A few thoughts and observations over the last few weeks that may of interest…
I returned from a recent trip to the American Institute of Architects (AIA Hawaii) in Honolulu. The Islands, like nearly all of the US, was not immune to the economic meltdown, and the building market suffered a significant downturn. The good news is, the market seems to be recovering quicker than other States and opportunity exists for suppliers of high grade heavy timbers and finished products.
I spoke to a number of builders and architects on the Islands and a few interesting observations were: Western Red Cedar has an opportunity to supplant Teak as the favoured species for high end residential and commercial building projects. The strong weather resistant properties of WRC on exterior and interior applications have created an interest in the species. One builder working on multi-million dollar properties in the Kukio development in Kona suggested that Teak has saturated the market and he is seeing more Red Cedar specified on his projects. He did note that sourcing architectural and appearance grade WRC is sometimes difficult though. Most builders are buying their cedar through the main building products supplier on the Islands, Honsidor Lumber, or are dealing with the main building products consolidator, Pacific Source based in Seattle.
While the ultra high end residential and vacation home market continues to improve on the Islands, a subtle but important change in market should be noted. Builders and architects who design these multi-million dollar homes for their wealthy clients are finding that the optics on building these homes have changed.
Their clients, often owners and CEO’s of fortune 500 companies, have what the builders refer to as “Deer in the headlights syndrome”. That is, they are concerned about the optics of building opulent luxury vacation homes in a down market. Specifically, they worry about what their Boards and company shareholders will think of their extravagant spending on a vacation home during a recession. As such you are seeing the cost per square foot of these homes been downgraded significantly. As one builder I spoke to building a 8000 sq ft house in Kapalua Hawaii said, “the square ft. price of this house has been reduced to $700 a sq ft-down from $1000 when we originally started designing the place. He continued by saying that, “the owner is concerned that his Board will frown upon spending $8 million on a vacation home. I only wish that I could have such problems!”
*image from honolulutransit.org
Finally the long awaited Honolulu light rapid transit project has been green-lighted and construction is slated to begin in the new year. The project is very similar to our own skytrain, and the initial designs show a significant use of heavy timber in the 22 stations planned along the route. According to State officials working on the project, 8 stations have been letted and the architectural designs have received preliminary approval. There is a good website available to learn more about the project and to view some of the concept designs at www.honolulutransit.org.
*image from honolulutransit.org
As always for more information on this market, or other opportunities in the US please feel free to contact me at firstname.lastname@example.org.