Hawaii Feasibility Studies

The Hawaii Thesis

A statewide Hawaii number is indefensible, and the mainland template fails here.

Hawaii is not one market but four non-substitutable island counties you cannot drive between: Oahu, which holds 69.1 percent of the state's population, plus Maui County, Hawaii County (the Big Island), and Kauai County.² An Oahu comp is not a Maui comp. But the deeper divergence is structural. Five features with no mainland analog govern every Hawaii pro forma: the State Land Use Commission's four-district regime layered on top of county zoning;³ pervasive leasehold land tenure controlled by large trusts;⁴ the General Excise Tax, which unlike a sales tax applies to commercial and residential rents at 4.5 percent;⁸ construction costs roughly 30 to 50 percent or more above the mainland, driven by the Jones Act;⁵⁶ and the Prepaid Health Care Act, the nation's only state employer health-insurance mandate.⁹ Miss any one and the study is worthless.

In Hawaii the oversupply monitor is really an entitlement-and-constraint monitor, because almost everything is structurally undersupplied. Oahu industrial vacancy was 1.2 percent in early 2025, among the tightest in the nation against a rate above 6 percent;¹⁰ the statewide rental market runs near 3 percent vacancy;¹³ and the housing shortage is so severe that Hawaii is losing population, down 2,132 residents in fiscal 2025 to 1,432,820.¹ The binding constraint is not demand. It is the ability to get anything entitled and built.

What follows is organized as a working desk: a live island-by-island supply monitor, a funding-routing map, the review failures that sink Hawaii studies, the regulatory edges that decide outcomes, and a per-island demand fingerprint. Every figure is dated and attributed in the sources below.

The Entitlement & Supply Monitor

Where Hawaii markets stand, island by island.

A supply-pressure read for each island county and asset class, refreshed each quarter from named primary sources. Because the land-use regime prevents supply from meeting demand, nearly every cell reads undersupplied; this is an entitlement-and-constraint monitor, not an oversupply monitor. Data current to Q2 2026.

Supply pressure: Undersupplied / tight Balanced Softening / digesting / thin Oversupplied
Island	Multifamily	Industrial	Self-Storage	Hotels	Office
Oahu	Undersupplied~3% rental vac.	Undersupplied1.2% vac., near record	Undersupplied~3 sf/capita	BalancedWaikiki 77.8% occ.	Balanced~11% vac., softening
Maui	UndersuppliedPost-fire crisis	Undersupplied	Undersupplied	Digesting63–66% occ., post-fire	Thin
Big Island	UndersuppliedMost affordable; lava-zone risk	Undersupplied	Undersupplied	BalancedKona/Kohala ~$218 RevPAR	Thin
Kauai	UndersuppliedRestrictive by policy	Undersupplied	Undersupplied	BalancedLed counties, $287 RevPAR	Thin

Readings compiled from sources 10–22 below. Vendor vacancy estimates for the same island can differ; each figure is attributed at its point of use.

Housing: the highest prices in the nation, against a shrinking population

Hawaii has the highest home prices of any state, a statewide median single-family price of $950,000 in 2025, requiring more than 180 percent of state median income to afford.¹¹ On Oahu the single-family median ran roughly $1,141,500 for full-year 2025, with condos near $507,750.¹² The rental market is extremely tight, with Honolulu average rent near $2,130 per month and islandwide Oahu near $2,734, on vacancy of roughly 3.1 to 3.4 percent.¹³ New high-rise supply concentrates in Kakaako under the Hawaii Community Development Authority, a distinctive entitlement path that bypasses normal county zoning; Howard Hughes' Ward Village has eleven residential towers completed or under way, with Ulana Ward Village and its 697 workforce units opening November 2025.¹¹ Suburban growth concentrates in the Kapolei–Ewa second city, where D.R. Horton's Hoopili, about 12,000 planned homes, and Castle & Cooke's Koa Ridge, about 3,500 units, anchor the pipeline.

Industrial: the signature structural-undersupply story

Oahu's 41.9-million-square-foot industrial market reported a 1.2 percent vacancy rate in early 2025, up from 0.9 percent at the end of 2024 and a near-record 0.6 percent in the third quarter of 2023, against a national rate above 6 percent.¹⁰ Direct weighted-average asking rent reached a new high of $1.56 per square foot per month, with gross rents above $2.00. Roughly 600,000 square feet of new supply was projected to deliver by the end of 2025, mostly in Kapolei and James Campbell Industrial Park, and net absorption swung back positive to about 140,803 square feet in the third quarter of 2025.¹⁰ This is the textbook Hawaii story: almost no developable industrial land, twelve-to-twenty-four-month permitting, and shell costs above $200 per square foot before land.⁵ Pearl Harbor Naval Shipyard is the state's largest industrial employer, and the $500 million Kapalama Container Terminal expansion adds 84 acres of yard capacity.

Hotels: the highest RevPAR in the country, four divergent island reads

Hawaii posts the highest hotel revenue per available room of any US market, a statewide $270 for the first nine months of 2025, ahead of New York; Maui carries the nation's highest twelve-month average daily rate, near $551.¹⁵ The island reads diverge sharply. In September 2025 Kauai led the counties at $287 RevPAR on 74.7 percent occupancy, and the Big Island's Kona–Kohala coast posted about $218, both broadly balanced, while Maui's Lahaina–Kaanapali–Kapalua submarket was still recovering from the fire at $211 RevPAR and 61.1 percent occupancy, and urban Waikiki softened.¹⁵ Maui County occupancy sat at 63 to 66 percent through most of 2025, approaching 70 percent in early 2026.¹⁶ One asset class, four opposite reads, is the clearest possible refutation of a Hawaii hotel average.

Maui: the Lahaina fire and the largest short-term-rental conversion in US history

The August 2023 Lahaina wildfire, the deadliest US wildfire in over a century, killed 102 people and destroyed an estimated 2,207 buildings, with a $5.5 billion federal damage estimate; a roughly $4 billion global settlement was finalized in April 2026.²¹ The policy response reshaped the market. Maui County Ordinance No. 5909, signed December 15, 2025, is expected to return more than 6,000 apartment-zoned Minatoya List short-term rentals to long-term housing, with a West Maui deadline of January 1, 2029 and a South Maui deadline of January 1, 2031; two regulatory-taking lawsuits are pending with no injunction as of April 2026.¹⁷¹⁸ Maui condo prices fell 44 percent year over year by September 2025, and condo inventory hit a ten-year high.¹⁹

The condo insurance crisis and self-storage

A statewide condo insurance crisis has driven master-policy premiums up 300 to 1,300 percent, leaving about 400 buildings under-insured and effectively unfinanceable under Fannie and Freddie rules except to cash buyers; the Legislature responded with Act 296, which revived the Hawaii Hurricane Relief Fund and created a Condominium Loan Program.²⁰ Self-storage is structurally undersupplied at roughly 3 square feet per capita in Honolulu against a 7-square-foot national benchmark, and it is the most expensive storage market in the nation, with a Honolulu 10-by-10 unit near $299 per month, more than double the national average.¹⁴

Senior housing and healthcare: CON-gated and access-constrained

Skilled nursing and most health-care facilities are gated by Hawaii's Certificate of Need program, which lowers oversupply risk but raises the barrier to entry.²² Hawaii has among the nation's highest life expectancy and a rapidly aging population, so kupuna-care demand is strong, but extreme land and construction costs make development very hard, and the state leans on the small-scale Adult Residential Care Home model rather than large facilities. On the neighbor islands a severe physician shortage forces many patients to fly to Oahu for specialty care.

The Funding-Routing Map

How a Hawaii deal actually gets funded.

Feasibility work exists to satisfy a specific reviewer. Knowing which channel funds your asset on your island is half the battle. This is the routing most feasibility pages never publish.

SBA and USDA offices serving Hawaii

One district office and one 504 CDC serve the state, with USDA routed distinctively through Hilo.²³²⁵
Office	Coverage
SBA Hawaii District Office (Honolulu)	Hawaii and the Pacific territories
USDA RD Hawaii & Western Pacific State Office (Hilo)	Statewide, based on the Big Island, plus the Pacific Basin
HEDCO Local Development Corporation	Statewide SBA 504 debentures

Central Pacific Bank led all Hawaii institutions in number of SBA loans in 2024, with 113 7(a) loans, and led Hawaii and Guam in 504 approvals; in fiscal 2025 three Hawaii banks earned SBA Lender-of-the-Year honors, First Hawaiian Bank, Central Pacific Bank, and Hawaii National Bank, even as statewide SBA volume fell year over year.²⁴ Bank of Hawaii and First Hawaiian are the two dominant banks statewide, and national SBA specialists such as Live Oak also write Hawaii credits. HEDCO Local Development Corporation has historically been the state's only SBA-certified 504 CDC, though TMC Financing has announced an expansion into Hawaii.²³ For rural credits, USDA Business and Industry and Community Facilities loans route through the Hawaii and Western Pacific State Office in Hilo, and most neighbor-island areas outside Kahului–Wailuku and the Honolulu urban core qualify as rural, a widely underused opportunity.²⁵

An Oahu urban-core project in Honolulu, Kakaako, or the industrial beltBank of Hawaii or First Hawaiian for conventional and 504, with HEDCO carrying the 504 debenture.
A neighbor-island or rural project on the Big Island, rural Maui, Kauai, Molokai, or LanaiCheck USDA Business & Industry and Community Facilities eligibility first through the Hilo state office.
SBA 7(a) working capitalCentral Pacific Bank or First Hawaiian Bank, the most active writers in the state.
A self-storage, hotel, or other special-purpose assetA national SBA specialist such as Live Oak, paired with HEDCO on the 504 side.
Any leasehold asset with a near-term lease-rent resetConfirm the remaining term and reset schedule before financing; many lenders will not lend on a short-remaining-term leasehold.

Common Review Failures

How Hawaii feasibility studies fail review.

Each failure below is tied to a real Hawaii number. These are the recurring reasons a Hawaii study loses credibility with a lender or agency, engineered out of our deliverables before they ship.

Statewide-average error

The four island counties are separate, non-substitutable markets you cannot drive between. Oahu is 69.1 percent of the population; a Hawaii average blends a 1.2-percent-vacancy Oahu industrial market with a fire-disrupted Maui and a lava-zone Big Island, so any statewide comp is meaningless.²¹⁰
Entitlement and land-use risk

The State Land Use Commission's four-district system, the district boundary amendment process, county zoning, Special Management Area permits, Chapter 343 environmental review, and burial review routinely produce decade-plus timelines, and only about 5 percent of state land sits in the Urban district. Underwriting without modeling the entitlement timeline and its carrying cost is disqualifying.³
Leasehold versus fee-simple

A short-remaining-term leasehold with a pending lease-rent reset carries fundamentally different financing and valuation than fee-simple, and many lenders will not finance it. Major holders include Kamehameha Schools/Bishop Estate, which cares for roughly 363,000 acres, plus the Department of Hawaiian Home Lands, Alexander & Baldwin, Castle & Cooke, and Parker Ranch. Assuming fee-simple without verifying is fatal.⁴
Construction cost and the Jones Act

A mainland cost-per-square-foot assumption understates Hawaii by 30 to 50 percent or more, and warehouse shells exceed $200 per square foot before land. The Jones Act adds an estimated $54.4 to $255.9 million a year to Hawaii real-estate and construction costs, part of a $1.2 billion total annual cost to the state.⁵⁶
Maui post-fire, STR phase-out, and condo insurance

Bill 9 removes short-term-rental income from roughly 6,200 units on 2029 and 2031 deadlines, Maui condo prices fell 44 percent year over year, and the condo insurance crisis has left about 400 buildings under-insured and unfinanceable. Underwriting any Hawaii condo or short-term rental without these is a failure mode.¹⁷¹⁹²⁰
Natural hazards

Big Island Lava Zones 1 and 2 are essentially uninsurable except through the state property-insurance association and hard to finance; wildfire risk on invasive plantation grasses is now a serious insurance factor after Lahaina; and new Oahu FEMA flood maps took effect April 29, 2026.²⁷
Cost of living, out-migration, and electricity

Hawaii lost 2,132 net residents in fiscal 2025, out-migration undermines resident-serving demand, the Prepaid Health Care Act raises employer costs, and electricity at 46.62 cents per kilowatt-hour must be modeled as an operating expense.¹⁷⁹

Regulatory Edges

The Hawaii rules that decide feasibility outcomes.

Four regulatory realities separate a Hawaii study that survives review from one that does not. Together they are why the mainland feasibility template does not travel here.

A full Certificate of Need program

Hawaii runs a full Certificate of Need program administered by the State Health Planning and Development Agency under HRS Chapter 323D, governed by the State Health Services and Facilities Plan. CON applies to new health-care facilities, hospital and nursing beds, ambulatory surgery centers, major medical equipment, home health, and hospice; administrative review applies where a change carries a capital expense of $1 million or less and increased annual operating expense under $500,000.²² Hawaii gates health-care supply directly, so oversupply risk is low but the CON application itself becomes a feasibility-study driver. Reform is active, with a December 2025 white paper and 2025–2026 bills proposing to narrow the program, though none is confirmed enacted.²²

The State Land Use Commission's four-district regime

All of Hawaii's roughly 4.11 million acres are classified by the state into Urban, Rural, Agricultural, or Conservation districts, about 5 percent urban, 47 percent agricultural, 48 percent conservation, and under 0.5 percent rural. Any project outside the Urban district generally requires a state Land Use District Boundary Amendment layered on top of county zoning, community plans, and environmental review, and amendments over 15 acres go to the Commission itself under HRS Chapter 205.³ Entitlement can take a decade or more, and the carrying cost of that timeline is the single most frequently missed Hawaii feasibility variable.

The General Excise Tax on rents and the Prepaid Health Care Act

Two operating-cost edges are routinely missed by mainland consultants. The General Excise Tax applies to gross commercial and residential rental receipts at 4.5 percent on all four islands, a pyramiding tax owed whether or not it is passed to tenants, so every Hawaii lease pro forma must carry it.⁸ And the Prepaid Health Care Act, the nation's only state employer health-insurance mandate predating the ACA, requires coverage for employees working 20 or more hours a week, a lower threshold than the ACA's 30 hours, raising operating costs for every Hawaii business including SBA borrowers.⁹

The Green Fee, condo insurance, and tailwinds

Three 2025–2026 changes move the pro forma. The state Transient Accommodations Tax rose to 11.0 percent on January 1, 2026 under the new climate-impact Green Fee, pushing combined lodging tax near 19 percent, and is scheduled to reach 12 percent in 2027.²⁶ The condo insurance crisis prompted Act 296, reviving the Hawaii Hurricane Relief Fund.²⁰ Cutting the other way, Hawaii has among the lowest effective property-tax rates in the nation and enacted a multi-year income-tax cut phasing in through 2031, while the SBA doubled its combined 7(a)-plus-504 ceiling to $10 million effective July 4, 2026, enlarging bankable deal size.²⁹²⁸

Island Divergence

Four island counties, distinct demand fingerprints.

Each island carries its own economic base and its own supply position. These are the units of analysis for a Hawaii study, and each anchors a dedicated market page.

Urban core & military

Honolulu / Oahu

Government, finance, Waikiki tourism, and Pearl Harbor. Home to 69.1 percent of the state on industrial vacancy near 1.2 percent; growth concentrates in Kakaako transit-oriented development and the Kapolei–Ewa second city.²¹⁰

Second city

Kapolei / Ewa

Oahu's designated growth corridor along the Skyline rail. Hoopili and Koa Ridge anchor the largest master-planned housing pipeline in the state, and industrial delivers here and at James Campbell Industrial Park.¹⁰

Tourism & post-fire

Maui County

Wailea and Kaanapali resorts, a post-fire housing crisis, and the Bill 9 short-term-rental phase-out. County population fell 1.0 percent and condo prices dropped 44 percent year over year.¹⁶¹⁷

Fire rebuild

West Maui / Lahaina

The fire-devastated submarket, slowly rebuilding, with 634 permits issued on 473 affected parcels by mid-2026. Hotel RevPAR recovered to about $211 but remains well below 2019.¹⁶¹⁵

Agriculture & astronomy

Hawaii Island (Big Island)

Kona–Kohala resorts, diversified agriculture, and Mauna Kea astronomy. The most affordable land in the state and the only growing county, but much of Puna sits in Lava Zones 1 and 2.²⁷

Restrictive & resort

Kauai

Poipu and Princeville resorts on highly restrictive, anti-development policy. Led the counties in September 2025 hotel RevPAR at $287; undersupplied by design.¹⁵

By Asset Class

Hawaii feasibility studies by asset class.

Each asset class carries its own Hawaii demand drivers, from resort seasonality to leasehold tenure to the highest-in-nation electricity cost. Explore the analytical approach by property type.

Hawaii Questions

Hawaii feasibility study questions.

Does Hawaii require a feasibility study for an SBA loan?

Under SBA SOP 50 10 8, a feasibility study is discretionary rather than universally mandated, and lenders commonly require one for special-purpose properties and startup or ground-up projects that lack operating history. Hawaii's extreme construction costs, decade-long entitlement timelines, and leasehold complications make independent feasibility analysis routine on Hawaii SBA credits.

Does Hawaii have a Certificate of Need law?

Yes. Hawaii runs a full Certificate of Need program administered by the State Health Planning and Development Agency under HRS Chapter 323D, covering new health-care facilities, hospital and nursing beds, ambulatory surgery centers, and major medical equipment. Health-care supply is permit-gated, which lowers oversupply risk but makes the CON application itself a feasibility-study driver.

Which Hawaii real estate markets are oversupplied right now?

Almost none. Because the State Land Use Commission regime and roughly double-mainland construction costs prevent supply from meeting demand, nearly every asset class reads undersupplied. Oahu industrial vacancy was about 1.2 percent in early 2025, the statewide rental market runs near 3 percent vacancy, and Honolulu self-storage sits near 3 square feet per capita against a 7-square-foot national benchmark. The binding constraint is entitlement, not demand.

Who funds SBA and USDA loans in Hawaii?

SBA programs route through the Hawaii District Office in Honolulu, with HEDCO Local Development Corporation historically the state's SBA-certified 504 CDC. Central Pacific Bank and First Hawaiian Bank are among the most active 7(a) writers, while Bank of Hawaii and First Hawaiian dominate conventional lending. USDA Business and Industry and Community Facilities loans route through the Hawaii and Western Pacific State Office in Hilo, and most neighbor-island areas qualify as rural.

How is a Hawaii feasibility study different from a mainland one?

The mainland template fails in Hawaii. Five features with no mainland analog govern every pro forma: the State Land Use Commission's four-district regime layered on county zoning, pervasive leasehold land tenure controlled by large trusts, the General Excise Tax on gross rental receipts, construction costs roughly 30 to 50 percent or more above the mainland driven by the Jones Act, and the Prepaid Health Care Act employer mandate. A study must also be built island by island, because Oahu, Maui, the Big Island, and Kauai are non-substitutable markets.

What is the Maui Bill 9 short-term rental phase-out?

Maui County Ordinance No. 5909, signed December 15, 2025, is expected to return more than 6,000 apartment-zoned Minatoya List short-term rentals to long-term housing, the largest short-term rental conversion in US history. The West Maui deadline is January 1, 2029 and the South Maui and other deadline is January 1, 2031. Two regulatory-taking lawsuits are pending with no injunction as of April 2026, so any Maui condo or short-term rental pro forma must model the phase-out.

Sources

Data sources and dates.

Every figure on this page traces to a named authority. Real-estate readings are point-in-time and vendor-dependent; each is attributed at its point of use.

Hawaii State Census office and DBEDT, Vintage 2025 population estimates (released January 27, 2026): 1,432,820 residents as of July 1, 2025, a net loss of 2,132; Grassroot Institute of Hawaii summary.
U.S. Census Bureau and Hawaii DBEDT, county population shares (2024); State of Hawaii Data Book, Office of Planning.
Hawaii State Land Use Commission, HRS Chapter 205; Hawaii State Data Book land-use district classifications via the Office of Planning.
Kamehameha Schools / Bishop Estate landholding disclosure (ksbe.edu); 2024 Hawaii Data Book landowner rankings; Department of Hawaiian Home Lands.
Clearhouse Lending, Hawaii construction-cost analysis (2025); Colliers warehouse shell-cost commentary (2025).
Grassroot Institute of Hawaii, "Quantifying the Cost of the Jones Act to Hawaii," John Dunham & Associates (July 29, 2020).
U.S. Energy Information Administration via Electric Choice, residential electricity rates (April 2026): 46.62 cents per kWh.
Hawaii Department of Taxation, General Excise Tax on gross rental receipts (HRS §237-16 and §237-13); county surcharge schedule (4.5 percent on all counties).
Hawaii Prepaid Health Care Act, HRS Chapter 393 (enacted 1974).
Colliers, Oahu industrial market (Bill Froelich), via Western Real Estate Business (June 2025); Colliers Hawaii Q3 2025 absorption data.
UHERO (University of Hawaii Economic Research Organization), Hawaii Housing Factbook 2026 (released May 7, 2026).
Honolulu Board of Realtors, Oahu MLS median price data (full-year 2025).
RentCafe / Yardi Matrix, Honolulu and Oahu average rents (2025); property-manager vacancy estimates (October 2025).
StorageCafe analysis of Yardi Matrix data, Honolulu self-storage per-capita and street rates (2025).
Hawaii Tourism Authority and STR, statewide and island RevPAR, ADR, and occupancy (2025; January 2026 reports).
UHERO, Maui economic and hotel-recovery forecast (Q2 2026, released May 2026); Maui rebuilding-permit counts.
Maui County Ordinance No. 5909 (Bill 9), signed December 15, 2025; Bissen administration via Maui Now; Minatoya List (7,069 properties).
Lynam v. County of Maui (Case No. 2CCV-25-0003780, filed December 22, 2025) and the Kaanapali Royal owners' suit (December 2025), via Maui Now.
Realtors Association of Maui, Maui condo price and inventory data (September 2025).
Hawaii Business Magazine, condo master-policy premium reporting (2024); Act 296 / SB1044 (signed July 2025) reviving the Hawaii Hurricane Relief Fund.
Maui County, FEMA, and Pacific Disaster Center, Lahaina wildfire casualty and damage counts; U.S. Fire Administration / FEMA After-Action Report; global settlement finalized April 2026.
Hawaii State Health Planning and Development Agency (SHPDA), Certificate of Need program, HRS Chapter 323D; Grassroot Institute white paper (December 2025).
U.S. Small Business Administration, Hawaii District Office directory; HEDCO Local Development Corporation; TMC Financing expansion announcement.
Central Pacific Bank SBA disclosures (2024 and 2025); Pacific Business News via Hoodline, SBA fiscal 2025 Lender-of-the-Year honors (May 2026).
USDA Rural Development, Hawaii and Western Pacific State Office, Hilo (2026); USDA rural-eligibility summary.
Act 96 / SB1396 (signed May 27, 2025), Transient Accommodations Tax increase to 11.0 percent effective January 1, 2026; scheduled 12 percent in 2027.
Hawaii Property Insurance Association, lava-zone coverage; Hawaii County lava-zone hazard maps; 2018 Kilauea eruption impact; new Oahu FEMA flood maps effective April 29, 2026.
U.S. Small Business Administration, Policy Notice 5000-879058, combined 7(a)-plus-504 cap increase to $10 million effective July 4, 2026.
Hawaii Department of Labor and Industrial Relations, minimum-wage schedule ($16 on January 1, 2026; $18 on January 1, 2028); Hawaii income-tax reduction enacted 2024, phasing through 2031.