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Economic Conditions - Nashville, TN, U.S., Global


Mr_Bond

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12 hours ago, smeagolsfree said:

You have to flatten out all of the hills and then convince the folks that live there to allow any kind of development. I don't think either one will happen. There is one 300-acre parcel right off of Briley at Ashland City Hwy the owners have been trying to get rezoned from agriculture A2 to anything other than that and Metro is not considering a change. The owners can't even sale the property and it is pretty much useless as farmland as well because of the terrain. The area neighbors are always raising a stink about any development even though this is right across from the landfill and several other industrial sites. This is Metro at its best!

It is Metro at its best. Sprawling development is fiscally unsustainable. Low density development does not provide the tax base to support its own infrastructure, requiring a subsidy from more tax productive areas of town. Nashville should be trying to contain growth within areas of existing infrastructure that can support dense development. 

Also, there are numerous residential developments in the vicinity of Briley and Ashland City HWY currently underway...

Edited by Nashvillain
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  • 3 weeks later...
On 6/3/2022 at 7:18 PM, Nashvillain said:

It is Metro at its best. Sprawling development is fiscally unsustainable. Low density development does not provide the tax base to support its own infrastructure, requiring a subsidy from more tax productive areas of town. Nashville should be trying to contain growth within areas of existing infrastructure that can support dense development. 

Also, there are numerous residential developments in the vicinity of Briley and Ashland City HWY currently underway...

I would not call these numerous. There is one fairly new subdivision on Eatons Creek road.

The ones that are under development are on the downtown side of Briley. A few on Ashland City Hwy going back toward Clarksville Pike, and another one on Clarksville Pike, again on the Nashville side of Briley. These are mostly small townhome developments except for the subdivision going in on Clarksville. My guess is the total is no more than a few hundred homes. Now there are more on the north side of Briley at the Whites Creek exit as the land is flatter there and one planned at the intersection, but that is closer to I 65. Going up Ashland City Hwy., there is nothing except Lewis Country Store and Hwy 12 Motor Sports. No new homes, just a couple of area that are being used as rock and dirt fills. Nothing until you get into Ashland City.

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8 hours ago, Nashvillain said:

Not sure if this is the right place for this, but I just found this excellent primer on why and how zoning ordinances are terrible and are the drivers of skyrocketing home prices and unaffordability. 

 

https://www.theatlantic.com/ideas/archive/2022/06/zoning-housing-affordability-nimby-parking-houston/661289/

What a coincidence. More great reading material on zoning and how it broke cities

 

 

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On 6/21/2022 at 7:00 AM, Nashvillain said:

Not sure if this is the right place for this, but I just found this excellent primer on why and how zoning ordinances are terrible and are the drivers of skyrocketing home prices and unaffordability. 

 

https://www.theatlantic.com/ideas/archive/2022/06/zoning-housing-affordability-nimby-parking-houston/661289/

While I agree with certain aspects of the article, such as minimum lot size and parking mandates, I disagree with the notion that zoning should be abolished. As I have responded to multiple zoning arguments where folks use the guise of "property rights", zoning is more essential today than it was back in the days just after World War II. The economy has evolved so much in that developers are going after what ever they can with very little regard for their neighbors, the surrounding context and the city as a whole. Within an urban context, design/construction/living needs to think about the city or neighborhood as a whole when it is building. If you want to eliminate zoning, go live out in the rural unincorporated lands that surround cities. Big money has gotten a lot bigger and as a result free reign on land becomes less and less likely. There  more Mr. Potters in the world than folks realize and very few George Baileys.

Folks say we need to abandon/abolish zoning, one would argue that cities like Nashville are growing just fine with zoning. Affordability is obviously another component to this discussion, but that is where folks use the supply/demand argument. Sure, logic states that if we build enough housing prices will come down. Realistically, zoning is not playing a factor in how much housing is getting built. The cost of construction (which zoning has no effect on), amount of labor (which zoning has no effect on) is driving the costs of construction pretty closely to how land costs are effecting affordability. 

The authors doom and gloom approach where is saying that at best we get is x number of living units or at worst we get none is a bit poor in my book. I would be willing to bet that "zoning" kills less than a 15% of projects around the country, if nothing else because there are mechanisms in place to change such zoning. Building in cities is not meant to be easy. Every city has a mechanism to change zoning that would allow a developer to build, part of the effort is to convince the neighbors though that what is doing is an improvement. Yes, NIMBYs can be difficult. Change is difficult. But that does not mean developers should just be able to do whatever their wallets will allow them to do. 

Cities are extremely complex and are only getting more so. Zoning is parameters around the city to help guide where the city should go. Contrary to popular belief, it is the city that should guide the city and not developers or even joe schmo around the corner.

 

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8 hours ago, Bos2Nash said:

While I agree with certain aspects of the article, such as minimum lot size and parking mandates, I disagree with the notion that zoning should be abolished. As I have responded to multiple zoning arguments where folks use the guise of "property rights", zoning is more essential today than it was back in the days just after World War II. The economy has evolved so much in that developers are going after what ever they can with very little regard for their neighbors, the surrounding context and the city as a whole. Within an urban context, design/construction/living needs to think about the city or neighborhood as a whole when it is building. If you want to eliminate zoning, go live out in the rural unincorporated lands that surround cities. Big money has gotten a lot bigger and as a result free reign on land becomes less and less likely. There  more Mr. Potters in the world than folks realize and very few George Baileys.

Folks say we need to abandon/abolish zoning, one would argue that cities like Nashville are growing just fine with zoning. Affordability is obviously another component to this discussion, but that is where folks use the supply/demand argument. Sure, logic states that if we build enough housing prices will come down. Realistically, zoning is not playing a factor in how much housing is getting built. The cost of construction (which zoning has no effect on), amount of labor (which zoning has no effect on) is driving the costs of construction pretty closely to how land costs are effecting affordability. 

The authors doom and gloom approach where is saying that at best we get is x number of living units or at worst we get none is a bit poor in my book. I would be willing to bet that "zoning" kills less than a 15% of projects around the country, if nothing else because there are mechanisms in place to change such zoning. Building in cities is not meant to be easy. Every city has a mechanism to change zoning that would allow a developer to build, part of the effort is to convince the neighbors though that what is doing is an improvement. Yes, NIMBYs can be difficult. Change is difficult. But that does not mean developers should just be able to do whatever their wallets will allow them to do. 

Cities are extremely complex and are only getting more so. Zoning is parameters around the city to help guide where the city should go. Contrary to popular belief, it is the city that should guide the city and not developers or even joe schmo around the corner.

 

I think I disagree somewhat here. If you changed the base zoning in 37216 (Inglewood / Outer East Nashville) to allow 12 units/acre, you would absolutely see significantly more construction building homes at a price point that is affordable "relative to current new build detached homes & HPR duplexes" … this has played out in the price difference between the Nations (lot of $600k-$800k homes on split lots) and Sylvan Park (mostly >$1M homes on unsplit lots).

Undeniably, materials and labor have risen in cost dramatically, but land costs have also risen significantly in the last five years, and the largest appreciation is in locations with more strict zoning laws.

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10 hours ago, Bos2Nash said:

Yes, NIMBYs can be difficult. Change is difficult. But that does not mean developers should just be able to do whatever their wallets will allow them to do. 

There is already a mechanism (without zoning) that prevents developers from building whatever their wallets allow:  The market.  Developers are strongly incentivized by the market to build the housing that is most in demand by consumers (future home owners).  Your appraisal of the situation skews dramatically in favor of existing residents and completely ignores the housing demanded by future residents.  Instead of telling developers (and their customers: new residents) to fight an up-hill battle against the entrenched NIMBY's and their government, why don't you just expose the NIMBY's to the reality of the free market?  When they NIMBY's complain, why don't you tell them "change is hard"?

You feel at liberty to lecture developers about why it's necessary to restrict their ability to provide housing demanded by customers.  You feel at liberty to restrict the types of housing products offered to new customers and the locations where housing can be offered in the formats desired by customers.  Why so much animosity to growth and change in an urban environment that is supposed to be characterized by dynamism and perpetual change?... with residents who know what it means to live in a constantly growing and changing city with new types of people arriving in large numbers?

The zoning laws you justify with lofty ideals such as context and community consensus have the real-world effect of making housing more scarce for low-income and minority residents. 

Edited by Armacing
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  • 2 weeks later...

With the recent news of a possible recession starting, I wanted to kick this thread back to the top. There has been some brief discussion in other threads about the potential impact of a recession on Nashville and how it may come out the other side.

I'm not really looking forward to the unemployment and drained retirement accounts that can come along with a recession, however this could be a natural cooling of an overheated housing market. Maybe, just maybe, it could have the good benefit of discouraging private equity firms from buying up all of the housing stock and allow people to actually consider buying a reasonably priced home. That could just be me being a selfish elder millennial, though... :P

Edited by Nathan_in_DC
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2 hours ago, Nathan_in_DC said:

With the recent news of a possible recession starting, I wanted to kick this thread back to the top. There has been some brief discussion in other threads about the potential impact of a recession on Nashville and how it may come out the other side.

I'm not really looking forward to the unemployment and drained retirement accounts that can come along with a recession, however this could be a natural cooling of an overheated housing market. Maybe, just maybe, it could have the good benefit of discouraging private equity firms from buying up all of the housing stock and allow people to actually consider buying a reasonably priced home. That could just be me being a selfish elder millennial, though... :P

If anything, the recession is a massive "buy signal" for equity to move into housing if prices are temporarily depressed and all other asset classes are under-performing at the moment.  The simple truth is that people need housing, so it's a great investment regardless of where we are in the economic cycle.  But the financial resources of those real-estate companies are not infinite... it would be possible to build so many houses that investment firms simply can't afford to buy them all.  But doing that would require some major changes to laws that currently restrict the supply of housing.

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Mayor Cooper responds to calls about leadership vacuum on economic-development strategy in interview at The Tennessean:

Q: What's Metro government's responsibility in attracting new jobs and business growth?

A:  "The state is a primary driver of all relocation in Tennessee. The state has a very powerful tool and it’s called the tax rate.

You used to have the early Sun Belt when the South was poor and we were willing to do anything to get an eastern manufacturer to Tennessee. That era has come and gone. Then you had the Rust Belt era, where people paid others to come here. We don't pay people to come here anymore. In our toolbox is one of the most compelling arguments for economic revitalization that can exist. The ability (for businesses) to recruit (high-quality workers) along with zero taxes puts you in this very powerful mode. 

Once you're vibrantly growing, your effort needs to shift to inclusion, equity building and making the economy an opportunity for those who work here. It is more about creating the environment for entrepreneurs and small business creation, access to resources and a support structure."

Q: What is most important to Metro Nashville's development efforts?

A: "The chamber's budget is $9 million and there's a close back-and-forth with the state and the chamber. It's a three-legged stool. The value of having Metro is that (businesses are) locating somewhere, and you need a relationship to discuss: 'Is this site zoned? Are you sure bus service will continue on this site? We'll need a sewer tap.' It's the practical things. 

The county plan is for hard-to-employ people. Let's think more about economic development as helping people getting out of prison find jobs and helping very hard-to-employ people. We need to find them jobs. Our high-school seniors have to get connected."

Q: What have you done specifically to develop Nashville's economy equitably?

A: "Matchmaking is a big part of the economic-development world. 

The head of middle-market lending with J.P. Morgan was in my office today. Chase is opening up 25 branches in Nashville. I introduced him to Fisk. He said Fisk is a fantastic place to recruit the best minds. Also, in our high schools, people exposed to internships are many times more likely to have careers there. 

(Cooper proposed a $10 million transformation of Fisk University's Burrus Hall from a dormitory to an innovation incubator to accelerate entrepreneurship with tech 'boot camps' and small-business support.)

Then you've got Hickory Hollow Mall (leased to) Vanderbilt: A dead mall (in Antioch) will become a medical center in partnership with Nashville State Community College, creating jobs, education and access to healthcare in the same place. 

We spend time trying to invest in a digital-future strategy so our kids are super well qualified for new IT jobs coming. We’ve got a couple years to do that. That to me is economic development."

Q: What does Nashville economic-development future look like?

"Paying a living wage is economic development – you’re increasing wages of the workforce. Does that flow through the Economic Development Department's budget? No, but paying living wage is part of lifting all boats.

Nashville's economic development is the proposing of partnerships to companies here to employ our people. We’ll be more workforce and small business directed because, as we evolve, it’s clear getting our kids ready for these new (technology) jobs is everything.

We are the envy of all other cities. There is no city that would not want to trade places with Nashville. That doesn’t mean we’ve solved the opportunity gap for our citizens. That’s what needs to happen next. At one point, the city sold assets cheaply and gave cash incentives for people to come here. Now we need partnerships with the school system and to work closely with the people getting the work done: jobs for hard-to-employ people, people the current system is not working for. The amount of need here is infinite. There’s a whole lot of work to do."

More behind the Tennessean paywall here:

https://www.tennessean.com/story/money/2022/07/12/nashville-mayor-john-cooper-responds-calls-leadership-vacuum-economic-development-strategy/7822694001/

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Personally, I think his chances are slim, but  a lot depends on his opponent. If he survives a primary and if the final opponent is viewed as too far to the right, he could win by people simply holding their noses and voting for him again.

Edited by Nash_12South
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  • 1 month later...

According to CBRE Group, which is forecasting a 14.1% annual increase in U.S. construction costs by the end of 2022, thanks to industry labor shortages, inflation, supply chain disruptions, ongoing impacts from the Covid-19 pandemic and the war in Ukraine. That annual price increase, if it occurs, would outpace the 11.5% escalation in construction costs seen last year.

Some pricing has recently become less volatile and is coming off yearly and all-time highs. In 2023 and 2024, CBRE is expecting cost escalations of 4.3% and 2.9%, respectively — a drop-off in the rate of increase, to be sure, but still an increase in pricing after the double-digit jumps of the past two years.


More at NBJ here:

https://www.bizjournals.com/nashville/news/2022/08/25/construction-costs-increase-this-year.html

Current lead time in days for materials:

Screen Shot 2022-08-25 at 10.36.20 AM.png

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