The clatter of bulldozers and the whir of riveters these have been familiar sounds over the past few years for people who live and work in Nashville's suburbs.
But not for much longer. After four years of quick growth, a period that has brought a slew of strip malls, big-box discounters and lifestyle centers to Middle Tennessee, the retail construction boom finally appears to be winding down.
From Williamson County to Wilson County, developers are finishing projects started when consumers were spending fast and residential growth seemed boundless.
Now many are planning to pull back and wait out what could be a protracted slump. Cranes and steel frames may still be rising, but they're probably the last burst of activity before a lull that could span about 18 months, say developers, brokers and others in the commercial real estate industry.
"I don't know of anybody that has really been going after something that has been put on ice," said Thomas Frye, managing director of the Nashville office of CB Richard Ellis. "But I think everybody's been gradually scaling back on everything."
The slowdown hasn't shown up in rusting girders and idled earthmovers. Because it is often costlier to stop a project than to complete it and because builders rarely start construction on a major project without having a tenant signed up in advance, work has continued on dozens of projects around the region even as the economy has moved into what many experts fear could be a deep recession.
In fact, Nashville-area developers are expected to finish about 2.6 million square feet of retail space in 2008, an area more than twice the size of the CoolSprings Galleria mall.
But signs of a coming slowdown abound, retail real estate experts said.
More storefronts sit empty. The vacancy rate has risen from about 3 percent in 2003 to nearly 6 percent this fall, according to CoStar Group Inc., a Bethesda, Md.-based commercial real estate information and marketing services firm.
Homebuilding, an important driver of suburban retail growth, has slowed. According to MarketGraphics Research Group, a Brentwood real estate data firm, the number of building permits issued in the Nashville area has fallen 40 percent from a year ago.
Few expect homebuilding to rebound anytime soon.
"We may never see the level of activity we'd seen over the last three years," said Mike Moulton, Sumner County's planning director.
And finally, many of the chains that drive retail construction, such as Wal-Mart and Target, have scaled back expansion plans across the country. That will mean fewer new stores in Middle Tennessee.
"They're definitely saying, 'We're cautious,' which is good. But, too, they don't have the money," said Steve Rudd, a partner in the Nashville firm Restaurant Retail Properties. "They don't have banks that will lend to them, they don't have the cash flow and they can't issue stock."Phases pushed back
The pullback is expected to be the most severe the retail industry has seen in decades, far worse than the cutbacks made after the Sept. 11 attacks seven years ago.
"We haven't seen this since the early 1990s," said David Baker, a principal with the real estate firm Baker Storey McDonald.
Developers of projects that would have taken years to complete anyway can push back some phases.
Boyle Investments, the developer behind the Berry Farms project between Franklin and Spring Hill, says it plans to build only enough retail space for a bank, a few restaurants and other small businesses next year.
Boyle eventually plans to build more than 1.8 million square feet of retail space in Berry Farms, but the bulk of it will not come until residential construction takes off again, said Jeff Haynes, a partner in the firm.
Atlanta-based Gipson Co., the development firm behind The Paddocks project in Mt. Juliet, said it also will move more slowly than anticipated.
The 150-acre development's $80 million first phase, which includes a Wal-Mart and a Lowe's, is under construction and scheduled to open early next year. But future phases of the 150-acre development are on hold for a while, said Colin Barker, Gipson's vice president.
"There's activity," Barker said "It's just a matter of economics and timing."Big projects to ebb
The slowdown will not mean a total freeze on construction.
Boyle, for instance, will start construction soon on a Mt. Juliet shopping center anchored by a Publix grocery store, and Dan Downs, a Sumner County developer, says a plan to open a Publix-anchored shopping center in Gallatin by fall 2010 are still on the books.
Swanson Development, of Murfreesboro, says it hopes to start construction on Gateway Village, a three-building project that will have condos, stores and offices, early next year.
Nonetheless, Middle Tennesseans should start to see evidence of the slowdown by early next year, industry experts said. By then, many of the current projects, which were planned during the economic boom perhaps as far back as two or three years ago will start to wind down.
One sign will be a climbing vacancy rate. As more space is added in the face of the economic downturn, developers will have a harder time renting space to the smaller businesses that typically fill out a shopping center, such as beauty salons, liquor stores and pizza parlors.
"Once they (major projects) have started, they've started," said Peggy Sells, the Middle Tennessee retail division leader for Colliers Turley Martin Tucker. "The traditional leasing of 2,500 square feet, the mom-and-pops, a lot of that is not out there."
Another will be a dearth of big new shopping centers.
Major retailers have been pulling back their growth plans for about a year, brokers said. They predicted it will be an additional six months before they start to talk about growing again.
That means it could be a year or two before another round of construction begins. Until then, the booming suburbs can do little but wait out the coming slowdown.
"Perhaps the interest (in starting new projects) is declining some," said G.C. Hixson, director of Wilson County's Joint Economic and Community Development Board. "I'm encouraged by where we are but who could project where we will be in 12 months or 18 months?"
In medical office market, tenants are able to call shots
Investor Report: Cash for Future Equity
Washington Report: Paulson and Neel Kaskari