Wednesday, June 23, 2004

The new University of Hawaii medical school under construction in Kakaako is pictured above. Isle construction spending in the first quarter hit levels seen in the late 1980s, a report says.

spending up

The year's total spending
may hit $4 billion

Construction spending for projects bigger than $50,000 rose strongly during the first quarter of the year to $853 million despite the cement workers strike that stalled the industry, according to a survey by the Pacific Resource Partnership.

The pace of construction activity looks likely to push this year's total spending to $4 billion, said Bruce Coppa, the partnership's managing director.

Art "We're going to come damn close to $4 billion this year," he said. "I've never seen it that big. It's incredible."

The figures compiled by the PRP, the joint market recovery program of the Hawaii Carpenters Union and unionized building contractors, are based on permits and bid results over $50,000 and do not represent total construction spending.

However, Coppa said the last time the figures reached $4 billion for a full year was during the days of the Japanese real estate and construction bubble of the late 1980s.

Leading the way in the first quarter was construction of multi-family housing, including hotels and condos, which accounted for $331 million. That's way up from $154 million in the first quarter of last year, due in part to the handful of large condo projects being built in the Kakaako area, Coppa said.

Single-family housing accounted for $258 million in construction spending, up from $205 million last year. Spending on tract residential housing fell to $70 million, down from $105 million.

Paul Brewbaker, chief economist with the Bank of Hawaii, said the rising numbers may be caused less by a pickup in construction activity than by a rise in cost for materials, such as steel.

"People are committing to spend on construction but they're not getting as much building out of it," he said.

Ronald Fujikawa, president of general contractor Associated Steel Workers Ltd., says record-high steel prices tied to a worldwide shortage are a thorn in the side of companies like his, which is building the Koolani, Hokua and Lanikea high-rise condominium projects.

The PRP report said public-sector construction totaled just $95 million, down from $134 million a year earlier. Commercial construction accounted for $83 million, down from $104 million.


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