The calendar turned. Every security executive in Tennessee spent December doing the same thing: reviewing contracts, tallying revenue, trying to figure out what 2017 will demand from them. After talking to two dozen firm owners, compliance officers, and property managers across the state over the past six weeks, I have a reasonable picture of where this industry is heading.
Here’s my take. Some of it will age well. Some won’t. That’s the nature of predictions.
2016 Set the Table
Last year was strong for Tennessee security firms, particularly those operating in the Nashville metro. The crane count in Davidson County stayed above 20 for most of the year. Every new mixed-use project on Broadway, every hotel rising near the Gulch, every office tower going up along Korean Veterans Boulevard generated security contracts. Construction site security alone kept several mid-size Nashville firms at capacity from April through November.
Memphis told a different story. The city’s violent crime rate climbed to roughly 1,820 per 100,000 residents, a number that puts it among the highest in the country. That rate drove demand for armed guards in ways that Nashville’s construction boom simply doesn’t. Shelby County businesses, warehouses along Airways Boulevard, medical facilities near the Med district, retail centers in Hickory Hill: they all wanted armed officers, and they wanted them yesterday.
The national private security market sits somewhere around $350 billion when you factor in technology, personnel, and consulting. Tennessee captures a small slice of that. Small, yes, but growing.
Prediction 1: Technology Spending Will Accelerate
Body cameras changed policing over the past three years. Now the private security sector is catching up. I spoke with operators in Knoxville and Nashville who plan to equip patrol officers with body-worn cameras by mid-2017. The hardware cost has dropped enough that even firms running 50 guards can justify the expense.
GPS tracking for patrol verification is the other big piece. Clients don’t want to take a guard’s word that they walked the property at 2:15 a.m. They want timestamped GPS data showing the exact route. Several Memphis property management companies told me they’re making GPS tracking a contract requirement this year.
The firms that resist this shift will lose bids. Simple as that. A security company in 2017 that can’t show real-time patrol data is competing with one hand behind its back.
Video analytics and remote monitoring are also gaining traction, though adoption remains slower in Tennessee than in Texas or California. The infrastructure cost is the barrier. Installing IP cameras across a 200,000-square-foot warehouse costs real money, and many Shelby County warehouse operators are still running analog systems from 2008.
Prediction 2: Nashville Stays the Growth Engine
Nashville isn’t slowing down. The city added roughly 83 people per day in 2016 according to census estimates. That population growth translates directly into commercial development, which translates directly into security contracts.
The big projects to watch: the SoBro district continues filling in. The Westin on Demonbreun Street opened in late 2016, and at least three more hotel projects are in various stages of construction nearby. Each one needs lobby security, parking structure patrols, and event staffing.
East Nashville’s commercial corridor along Gallatin Avenue keeps expanding. The mix of restaurants, boutique retail, and small offices creates demand for patrol services that didn’t exist three years ago. These aren’t large contracts individually. A single restaurant hiring one overnight guard isn’t moving anyone’s revenue needle. Collectively, though, East Nashville’s commercial growth is a real market.
Williamson County, south of Nashville, is where the money gets interesting. Franklin and Brentwood are attracting corporate relocations and regional headquarters. These are clients who expect polished, professional security operations: uniformed officers, documented procedures, quarterly reviews. Smaller firms may struggle to meet those standards.
Prediction 3: Memphis Armed Guard Demand Holds Steady
Memphis won’t suddenly become safe in 2017. I wish I could predict otherwise. The crime numbers from 2016 were grim, and nothing in the current environment suggests a dramatic reversal.
That means continued high demand for armed security personnel throughout Shelby County. The corridors along Poplar Avenue, the medical district around Union and Dunlap, the warehouses flanking the airport: these areas will keep hiring. Memphis hospitals have been particularly aggressive in expanding armed security presence. Methodist Le Bonheur and Baptist Memorial both increased guard counts in 2016, and I expect similar moves from Regional One and St. Francis this year.
The catch is supply. Armed guard registrations through TDCI require firearms training and qualification, which creates a bottleneck. Tennessee’s current training requirements, four hours for unarmed and additional firearms qualification for armed, are among the lightest in the Southeast. That low bar means more people can qualify, but it also means the pool includes candidates that firms in Georgia or Florida might screen out under stricter state standards.
Prediction 4: Mid-Size Firm Consolidation
Tennessee has roughly 850 licensed contract security companies according to TDCI records. Many of those are one-person operations or small outfits running fewer than 10 guards. They exist, they file their renewals, they pick up small contracts.
The interesting action is in the middle: firms running 50 to 200 guards. These companies are big enough to handle serious contracts, small enough to feel squeezed by labor costs and technology investments. I expect several of them to merge or get acquired in 2017.
The math is straightforward. When a client demands GPS-tracked patrols, body cameras, electronic incident reporting, and 24/7 dispatch capability, the capital investment gets heavy for a firm billing $2 million a year. Two firms billing $2 million each can merge, share the technology platform, and suddenly compete for contracts that neither could win alone.
Watch Chattanooga and Knoxville especially. East Tennessee has several firms in this middle range that have been quietly talking to each other for months.
Prediction 5: Training Requirements Get Scrutinized
The four-hour unarmed training minimum in Tennessee has been a sore spot for years. Other states require significantly more. North Carolina mandates 16 hours. Georgia requires 24. Virginia sits at 18.
Every time something goes wrong involving a private security guard in Tennessee, the training debate resurfaces. I don’t expect the legislature to overhaul requirements in 2017, but I do think TDCI will face increasing pressure to at least study the issue. The Tennessee Private Protective Services Licensing Board, which advises TDCI on these matters, has members who’ve been vocal about raising the bar.
The armed training side is less controversial because the firearms qualification requirement provides a natural filter. If you can’t shoot, you can’t get registered. The unarmed side, though, is where four hours of instruction feels thin by any standard. A guard working the overnight shift at a Midtown Memphis apartment complex faces situations that four hours of training simply can’t prepare them for.
What I’m Watching
Beyond these five predictions, a few wildcards could reshape 2017 in unexpected ways.
The new presidential administration takes office on January 20. Any changes to federal immigration enforcement could ripple through the security labor market. Tennessee’s security workforce includes immigrants, and stricter enforcement could tighten an already constrained labor pool.
Cybersecurity is slowly creeping into the physical security conversation. Property managers in Nashville are starting to ask whether their security provider can also monitor building access control networks. Most guard companies can’t. The few that can integrate physical and cyber capabilities will have an edge.
Insurance costs continue rising for security firms carrying armed personnel. Liability coverage for armed guards in Memphis has gotten more expensive each of the past four years. At some point, those costs get passed to clients, and contract prices go up across the board.
The Bottom Line
Tennessee’s security industry enters 2017 with solid demand, a tightening labor market, and technology investments that are no longer optional. The firms that adapt, that treat GPS tracking and body cameras as standard equipment rather than extras, will win the contracts. The ones that don’t will watch their clients walk.
Nashville will keep building. Memphis will keep needing armed guards. East Tennessee will keep growing quietly. And somewhere in a TDCI office on Davy Crockett Tower’s upper floors, a regulator will look at that four-hour training requirement and wonder if it’s time for a change.
I’ll revisit these predictions in December. We’ll see how I did.