A new decade starts with Tennessee’s private security industry sitting at roughly $1.8 billion in annual revenue. That number, pulled from state licensing data and industry trade group estimates, puts Tennessee in the top 15 nationally for security spending. Not bad for a state that most people associate with country music and hot chicken.
Guard services still account for more than 60% of that revenue. Physical bodies on site, patrolling parking lots, checking IDs at lobbies, standing post at warehouses from midnight to 6 a.m. The human guard isn’t going anywhere, despite what the tech evangelists keep promising at trade shows. Tennessee companies tried adding drones and AI cameras over the past two years, and some of those pilots worked fine. Most didn’t scale. The economics of a warm body in a uniform remain hard to beat for the average commercial client paying $18 to $25 per hour for unarmed coverage.
Nashville’s Construction Boom Is Driving Demand
Nashville added over 100 active construction sites in 2019, according to permit data from the Metro Planning Department. Every one of those sites needs overnight security. Copper theft alone cost Middle Tennessee builders an estimated $4.2 million last year, and insurance companies are now requiring proof of on-site security before they’ll write policies on projects over $10 million.
The result: Nashville-based guard companies can’t hire fast enough. Turnover in the guard industry already runs between 100% and 300% annually (yes, that’s the real range), and Nashville’s low unemployment rate makes recruiting even harder. Companies like Securitas, Allied Universal, and several mid-size regional firms are poaching guards from each other with signing bonuses of $200 to $500, a practice that would’ve been unthinkable five years ago.
Construction security isn’t glamorous work. Guards sit in trucks on muddy lots for 10-hour shifts, dealing with trespassers who want to steal materials and homeless individuals looking for shelter in half-finished buildings. The pay is marginally better than retail security, typically $13 to $15 per hour, and the conditions are worse. Companies that can retain guards for these posts have a real competitive edge heading into 2020.
Memphis: Crime Concerns Push Commercial Spending
Memphis tells a different story. The city’s violent crime rate remains among the highest in the nation, and that statistical reality shapes how businesses think about security. Commercial clients in Memphis aren’t buying security because their insurance requires it. They’re buying it because their employees are scared to walk to their cars after dark.
Retail security in the greater Memphis area grew an estimated 12% in 2019. Grocery chains, big-box retailers, and shopping centers all increased their security budgets. Kroger’s Memphis-area stores added uniformed guards at several locations that previously relied on loss prevention alone. FedEx, the city’s largest employer, expanded its contract security workforce at the Memphis hub by what industry sources estimate at 15% to 20%.
Healthcare security is another Memphis growth area. Regional One Health, Methodist Le Bonheur, and Baptist Memorial all increased security staffing in 2019. Emergency room violence, a national problem, hits Memphis facilities hard. Guards at Memphis hospitals now regularly deal with armed patients, family members in crisis, and the overflow effects of the city’s gang activity. It’s dangerous work, and it pays accordingly: armed hospital guards in Memphis can earn $18 to $22 per hour, well above the state average for security positions.
The Technology Gap
Here’s where Tennessee falls behind. States like California, Texas, and Florida have seen rapid adoption of integrated security platforms: access control tied to video analytics tied to alarm monitoring tied to mobile patrol dispatch. Tennessee companies, by and large, haven’t made that jump.
Part of it is cost. A fully integrated security platform runs $50,000 to $200,000 for a mid-size commercial property, and Tennessee’s commercial real estate market doesn’t support the same price points as coastal cities. A warehouse owner in Chattanooga paying $8 per square foot in rent isn’t going to spend $150,000 on a security system designed for a building in San Jose paying $30 per square foot.
Part of it is culture. Tennessee’s security industry grew up on guard services, and many of the state’s 400-plus licensed security companies are family operations with 10 to 50 employees. These firms know how to recruit, train, and deploy guards. They don’t have IT departments. They don’t have software engineers on staff. Asking them to sell and support integrated technology platforms is like asking a plumber to wire a house: technically adjacent, practically different.
The companies that will win the technology race in Tennessee aren’t the traditional guard firms. They’re the alarm and monitoring companies, ADT, Vivint, local players like Security Alarm Corporation in Knoxville, that already have the technical infrastructure. Watch for these firms to start bundling guard services with their tech platforms in 2020. The convergence of physical and electronic security has been talked about for a decade; Tennessee might finally start seeing it happen.
Knoxville and Chattanooga: Quiet Growth
East Tennessee doesn’t generate the same headlines as Nashville or Memphis, and that’s precisely why some security operators like it. Knoxville’s steady expansion of its downtown corridor and the continued growth of the University of Tennessee campus create reliable, predictable demand. UT’s security budget alone exceeds what some small Tennessee cities spend on their entire police departments.
Chattanooga’s tech sector, anchored by the city’s municipal broadband network, is attracting data centers and tech companies that need serious physical security. Amazon’s fulfillment center in Chattanooga employs hundreds of contract security guards. The Volkswagen plant in Chattanooga uses a mix of in-house and contract security. These industrial accounts pay well and offer multi-year contracts, making them the most coveted clients in the East Tennessee market.
What to Watch in 2020
Several trends are worth tracking as the year unfolds.
Minimum wage pressure. Tennessee doesn’t have a state minimum wage (the federal $7.25 applies), and Nashville’s attempt to set a local minimum was blocked by state legislature. Still, market forces are pushing entry-level security wages up. Companies paying guards $9 or $10 per hour are losing them to Amazon, which starts at $15 in its Tennessee facilities. Expect guard wages to keep climbing, squeezing margins for companies that haven’t raised their billing rates.
Consolidation. Allied Universal’s 2016 merger created a giant, and the company has been acquiring smaller firms across the Southeast ever since. Tennessee has plenty of acquisition targets: established firms with $2 million to $10 million in revenue, loyal client bases, and owners nearing retirement. Don’t be surprised if two or three notable Tennessee companies get absorbed this year.
Cannabis. Tennessee hasn’t legalized recreational marijuana, and medical use remains limited, so this won’t hit the state in 2020. Still, security companies should be paying attention to what’s happening in neighboring states. If Tennessee ever moves toward legalization, the security requirements for grow facilities, dispensaries, and transport will create an entirely new market segment.
School security. Tennessee allocated $30 million in 2019 for school safety grants, and that money is flowing into security upgrades at K-12 schools across the state. Armed school resource officers, access control systems, panic buttons, visitor management software: these purchases benefit both guard companies and technology providers. The program is expected to continue through 2021 at minimum.
The Numbers That Matter
For operators trying to plan their 2020 budgets, here are the benchmarks that matter:
- Average unarmed guard billing rate in Tennessee: $19 to $24 per hour
- Average armed guard billing rate: $25 to $35 per hour
- Average guard turnover: 100% to 200% annually (higher in Nashville, lower in rural areas)
- Average time to fill a guard position: 14 to 21 days
- Average training cost per new guard: $800 to $1,200 (including TDCI-required 48 hours)
- Industry growth projection for Tennessee in 2020: 4% to 6%
These numbers won’t make anyone rich overnight. Security has always been a thin-margin business, typically 3% to 8% net profit for guard companies, and Tennessee is no exception. The companies that succeed in 2020 will be the ones that control turnover, raise billing rates without losing clients, and pick the right technology investments.
The decade ahead could reshape this industry entirely. For now, Tennessee’s security market enters 2020 in solid shape, with demand outpacing supply in the state’s two largest cities and technology creating opportunities for firms willing to invest. It’s a good time to be in the business, if you can find the guards to staff it.