US Market Update

Posted by Dave Farley
November 22nd, 2011

A few ideas, comments, and thoughts that may be of interest to industry…

October was an extremely busy time for BC Wood in the United States with 4 major trade events taking place in the month. Over the next few weeks, I will discuss the events and the potential market opportunities that arose from our participation.

First up was the AIA Pacific in Honolulu, Hawaii. BC Wood and 5 members participated in the trade event and the following mission in early October. Like most trade events that target the US residential and light commercial construction sector, this show was down in both participation and attendance. This year, 300 plus exhibitors and 1400 attendees were at the event, down by approximately 20% over previous years and is reflective of the reduced construction activity throughout the State of Hawaii. Nevertheless, this trade event still provides the single best opportunity for BC companies to network with builders, developers, and architects across the state of Hawaii and other countries including Guam, Tahiti, Micronesia, and the West Coast of the United States who have projects on the islands.

Following the event, we spent 3 days travelling between the Islands meeting with architects and builders and visiting construction sites, getting a 1st hand account of the market and potential opportunities that are available. The general consensus from builders and architects working on projects in both Maui and Kona is that the market is showing gradual improvement. Also, a belief that there is a pent up demand developing as their clients – ultra wealthy individuals, building luxury vacation homes – are tired of sitting on the sidelines, waiting for the economy to improve. As one builder described it, “the life quality ratio is starting to weigh on his clients”. Essentially, his target market is older, semi retired or retired professionals who have the financial ability to self-finance multi-million dollar construction projects. A number of his clients are weighing the consequences of waiting for the economy to improve vs. their remaining quality of life and have decided to start construction projects that were stalled after the market collapse in 2008. This is likely a problem most of us would love to have, but certainly bodes well for high-end residential construction projects to resume on the Islands.

Another observation that I found interesting, from one of the top residential and commercial builders on the Islands, was the changing demographic in the secondary vacation home market. The big Island of Kona, he suggests with the luxury resorts of Hualolai and Kukio, are where the “old school money” has vacation homes and property; think for example, Charles Schwab. The new rich, those who have made money in Silicon Valley and the Dot Com market, find these resorts stuffy and instead are investing in new developments on the Islands of Maui and Kauai. This builder is banking on the shift in wealth demographic and is expecting to focus on projects on these Islands.

Finally, most experts that we met expected to see good growth over the next few years as the economy continues to improve in the US and across the State of Hawaii. There are a number of projects that are on the drawing board and are expecting to begin construction in the Spring of 2012. I will continue to follow up with the builders and keep you informed when these projects are announced. As always if you have any questions or comments please contact me at dfarley@bcwood.com.

 

 

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