Big Island has
The island’s economy is the
best it has been in years,
an economist says
The Big Island's economy is seeing its best growth in several years as strong job creation, robust construction and real estate, and improved visitor arrivals from Japan fuel the resurgence.
But, just like the state's other islands, strains on infrastructure and a lack of affordable housing are curbing growth, First Hawaiian Bank economics consultant Leroy Laney said in separate forums yesterday in Hilo and Kona.
Laney, who also is a professor of economics and finance at Hawaii Pacific University, said the Big Island's unemployment rate of 5.6 percent in June was the lowest since 1991 and the continued low jobless rate has resulted in a tight labor market, particularly on the Kona-Kohala side of the island.
Construction, driven by low interest rates and local and out-of-state demand for residential properties, has remained robust, he said, with growth highly concentrated in South Kohala and North Kona. That has put increased strains on roads and other infrastructure in West Hawaii, he said.
Laney said figures from Clark Realty show that median home sales prices in the four-year period from mid-2000 to mid-2004 have risen 42 percent in Kona, 52 percent in Hilo, 74 percent in Keauhou and 102 percent in Waimea.
"As everywhere else in the state, home affordability for local residents has become a very hot topic," said Laney, adding that a speculative element has begun to surface. "Demand outstrips inventory, and homes are sold as soon as they hit the market."
The return of Japanese tourists has boosted tourism statewide. Big Island visitor arrivals through July are running 2.9 percent ahead of a year ago. Direct flights from Japan into Kona have helped increase that number and through July visitors from Japan to the Big Island were up 19 percent from the first seven months of 2003. In addition, Laney said total air seats into Kona are up nearly 33 percent from a year ago.
He said another infusion to the Big Island economy will come later this year when 530 rooms are added with the opening of the Sheraton Keauhou Bay Resort, formerly the Kona Surf, on the west side of the island.
Laney said the Kohala Coast resorts remain the crown jewel of the Big Island because they provide almost 10 percent of the county's nonfarm jobs and 21 percent of property tax revenues on the Big Island.
Laney said the Big Island is the most diversified of the three neighbor island economies and holds up better when there are shocks to the state, such as those brought on by terrorist attacks and recession.
He said job growth on the island also has outpaced the state as a whole.
Agricultural diversification includes coffee, macadamia nuts, cattle exports, bananas, navel oranges, papayas and flowers.
The Mauna Kea astronomy also creates about 600 high-paying jobs on the islands with the combined annual budgets of all observatories approaching $70 million, he said. Five companies, with a sixth one on the way, also are selling desalinated deep sea water as bottled drinking water to offshore markets. This industry has become one of the state's biggest exporters, Laney added.
The 870-acre Natural Energy Laboratory of Hawaii at Keahole Point also has been going through the difficult process of weaning itself from taxpayer support, he said.
Laney said the growing cruise industry, naming the Pride of Aloha in particular, also will benefit the island, especially in Hilo where debarking passengers can walk the town and visit retail outlets. But he said growth of that industry may be hampered by inadequate harbor infrastructure and demand for the docks.
"One noteworthy trend found in this year's survey is the new sense of dynamism that seems to be emerging in Hilo," Laney said. "Greater optimism was expressed by a number of those interviewed."
Laney said there are several positive economic signs emerging in Hilo. Among them are:
» The University of Hawaii at Hilo is aiming to grow to 5,000 students in 2008 from its present 3,300 students and is planning a pharmacy college. In addition, the school's $28 million Mauna Kea Astronomy Education Center is due to open in 2005.
» More than $1.1 million has been raised in the community to renovate and expand the Hilo Medical Center emergency facility. The funds will be matched about 3 to 1 with state money.
» A $28 million veterans home, the first in the state, will be built on the site of the long-deserted Hilo Hospital.
» There are signals that the state might move ahead with a new lease for the Naniloa Hotel, which would encourage improvements and new management.
» A new Home Depot store is going in behind Prince Kuhio Plaza.
» New lava flows from Kilauea Volcano are attracting up to 2,000 daily visitors, most of whom pass through Hilo.