Hawaii is the first and only US state to claim an official hand sign, the shaka. The different gesture involves extending the thumb and little finger while dragging the three middle fingers. It represents the aloha spirit, friendship, gratitude and taking things easy.
For now, it might also be an adequate representation of the island’s AEC market. Total construction starts for Honolulu fell slightly in 2024, but rebounded to $6.5 billion last year, according to Dodge Data & Analytics. Forecast numbers for 2026 show a 20% increase for that year, with total starts reaching $7.8 billion.
“The pipeline is strong, especially for people who are diverse in how they approach work,” says Tseu.
Hawaii’s AEC market remains strong, driven by a combination of federal defense work, long-standing infrastructure improvements and renewed affordable housing activity.
“There has been a great initiative with [Honolulu] and counties on wastewater for several years to address the improvements that needed to be made,” Tseu says.
A prominent example is the $436 million first phase upgrade to the Sand Island Wastewater Treatment Plant, the largest in the state. The project had a successful clean fluid commissioning launch in February, marking the transition from construction to active system validation.
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When fully operational, the plant will treat 20 million gallons per day using advanced membrane bioreactor technology to dramatically improve effluent quality prior to discharge.
Hensel Phelps delivered the project for the City and County of Honolulu using a design-bid-build approach, an example of the growing owner interest in collaborative delivery methods in the region.
Tseu says these approaches have been slower to adopt in Hawaii than other regions, but he says state and local owners have shown greater interest over the past five to seven years, largely due to schedule demands and industry education.
Infrastructure is just one of three pillars for Honolulu’s current growth, along with federal jobs and housing.
“Affordable housing has been a big focus for the last few years,” he says. “With some of the [Skyline] With the completion of the rail project, there has been development around these cores with a strong focus on affordable housing.”
The effect is very clear in the numbers of Dodge starts. Residential starts are expected to double this year to $2.1 billion, driven almost entirely by multifamily projects.
While Dodge’s numbers are focused on Honolulu, Tseu says there has been an increase in activity beyond the island of Oahu.
“We’ve had pretty steady work on Maui and the Big Island the last few years,” he says. “It’s just that there isn’t that much volume.”
An upbeat mood doesn’t mean there aren’t adverse elements clouding the outlook. The most pressing concern is the lack of skilled labor, an industry-wide concern that severely affects work in the islands.
Hawaii’s geographic isolation amplifies national construction challenges, particularly labor availability, long-lasting materials, procurement timelines, and cost escalation. Unlike mainland markets, Hawaii cannot easily pull labor from nearby states or regions when project demand increases.
“We try to stay very focused on some of the bigger projects that are going on here and the phase of the projects that they’re at,” he says. “We know they attract a lot of labor, so we have to take into account what the labor market is like.”
Until now, contractors like Hensel Phelps have been able to stay ahead of labor constraints with detailed planning.
“What we’ve found is that, in terms of the workforce, if we can clearly communicate with our business partners what the timeline is going to be, what the project needs are going to be, then they can plan for it,” he explains.
The acquisition of material is another defining issue, according to Tseu. Shipping delays have not worsened beyond what is typical in Hawaii, but electrical equipment, steel and other long-lead items remain vulnerable to domestic supply pressures.
Contractors, he says, are responding to these conditions by buying ahead, storing materials locally and, in some cases, building warehouse space to house important equipment before installation.
“I think, again, the key to acquiring material is buying ahead,” he says. “For us, that’s a primary focus as soon as we get down to business.”
