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Real-Estate & Development

Developers Face Reduced Construction Cost Uncertainty as Building Code Legislation Advances

·3 min read·👀 Watch

Executive Summary

Hawaii House Bill 1725 proposes to "lock in" building codes at the time a permit is filed, a move expected to mitigate cost overruns and project delays for developers. Real estate owners and entrepreneurs should monitor legislative progress as this could significantly alter future project planning and financial risk assessments. Until the bill is enacted, maintain current planning or factor in potential code changes.

Watch & Prepare

Medium PriorityPending legislative approval

If this bill passes, developers need to understand how it changes their planning and risk assessment for future projects.

Monitor the legislative progress of House Bill 1725. If the bill passes and is enacted into law, real estate owners and developers should immediately update their financial modeling and risk assessment protocols to incorporate the 'locked-in' code provision for all future projects submitted for permitting. Entrepreneurs planning facility expansions should factor this increased predictability into their long-term business plans.

Who's Affected
Real Estate OwnersEntrepreneurs & Startups
Ripple Effects
  • →Reduced construction cost volatility for developers → more predictable commercial lease rates for entrepreneurs and small businesses.
  • →Faster project approvals due to fewer code-related delays → quicker activation of new business spaces and potential job creation.
  • →Increased developer confidence → potentially more investment in new construction projects → downstream effects on material suppliers and labor demand.
A female software engineer coding on dual monitors and a laptop in an office setting.
Photo by ThisIsEngineering

The Change

Hawaii House Bill 1725, which has garnered support from organizations like the American Institute of Architects Hawaii (AIA Hawaii), aims to stabilize building costs for developers by "locking in" building codes at the point of permit application. Currently, projects can be subject to updated codes that take effect during the construction phase, leading to unexpected expenses and schedule disruptions. This legislation seeks to eliminate that uncertainty by establishing a fixed code baseline for the duration of the permitting and construction process. The bill is currently advancing through the legislative process, with projected impacts contingent on its final passage and enactment.

Who's Affected

Real Estate Owners & Developers: For property owners and developers, the primary impact is a reduction in financial risk associated with building projects. By fixing building codes at permit filing, they can gain greater certainty over material costs, compliance requirements, and overall project budgets. This could lead to more predictable cost estimations and potentially accelerate project timelines by removing the threat of mid-construction code updates. Landlords may find it easier to finance new developments or major renovations.

Entrepreneurs & Startups: While not directly involved in large-scale construction, entrepreneurs and startups, particularly those in retail, hospitality, or services requiring physical space, will benefit from a more stable development environment. Reduced construction cost uncertainty for developers could translate into more predictable lease rates for commercial spaces. For startups aiming to scale and requiring new facilities, this bill could offer a clearer path for budgeting and site selection, making expansion planning more reliable. However, the immediate impact is indirect; any business relying on new commercial space will see improved predictability in their scaling plans.

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