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To Produce Affordable Units In Hawaii, Building Design Needs To Change

Daniel Ramirez

Hawaii has some of the highest construction costs in the country. That makes building new housing an expensive prospect.

To solve the projected 65,000 unit housing shortage, regulators and developers will need to be laser focused on efficiency, both in design and construction. Efficiency helps minimize costs, which in turn keeps the final sale price down -- the true measure of affordability.

One of the easiest ways to increase efficiency, according to Michael Vachio with Honolulu-based venture capital firm J.L. Capital, is to build tall.

“The higher you go, the lower the cost per gross square foot goes -- a lot of the cost of these tower is actually in the base of the tower,” Vachio said in a recent panel discussion on housing.

Maximizing height allows for more units in a given project, which in turn allows the developer to spread the construction cost more thinly across each potential buyer.

But it will take much more than just tall buildings. Vachio says overcoming a shortage of this magnitude, while keeping some semblance of affordability, will require upending the normal building process, which begins with architectural design before going to engineers and eventually contractors.

“The idea is you flip the whole design process on its head. Don't design from the outside in, design from the inside out. It's all about efficiency.”

Designing with actual construction in mind, rather than aesthetics, minimizes the number of construction days, and the associated labor costs. Vachio points out that elaborate exterior facades and amenities like pools all increase the cost of materials, labor, and the time required to build.

With Hawaii construction costs already among the highest in the country, some in the building industry have raised doubts about whether the affordable standard can really be met with large, high-density projects.

Micahel Young, with general contractor Albert C. Kobayaski, told the same audience that the construction industry will not be able to tackle the challenge alone.

“I think we'll have to find ways to partner with different stakeholders. I think this is a difficult challenge for one industry,” Young said.

The state and local governments already offer tax credits for the construction of affordable units, and the City and County of Honolulu recently enacted a test program to relax some building restrictions for low-cost projects.

But some officials argue more is needed. In the 2019 legislative session, state Sen. Stanley Chang’s ALOHA Homes proposes a leasehold plan based on Singapore’s national housing program. Unused public land would be leased to developers at no cost for housing construction.

The goal is to bring those units to market for a median price of $300,000, although there is skepticism about the feasibility of that figure.

Lawmakers declined to advance the plan on its first review, but did approve funds to further study how it could be implemented.

Read the first of this two-part series on Hawaii's housing shortage, examining why infrastructure matters.

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