BY Arthur Perlen, CCIM
Nashville is a city on the rise. The city has experienced a construction boom in recent years, with new buildings and developments all over town. However, this boom has come with some challenges.
One of the biggest challenges facing the Nashville construction market is the need for more skilled labor. The city’s rapid growth has outpaced the supply of qualified workers, making it difficult for contractors like Nabholz Construction to find the people they need to complete projects. “There are shortages when it comes to hiring tradesmen with the skills to ensure a quality outcome. At Nabholz, we pride ourselves on the products we produce, and we have found the labor shortage has affected our timelines,” said Mark Ingram, Superintendent of Nabholz’s Portland, TN Office.
These shortages throughout the industry have led to higher wages for construction workers, which has driven up the cost of construction. This has impacted the commercial real estate industry as businesses look to expand into the Nashville market.
Another challenge facing the Nashville construction market is rising material costs. The price of steel, lumber, and other construction materials has been on the rise in recent years, which has also driven up the cost of construction. “There is also a lack of product availability,” Ingram said, “and a need to find suitable replacements for previously utilized materials, which can increase lead time.” This increase in material costs and availability has made it more difficult for contractors to stay on budget, which has led to some projects being delayed or rescheduled. These increases and delays may mean the difference in a tenant deciding to build on an outlot or choosing a space that can be renovated for a much lower price point in a much smaller time frame.
As with any growing market, space is at a premium, and Nashville is no different. The need for renovating and remodeling existing spaces has increased exponentially. Where once a company may have built a custom new commercial project, they are now redeveloping their existing buildings or locating sites that can be redeveloped. Ingram’s team at Nabholz specializes in remodels and renovations and has seen this increase firsthand. As undeveloped site selection has become more scarce, clients are pivoting to locating and renovating.
“We have seen our clients, many of whom are in the healthcare, education, or manufacturing industries, struggle to locate land for large builds and wait years to find the right property to expand their growing businesses,” said Ingram. We look at site selection differently than we had even five years ago, with boots on the ground and a niche understanding of the local markets and their offerings and availability. Here at Centennial Retail Services, we have experience helping clients weigh their options and choose the best sites for their needs, with data-driven analytics, but also a keen understanding of the way different markets are changing with the influx of new residents, projected developments, and large corporations set to arrive like Oracle. Our job is to position our clients in areas of growth where their particular brands will thrive with the projected demographics and where there are sites that fit their needs.
The Nashville construction and commercial real estate markets remain strong despite the construction challenges. The city’s population is growing, and there is still a lot of demand. However, the market’s challenges will likely continue, and contractors and brokers alike must find ways to adapt. As for Nabholz, they see these challenges as opportunities to continue offering their clients the high-quality skilled labor and care they are known for while growing their maintenance offering to support businesses throughout the Nashville area. This flexibility allows them to continue to recruit quality contractors who can perform across the board, whether in new construction, a remodel or renovation, or maintenance repairs to ensure a business stays open and safe. At Centennial, we continue to serve our clients and use our decades of expertise for them in the exponential growth throughout the Nashville market.
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