Commercial construction is an industry impacted by all sectors as WNC communities continue to grow. Sector trends directly impact the types of projects prominent in commercial construction, and Vannoy Construction’s Vice President Brian Walker said he is seeing growth in the number of projects within the education and municipality sectors, and healthcare sector projects are staying strong as well.

Supply chain issues that created struggles in recent years are starting to level out across the country, according to Walker, and the workforce shortage is still present, but getting better. In Q1 of 2024, Walker hopes to see continued improvements and pricing become more competitive.

Western North Carolina is an insulated region as it has been a desirable place to live before, during, and after the issues that came along with COVID. With an increasing population comes an increased need for support sectors like education, healthcare, and hospitality, which all create a demand for more commercial construction.

“This creates a larger influx of work per capita here compared to other markets,” Walker said. “Not only are more new buildings being planned; there are a lot of expansions happening in the area as well. Colleges and universities are continuing to grow, and there’s more funding for growing school systems in rural areas like in Transylvania, Mitchell, and Yancey Counties and beyond.”

While the recent state budget will funnel money into public projects, Walker said private sector construction may slow down as lending tightens up and higher interest rates make it more difficult for developers to finance their projects. The growth rate of certain sectors may decrease, though the Asheville region may not see as much of a slow-down as other areas.

Since the planning portion of commercial construction projects take years, many developers are reconsidering new projects. 

“Budgets have to include the new cost of borrowing money,” Walker said. “After a long period of site selection, programming, and design that all takes months or years before a shovel is ever put in the ground, by the time the project is ready to go, banks may have become more cautious and the financial viability of the project may be questioned.”

Developers may have to get creative with financing options, according to Walker. Some are entertaining other potential financing options including private investments, as private equity sources may be more flexible.

For businesses considering new construction projects, Walker recommends working with experienced, professional companies that are aware of the entire process — from conception to close and beyond. As the market changes, he said it’s good to have professionals that can keep a lookout for shortfalls throughout the process and guide the business accordingly.

Commercial construction companies are also challenged with staying nimble when facing future uncertainty. While many could hire more workers, Walker said Vannoy is hesitant to over-hire due to concern about market conditions six to 12 months from now.

“When we hire, we want folks to have a career they can retire from,” Walker said. “We’re focused on longevity and are sensitive to the individuals that work for us. We’d prefer to turn away work in order to maintain good certainty about our employees’ future and ensure we maintain our high level of quality and service.”

While many talented individuals work in the construction industry now and predicting future shifts in the market is difficult, Walker said it is a good thing that the local education community is supportive in growing the construction workforce.

“We’re seeing K-12 programs expose more kids to our industry along with higher education institutions,” Walker said. “Schools on this side of the state are getting approved for funding to expand engineering and construction management programs, which will be tremendous for our community in WNC. Hopefully the students will stay here and work; the opportunity to be here and continue their career is important.”