Sunday, May 20, 2012
Commercial builders see uptick in Middle TN
Q&A
with Gregg Turner
& Ty Osman
Gregg Turner and Ty Osman
are co-owners of Solomon
Builders, one of Nashville’s most
prolific commercial construction
companies.
Tennessean business writer G.
Chambers Williams III recently
sat down with the two executives
to discuss their company and
the current state of commercial
construction in Middle Tennessee.
The economic downturn was
particularly hard on commercial
construction. How did it affect
your company?
Ty: It was really the first time we’d
ever been through anything like
that. For our first 15 years, we had
nothing but growth. Our biggest
challenge was how big — and how
fast — we wanted to grow. We had
a couple of years that were flat,
but none like this, where it just fell
off the cliff. And coming off such
a strong market that we were in, it
happened so quickly.
Of course, commercial
construction always lags in the
marketplace. Residential always
Ty Osman, left, and Gregg Turner, co-founders of Solomon Builders, one
of Nashville’s most prolific commercial construction companies, say a lack
of debt plus a backlog of commercial projects and new tenant build-outs
helped the firm weather the recession. Larry McCormack/The Tennessean
goes first, so we didn’t feel it as
quickly as the residential market
did. We had a backlog of projects
already in the pipeline. Some of
them fell off that hadn’t started yet,
but, fortunately, others were already
in the works — like Fairfield Glade
(a retirement project) and Emdeon
(a data center and offices) — and
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4539 Trousdale Drive m Nashville, TN 37204 m 615.333.9369 m www.solomonbuilders.com
Commercial builders see uptick in Middle TN, continued
they helped us ride it out.
Definitely, it was a tough time.
But we decided early on to make
some tough decisions from a
position of strength rather than keep
our overhead as high as it was and
hope that things got better.
We went ahead and made some
cuts — not a lot — and looking
back now, I think that was a good
move. Our people appreciated it.
We laid off a few, our first layoff
ever, actually. But for the most part,
we just didn’t hire any new people
for three or four years. We mostly
used attrition to slim back. Now,
we’re hiring again.
Gregg: During our growth period,
we were very methodical. When we
went into the recession, we really
had to take a look at our business.
We made some quick decisions.
One unique thing about our business
is we not only do new construction
but also tenant build-out, which is
what we did before we moved into
new construction. Those are two
different approaches.
During this recession, when
people quit building new buildings,
they were still making decisions
about their businesses, such as
downsizing or moving. It became a
tenants’ market. So, tenants began
renegotiating leases and getting new
blocks of space, and our tenantimprovement work continued to
flourish. That allowed us to keep
people employed.
That business has sustained us and
has actually grown over the past
three or four years. And now, as
new construction comes back, we’re
strong in both sectors. We’re able to
do a $20,000 interior upgrade or a
$100 million new building.
What has been your debt
structure?
Ty: One thing that really helped
is that we’ve never had any debt,
so we didn’t have to operate with
somebody else telling us what to
do. We could make decisions that
we really thought were in the best
interests of our company for the
long haul, instead of worrying how
we were going to make our payment
this month.
Another thing that was a big help
to us was our relationships. We cut
costs to try to stay as competitive
as we could, but we don’t have
to take work at a loss the way
some companies have done. We
were able to maintain a little level
of profitability — not like what
we were used to, but enough to
maintain a margin. I think that
helped us through as well.
How well is commercial
construction in Middle Tennessee
recovering?
Gregg: We actually see it improving.
There seems to be a little uptick in
the market. We’re blessed right now
to have a fair amount of business.
Lenders seem to be loosening the
purse strings a little bit and seem
motivated to lend money.
There seems to be more talk
in the marketplace about new
projects, coupled with the lenders’
willingness to lend. We are seeing
some projects that are getting
started. It’s not like it was back in
2005 and 2006. The buzz is that
there are a few more projects out
there. But it’s slow to come back,
and it is an election year.
Are companies still apprehensive
about undertaking new projects,
spending money, hiring?
Ty: I think there is some pentup demand after the years when
nobody built anything of substance.
But a lot of companies have still
been profitable, and they still
have needs. They have just been
apprehensive to take on a lot of
capital expenditures or big debt
because they couldn’t borrow, or if
they could, they were nervous about
the future. There has been a lack of
confidence. It feels like there is a
little bit of confidence being gained
again, finally, and some things are
moving around.
Gregg: There is talk of new office
buildings. In our tenant-interior
business, we’ve been fairly busy the
past three years. But the vacancies
are dwindling, and there (will)
be a need for some new office
buildings. There is a speculative
office building under construction
in Cool Springs, and there is talk of
additional “spec” office buildings
coming online.
What’s hot and what’s not in
commercial construction now?
Ty: The retirement community
is really strong. There are a lot
of those being developed and in
planning (stages) — anything that
deals with baby boomers and the
aging-population shift.
Gregg: In the past five or six
months, there’s been a surge in the
health-care world (with) physician
offices. We’ve even seen the
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4539 Trousdale Drive m Nashville, TN 37204 m 615.333.9369 m www.solomonbuilders.com
Commercial builders see uptick in Middle TN, continued
nonprofit world, which was silent
there for a couple of years, start to
come back, too.
Ty: Another thing that’s really
hot right now is apartments. There
are a lot of apartments in planning
and under construction, so that’s a
real viable piece of business. It’s
residential and commercial, because
there are some mixed-use projects
out there.
Retail doesn’t seem to be too
sexy right now. There are not a lot
of opportunities. But some of the
institutions — colleges and private
schools — have a lot of projects
going on or in planning. So that’s a
good sign. We’re doing a project for
Vanderbilt.
Describe the breadth of work
your company will undertake.
Ty: We’re a local commercial
general contractor based here
in Nashville. We do all types of
commercial construction, from
small interior build-outs to larger,
new out-of-the-ground construction,
mostly private work. Lots of
churches, office buildings, some
industrial, some retail, a little bit of
medical, even some specialty. We
are fortunate to be the contractor for
the Nashville Zoo.
What got you two together?
Gregg: We’re celebrating our 20th
year. We met in the late 1980s in a
real estate transaction. We realized
we went to church together and our
wives played softball.
We became close friends and
in 1992 decided to start Solomon
Builders.
Give us a few details of your
most recent projects.
Ty: We just completed a retirement
facility in Fairfield Glade. That was
a pretty good project, especially
through these past few years, as
it was a large project. Then an
Emdeon data center and office
space out by the airport. We’ve
been working at the zoo, but that’s
kind of ongoing. They always have
something going there. We just
finished the dinosaur exhibit.
We have some other projects
under construction now —
Columbia Academy, a private K-12
school in Columbia, Tenn., where
we’re doing a new field house and
weight room for their athletes.
We’re just finishing up some work
in Clarksville for the Hemlock
semiconductor company.
Lexon is under construction; it’s
a headquarters for a new surety
company in Mt. Juliet.
We’re on the fifth and final phase
of Werthen Lofts on Eighth Avenue.
The first four phases were lofts and
this phase is apartments and rental
units. It’s really unique because
it’s a change of use from an old
manufacturing building into living
quarters.
We’re also doing an addition for
Bellevue Baptist (Church).
What’s the biggest project you’ve
led so far?
Ty: Our biggest project ever
is just getting started. It’s the
new headquarters for LifePoint
Hospitals. It’s a seven-story
building that will be the tallest
office building in Brentwood. It
has a 1,000-car parking garage and
some associated retail space —
42,000 square feet in this phase.
This is just the first phase; there
is a second phase to come, so it’s
about a $100 million project total.
This piece is about $42 million of
that.
Commercial real estate loans have
been particularly hard to get since
the recession began. Is that spigot
opening any wider now?
Ty: They are willing to lend
money, where for a while there
was just no appetite for loans. But
the requirements are a lot more
stringent. Equity requirements are
higher; the liquidity the buyer has
to have and the security they have
to put up are tougher. Banks are
obviously being more conservative.
Gregg: They are anxious to lend
money, though. They’re not going
to jump at a 100 percent speculative
office deal, but they are looking for
good loans.
What did you learn from the recession?
Gregg: We’ve always been
methodical and intentional about
our growth, and it comes back to
the partnership we have. From Day
One, we have respected each other.
We have a true appreciation of
each other. We’re friends and we’re
partners. But because we’re friends,
the partnership takes care of itself.
4539 Trousdale Drive m Nashville, TN 37204 m 615.333.9369 m www.solomonbuilders.com