At the moment, it also might be an apt representation of the island’s AEC market. According to Dodge Data & Analytics, total construction starts for Honolulu fell slightly in 2024 but rebounded to $6.5 billion last year. The 2026 forecast numbers show a 20% increase for this year, with total starts reaching $7.8 billion.

“The pipeline is strong especially for folks that are diverse in the way that they approach the work,” says Tseu.

Hawaii’s AEC market remains strong, driven by a combination of federal defense work, long-running infrastructure upgrades and renewed affordable housing activity.

“There has been a big initiative with [Honolulu] and the counties on wastewater for several years to address the upgrades that needed to be done,” says Tseu.

A standout example is the $436-million first phase upgrade to Sand Island Wastewater Treatment Plant, the state’s largest. The project had a successful launch of clean fluid startup in February, marking the transition from construction into active system validation.

When fully operational, the plant will treat 20 million gallons per day using advanced membrane bioreactor technology to dramatically improve effluent quality before discharge.

Hensel Phelps delivered the project for the city and county of Honolulu using a design‑bid‑build approach, an example of the growing interest among owners in collaborative delivery methods in the region.

Tseu says these approaches have been adopted more slowly in Hawaii than other regions, but he contends that state and local owners have shown greater interest over the past five to seven years, largely because of schedule demands and industry education.

Infrastructure is just one of three pillars for Honolulu’s current upswing, along with federal work and housing.

“Affordable housing has been a big focus as of the last few years,” he says. “With some of the [Skyline] rail project getting completed, there has been development around those hubs with a big focus on affordable housing.”

The effect is abundantly clear in the Dodge starts figures. Residential starts are expected to double this year to $2.1 billion, driven almost entirely by multifamily projects.

While the Dodge numbers focus on Honolulu, Tseu says there has been an uptick in activity beyond the island of Oahu.

“We’ve had pretty consistent work in Maui and on the Big Island the last several years,” he says. “It’s just there’s not nearly as much volume.”

The optimistic mood doesn’t mean there are not adverse elements darkening the outlook. The most pressing concern is the lack of skilled labor, an industrywide concern that severely affects work on the islands.

Hawaii’s geographic isolation amplifies national construction challenges, especially labor availability, long-lead materials, procurement timing and cost escalation. Unlike mainland markets, Hawaii cannot easily draw labor from nearby states or regions when project demand spikes.

“We try and stay super focused on some of those larger projects that are going on out here, and the phase of the projects that they’re in,” he says. “We know those are pulling in a lot of labor, so we have to keep in mind what the labor market is looking like.”

Thus far, contractors like Hensel Phelps have been able to stay ahead of labor limitations with detailed planning.

“What we found is, on the workforce side, if we can communicate clearly with our trade partners what the schedule is going to be, what the project needs are going to be, then they can plan for it,” he explains.

Material procurement is another defining issue, according to Tseu. Shipping delays have not worsened beyond what is typical for Hawaii, but electrical gear, steel and other long-lead items remain vulnerable to national supply pressures.

Contractors, he says, are responding to these conditions by buying earlier, storing materials locally and, in some cases, building warehouse space to hold major equipment before installation.

“I think the key, again, to material procurement is us procuring early,” he says. “For us, that’s a primary focus as soon as we get on the job.”