As I sat down with Eddie Thompson, Director at Brown Edwards & Company and host of the Constructive Conversations podcast, one thing became crystal clear: construction and real estate are inseparable partners in development.
The Symbiotic Relationship
Eddie put it perfectly when he said that construction and real estate are very much intertwined. Real estate development spawns construction, but you need the construction part to get things built. It's not a chicken-or-egg situation—you need one to have the other.
Traveling around Virginia, West Virginia, and Tennessee, I've noticed the same thing Eddie mentioned: new subdivisions popping up everywhere, apartment complexes under development, and construction equipment dotting job sites across the landscape. This growth is cyclical, influenced by interest rates, lending practices, and economic trends, but the fundamental relationship remains constant.
Vertical vs. Horizontal Construction
During our conversation, Eddie helped clarify the two primary types of construction:
Vertical builders construct structures from the ground up—office buildings, schools, and hospitals that reach skyward.
Horizontal builders focus on infrastructure—roads, bridges, and projects that involve moving dirt and building flat structures.
Interestingly, Eddie shared that his client base skews about 60-40 toward horizontal builders over vertical ones. This isn't necessarily because there are more horizontal jobs available, but rather due to the significant federal funding directed toward infrastructure spending.
Current Development Trends
What's being built right now? In West Virginia, Eddie sees substantial activity in:
- School construction: Consolidations and rebuilds of aging facilities, funded by SBA money and sometimes FEMA funding from natural disasters. The new Herbert Hoover High School near Charleston represents this trend—a state-of-the-art facility that cost exponentially more than schools built 15-20 years ago.
- Hospital facilities: University partnerships with local hospitals are driving construction of medical office buildings and cancer research centers. WVU and Marshall Health have been particularly active in this space.
- Manufacturing facilities: New plants, like the core facility along the Ohio-West Virginia border, are bringing hundreds of jobs and spurring additional development.
- Data centers: Following Virginia's lead, West Virginia is seeing data center development, which creates substantial construction activity even if long-term job creation is limited.
The Ripple Effect
Perhaps most exciting is what Eddie described as the ripple effect of infrastructure investment. New highways connecting rural areas are cutting travel times dramatically—trips that once took two and a half hours now take just 30 minutes. Along these new highways comes economic development, which spawns more real estate development.
A perfect example: a neighboring county is building a 500-home subdivision due to housing shortage. The jobs created by that construction, combined with the economic impact and tax revenue from new residents, creates a positive cycle of growth.
The Office Space Evolution
One notable shift: office building construction has decreased as more open space becomes available for rent. The trend toward remote and hybrid work has transformed this sector. We're now seeing old office buildings being renovated into apartments or lofts—a creative solution to changing work patterns and housing needs.
Looking Ahead
From my tax perspective working with real estate professionals, and from Eddie's construction accounting viewpoint, we're both seeing the same thing: construction and real estate development isn't slowing down anytime soon. Federal spending continues, economic indicators aren't pointing toward recession, and the demand for housing, infrastructure, and facilities remains strong.
Whether you're a real estate developer, a contractor, or a professional serving these industries, understanding how construction and real estate work together is essential for building your own successful playbook.
Evan Ross is a Tax Director with Brown Edwards & Company based in Roanoke, Virginia, and host of the Real Estate Tax Playbook podcast.
