Slower growth expected for Maui
By Rick Daysog
Advertiser Staff Writer
By Rick Daysog
Maui's economy remains on solid footing, but like the rest of the state, growth is expected to slow from the heated pace of the past several years, First Hawaiian Bank economic consultant Leroy Laney said yesterday.
Healthy tourism and construction sectors as well as development plans by local companies continue to underpin Maui's economy, which is now in its 10th year of expansion, Laney said at the 32nd Annual First Hawaiian Bank Economic Outlook Forum at the Maui Beach Hotel.
Factors that are likely to contribute to slower growth are an "extremely tight" labor market, overcrowding at Kahului Harbor and a slowdown in real estate sales, said Laney, who is a professor of economics and finance at Hawai'i Pacific University.
"Maui continues to do well this year, and the outlook for 2007 is bright for most sectors," said Laney.
"But it will experience the same slowdown from the heated pace of the last several years that the entire state will."
Tourism continues to drive Maui's economic engine, as visitor arrivals on the Valley Isle have risen 9.2 percent during the first six months this year, while visitor spending rose 20 percent.
Hawai'i's cruise ship industry also is contributing to the boom. Last year, more than 300,000 passengers booked cruise trips in Hawai'i's waters, while another 500,000 are expected to book cruises next year, Laney said.
Maui's building industry also had a robust year, led by developers such as Alexander & Baldwin Inc. and Maui Land & Pineapple Co.
Laney noted that A&B plans to add 179 acres of light industrial real estate near Maui Business Park and plans to redevelop the fire-damaged Kahului Shopping Center with new office, retail and residential development, which will include a 103-unit condo project.
Maui Land recently obtained approval from the Maui Planning Commission to build an 882-unit housing project in West Maui. Nearly half of the units or about 450 single-family homes and apartments will meet the state's affordable-housing guidelines, he said.
However, Maui's housing market is showing signs of cooling just as the nation's residential market is slowing.
Laney noted that the number of single-family homes sold on Maui was down 27 percent during the first half of 2006 as speculative buyers have largely left the market.
Prices, meanwhile, were up 6 percent during the first half, following last year's 23 percent run-up, and Laney believes prices could drop slightly next year.
"If this cycle follows past ones, an actual mild decline in median prices next year would not be surprising," he said.
The tight labor market also is putting a lid on growth.
Maui's unemployment rate was about 2.5 percent at the end of the the first half, which compares with a statewide unemployment rate of about 2.6 percent and a national rate of about 4.7 percent.
"This is one of the biggest constraints on growth for the state, but especially for Maui," he said.
Reach Rick Daysog at email@example.com.