mass timber
When asked about alternative construction materials and techniques, such as modular homes, Pereira cautioned against making a blanket assumption that modular homes always provide cost savings.
“What we found … is that for modular to work properly, it really needs to be this kind of symphony orchestra between the actual site where the modular units are going to be placed and the factory that’s building those units,” he said. “If you don’t do modular exactly right… it’s very easy for any kind of savings to quickly evaporate and actually to put you into the red.”
He noted exceptions for transitional housing, but expressed skepticism for large, permanent subdivisions.
Regarding mass timber, a fire-resistant and environmentally friendly building material gaining traction, Pereira said the Hawaii Carpenters Apprenticeship and Training Fund has already provided training.
“They actually held a training course on mass timber on November… it was a total of a 32-hour instructional course for our carpenters apprentices,” he said.
Construction with mass timber has benefits such as a “lower burn rate, which enhances fire safety” and “cost efficiency for larger-scale projects,” he said.
Renewable energy projects
Maui’s renewable energy sector promises significant work. Pereira pointed to several upcoming projects, including the Kūihelani Phase 2 Solar (40 megawatts in Mā‘alaea); Kaheawa Wind One (30 megawatts, also in Mā‘alaea), the Pūlehu solar and storage project (20 megawatts), and the ‘Ūkiu Energy project (40 megawatt), all slated for completion by 2027. “That’s quite a lot of work ahead,” he stated, noting that each megawatt of utility-scale solar generates 1,000 to 1,500 labor hours.
Rising costs
However, even with encouraging trends, potential headwinds remain, such as potential increases in inter-island shipping costs from Young Brothers’ proposed rate increases now pending before the Public Utilities Commission.
“Any added cost of shipping is… a factor in the overall (construction) project cost,” he said.
However, Pereira added that federal interest rate cuts could be “like rocket fuel to our home builders,” allowing easier access to capital. He also mentioned a proposed “Big Beautiful” federal bill that could increase “US-sourced lumber for the construction industry.”
Mixed-use developments, community development financing
Observing general development trends in Hawai‘i, Pereira noted that on O‘ahu, mixed-use development (with homes sited above commercial establishments) is gaining traction in Transit-Oriented Development zones. While not specifically for Maui, he suggested it’s a model the County Council might explore, as well as creative financing strategies like community development financing, which leverages future property tax receipts to fund upfront infrastructure and lower housing costs.
Desalination as a source for fresh water
Finally, addressing Maui’s critical water supply concerns, Pereira cited recent polling reported in PRP’s Hawai‘i Perspectives Winter 2024 survey. It found strong resident support for desalination as a sustainable source of fresh water: 31% strongly favor desalination; 35% somewhat favor it; 10% somewhat oppose it; and 5% strongly oppose desalination. On Oʻahu, more than $18.9 million in federal funding has been allocated for the design and construction of a desalination facility at Kalaeloa.
Statewide construction statistics:
