Jack Tyrrell specializes in Kakaako, Honolulu, Hawaii luxury condo projects.

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State of Hawaii Department of Business, Economic Development and Tourism predicts stable economic growth

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HONOLULU—The Department of Business, Economic Development and Tourism (DBEDT) released its fourth quarter 2017 Statistical and Economic Report, which shows that the overall economic condition of Hawaii remains stable into the next few years and economic growth will be steady, around 1.5 percent.

During the first 10 months of 2017, the tourism industry has been performing better than expected. Visitor arrivals increased 4.9 percent and visitor spending increased 7.1 percent during the first nine months this year. According to the daily passenger data published by DBEDT, October’s passenger count increased 4.2 percent, which indicates the October visitor count will be an increase. For the first 20 days of November, passenger count increased 5.7 percent. In terms of visitor arrivals, it is on track towards another record level of visitors this year.

“We are happy to learn that scheduled air seats, the supply side of the tourism industry, will increase by 8.5 percent during the first three quarters of 2018,” said DBEDT Director Luis P. Salaveria. “Based on the current trend, there is the potential that we may be welcoming more than 9.5 million visitors in 2018.”

“It is a positive sign that direct flights to the neighbor islands during the next three quarters is expected to increase by more than 20 percent,” explained State Economist Dr. Eugene Tian. “That will help to ease the inter-island flight shortage due to Island Air ceasing operations on November 10.”

The labor market condition in Hawaii has been one of the best in the nation in the last few years. In October 2017, unemployment rate registered a record low rate of 2.2 percent, seasonally adjusted rate, and was the lowest rate in the nation for October. Year-to-date, Hawaii’s unemployment rate ranked the third lowest in terms of seasonally adjusted rate and ranked the lowest in terms of not seasonally adjusted rate.

Through October, the state gained 7,800 additional payroll jobs as compared with the same period last year. The increase in jobs mostly occurred in tourism-related industries. Retail trade and food services each added 2,500 jobs during the first 10 months, and accommodations added 1,100 hotel jobs, however, there are a few industries which lost jobs. Wholesale trade lost 600 jobs, financial activities and government sectors each lost 500 jobs, manufacturing and construction each lost 400 jobs during the first 10 months of the year.

There were 12,850 people looking for jobs in October, the lowest level since January 2007. During the first 10 months of 2017, average labor force and employment reached historic record high levels.

The value of private building permits increased 2.8 percent during the first nine months of 2017. The value of residential permits increased 14.7 percent, commercial and industrial permit values increased 119.4 percent, and value of additions and alterations decreased by 22.6 percent. The increase in building permit values will be reflected in construction activities next year.

The most recent economic forecast for the U.S. and the world indicates that most of the economies of the world, especially those our visitors are coming from, will experience continued economic growth in 2017 and 2018. The U.S. economy is expected to grow by 2.2 percent in 2017 and 2.5 percent in 2018, both are higher than the growth rate of 2016.

DBEDT revised the visitor industry forecast upward again with visitor arrivals now growing at 4.6 percent for 2017, 2.3 percent for 2018 and 1.5 percent for 2019 and 2020. Visitor expenditures will be at 6.7 percent for 2017, 3.9 percent for 2018, and 3.6 percent for 2019 and 2020.

DBEDT revised its projection of Hawaii’s economic growth, as measured by the real gross domestic product (GDP), upward from the third quarter projection to 1.7 percent for 2017, 1.5 percent for both 2018 and 2019, and 1.4 percent for 2020.

“The overall economic condition is good. We have one of the best labor markets in the nation, tourism is performing well, our real estate market continues to be strong, and more building permits are being issued,” said State Economist Dr. Eugene Tian. “The challenge is that not all the industries are performing well, some industries continue to lose jobs.”

DBEDT kept its projection on non-farm payroll job count unchanged at 1.0 percent in 2017 and falling to 0.8 percent in 2020. The unemployment rate projection now is lower for 2017 at 2.6 percent and will gradually increase to 3.4 percent by 2020.

DBEDT kept the nominal personal income growth rates unchanged from the previous quarter forecast in the neighborhood of 3.3 and 3.5 percent. Real personal income projections were also kept the same as the previous quarter forecast at rates below 2 percent for the next few years.

DBEDT kept its projections for the Honolulu consumer inflation rates unchanged from the forecast in the previous quarter at 2.5 percent for 2017, and 2.3 percent for the outer years. Consumer inflation rate for Honolulu during the first half of 2017 was 2.5 percent.

The DBEDT Quarterly Statistical and Economic Report contains more than 120 tables of the most recent quarterly data on Hawaii’s economy as well as narrative explanations of the trends in these data.

The full report is available at: dbedt.hawaii.gov/economic/qser.



Update on technology park planned in Kakaako

Photo: Hawaii Community Development Authority, Stanford Carr

Photo: Hawaii Community Development Authority, Stanford Carr

In neighborhood news, plans to build a technology park in Kakaako, which have been in talks for years, are progressing, as local developer Stanford Carr has proposed a project park.  The park presents an opportunity for the state to boost jobs in the tech sector.  The Hawaii Community Development Authority, the state agency that regulates development in Kakaako, is looking to have an initial building phase completed by 2018.

Read the full article from the Honolulu Star-Advertiser, below:

A state agency will consider a private developer’s $80 million proposal to build two pieces of an envisioned technology park in Kakaako after the opportunity to do the job attracted just one bid.

The Hawaii Community Development Authority, a state agency regulating development in Kakaako, in December issued a request for proposals to build two facilities on state land next to the University of Hawaii Cancer Center.

Only one developer, Stanford Carr, responded.

Carr proposed developing the two facilities for $79.9 million and paying the state $581,510 in land lease rent annually for the first five years. Rent would adjust after the initial term and every five years throughout a 65-year lease, under the proposal as related in an HCDA staff report.

Many details of Carr’s proposal have not been made public because they are considered by HCDA to still be part of a competitive procurement process.

The agency has scheduled a meeting for Wednesday at which its board might decide whether to proceed with Carr’s proposal and have HCDA interim Executive Director Aedward Los Banos negotiate a detailed development agreement with Carr.

Carr, a local developer who previously partnered with HCDA to build the low-income rental apartment tower Halekauwila Place on state land, could not be reached for comment Thursday, but he had made a presentation to HCDA’s board the previous day.

The tech park is seen by some as a major opportunity to boost Hawaii’s technology industry and help another state agency meet a lofty goal of creating 80,000 tech industry jobs that pay at least $80,000 annually in Hawaii by 2030.

A hub for startups

The tech park would be on 5.5 acres owned by HCDA and is envisioned to provide roughly 350,000 square feet of space for companies, researchers, students and the High Technology Development Corp., a state agency charged with facilitating growth of commercial high-tech enterprises.

The size of the complex is roughly equivalent to a 35-story tower but is proposed as midrise buildings to be developed in three phases.

Carr bid on the first phase, which includes a 13,500-square-foot Collaboration Center and a 153,279-square-foot building for commercial tech businesses.

The smaller facility, also referred to as the “Entrepreneur’s Sandbox,” would be an extension of HTDC’s aging and outdated business incubator near UH Manoa.

“The Collaboration Center is an open mixed-use facility that gathers the essential ingredients for business formation and complements it with tools that allow an early stage startup to grow,” HCDA said in its solicitation for development proposals.

Funding sources

HCDA and HTDC assembled $7.3 million from state, federal and private sources to finance the Collaboration Center. That includes a $3 million grant from the U.S. Economic Development Administration, $3 million from the state Legislature and $1.3 million committed by local office supply firm Fisher Hawaii.

Carr initially proposed building the Collaboration Center for $10.2 million. In a best and final offer, however, he lowered his bid to $7.3 million, but that excludes nonconstruction “soft costs” including engineering, archaeological work, governmental fees, builder’s risk insurance, furniture and fixtures, for which HCDA would be responsible.

As part of Carr’s proposal, Fisher would occupy about 30,000 square feet of the building. Another local company, named ‘ike (formerly DataHouse), also would occupy part of the building.

For the larger building dubbed the “Innovation Hale,” Carr bid $72.6 million. Financing this piece of the project is up to Carr.

HCDA would like to have the initial phase built by 2018.

The agency aims to have subsequent phases that include 140,000 square feet of space for higher education, 47,000 square feet of startup business incubation space, a 900-stall parking structure and a public plaza done by 2020



DBEDT Analysis on Hawaii Home Buyers

In November 2015, the State of Hawaii Department of Business, Economic Development, and Tourism (DBEDT) under Governor David Y. Ige released its first-ever analysis on Hawaii home-buyers this past November 2015. The report includes interesting statistics on the percentages of Oahu-based buyers versus buyers from out-of-state and other countries. An update on the report will follow next month in February 2016. 

Find the full press release about the first report, below:

HONOLULU – The Department of Business, Economic Development and Tourism (DBEDT) released its first report on Hawaii home buyers.  The “Residential Home Sales in Hawaii” report summarizes home sale activities in Hawaii recorded for the period from January 2008 to September 2015.  
The report is based on data compiled by Title Guaranty, which is based on the recorded conveyances from the Hawaii Bureau of Conveyances.  The data includes both resales of existing homes and new developments, and both single family homes and condominium homes, sales through real estate agent as well as sales by owners.

The following is a brief summary of the report: 

  • Between January 2008 and September 2015, a total of 139,998 homes were sold, this represented an average of 18,064 homes sold per year, or 1,505 homes sold per month. 
  • Of the homes sold statewide, 72.5 percent were sold to Hawaii residents, 23.5 percent sold to U.S. mainlanders, and 4 percent sold to foreigners. 
  • Average price for homes purchased by foreign residents was the highest at $785,604, followed by homes purchased by U.S. mainland buyers at $630,390, while homes purchased by Hawaii residents averaged at $478,189. 
  • About 47 percent of the neighbor island homes were sold to out-of-state residents, while only 15 percent of Oahu homes were sold to out-of-state residents.
  • Among the U.S. mainland buyers, California buyers accounted for 38.4 percent of the total, followed by buyers from Texas at 10.5 percent, Washington State buyers ranked third at 8.5 percent.   
  • Among the foreign buyers, Canadians ranked the first at 44.1 percent, and Japanese buyers ranked the second at 37.9 percent.  Buyers from these two countries accounted for 82 percent of the total foreign buyers. 
  • Buyers from Hong Kong had the highest average home price at $1.05 million, followed by homes purchased by residents of China at $936,738, and Korean buyers at $882,894. 
  • Home purchases by Canadian residents have been declining in recent years while purchases by other foreigners have been flat.

The department’s Research and Economic Analysis Division created the report.  DBEDT plans to issue an update to the report by breaking the home sales into single family and condominium homes, and will include the home sales data in its Quarterly Statistical and Economic Report going forward starting in February 2016.

The full report is available at: dbedt.hawaii.gov/economic/reports_studies/residential-home-sales-in-hawaii-trends-and-characteristics/