Report highlights opportunities, challenges

Manufacturers looking to expand often tell site selectors similar stories. They need a new site — as soon as possible.

“They all come to us with the same sort of story,” says Seth Martindale, senior managing director of CBRE Consulting. “They say, ‘We’ve waited way too long to get this new capacity up to speed. We need to build a new plant, and we’re already six months behind schedule. We’d like to be up and running in a year.’”

And that’s tough to do. There are incentives to negotiate, land deals to sign and of course a building to construct and outfit. Increasingly, businesses are looking for construction-ready sites. “We look at all these viable sites where they can do that across the country,” says Martindale. “And the fact is if you don’t have power running to the site or gas running to the site or a road running to the site, all that means is it’s going to push that timeline farther back.”
Virginia needs more large-scale,“pad-ready” sites to land big manufacturing projects, according to a new report by CBRE Consulting. Martindale led the research team assembling the report.

That is just one of many recommendations included in The Port of Virginia Opportunity Analysis. The extensive assessment evaluated Virginia’s economic development and port-related opportunities and made several recommendations to improve the commonwealth’s competitiveness and ultimately increase traffic at the Port of Virginia.

“In some regards, it put data and objective opinion behind a lot of what we thought we already knew, and we have been telling people anecdotally,” says David White, executive vice president of the Virginia Maritime Association, which commissioned the report. The report was sponsored by the Virginia Economic Development Partnership (VEDP), the Port of Virginia, Reinvent Hampton Roads and the economic development offices in Chesapeake, Newport News, Norfolk, Portsmouth, Richmond and Virginia Beach.

Stephen Moret, president and CEO of the VEDP, says site readiness also is a major focus by the agency. “The most common reason we are losing manufacturing projects by far is a lack of development-ready sites,” says Moret. “It’s not taxes or logistics or workforce. It literally is just other states that have sites that are more prepared and ready to go faster than Virginia.”

The commonwealth has a good portfolio of smaller sites under 25 acres but has limited availability of development-ready locations that are more than 500 or 1,000 acres, says Moret.

At press time, both chambers of the General Assembly had included between $500,000 and $1 million to support site readiness in their proposed budgets.

That’s a start, says Moret, but the commonwealth eventually will need much more. “For advanced manufacturing facilities and distribution facilities, site preparedness is a really, really important piece of the puzzle,” he says.

More funding for marketing is another aspect that’s vital to the port’s future as well as economic development all over Virginia, adds Moret. “We do a great job marketing Virginia tourism but don’t market for business investment,” he says.

In fact, Moret asked the General Assembly for $9.5 million in the next two-year budget for a marketing budget. The House and Senate included between $1 million and $2.5 million in their budgets.

Martindale with CBRE Consulting says this marketing is a key factor for growth. “The port is a really great asset for the state, and I think a lot of people know that within the commonwealth of Virginia,” he says. “I’m not sure that message is pushed out as much as it could be.”
CBRE’s full report is available on the Virginia Maritime Association’s website.

Below are addtional recommendations from the report.

A focus on advanced manufacturing

Virginia should focus its business recruitment on advanced manufacturing, the report says.

Many of its workers have credentials and higher education degrees, and therefore can demand higher wages. That makes the commonwealth more suitable for advanced manufacturing facilities than car assembly-line plants.

Martindale explains: “What Virginia is well-suited for is a manufacturing process that requires some sort of technical skills. It’s probably not in Virginia’s best interest to chase those big projects with low-wage jobs. It’s definitely better to go after those more advanced-type facilities that require a little bit of a higher skilled worker.”

Collaboration

The report recommends improved coordination among economic development agencies in Virginia. “The regions of the country that have been really successful all have one thing in common,” says Martindale. “They know how to collaborate really well.”

Collaboration is something Virginia has been keen on improving. Art Moye, director of external affairs at the Virginia Maritime Association, says the cooperation required for the study was a step in the right direction. “The effort itself I think was significant because it was a coordinated, collaborative effort,” says Moye. “And I think if we are going to grow the economy of Virginia, that’s the approach that’s going to have to be continued.”

In addition, the leaders of the Port of Virginia and VEDP now serve on each other’s boards. “I think the level of collaboration and alignment between the port and VEDP is probably the best it’s ever been,” says Moret.

The advantage of a mega-region

The CBRE study recommended the Richmond-Hampton Roads market themselves together and explore becoming a combined MSA. 
Many employers are looking for a specific population size, and marketing them together would help catch the attention of more consultants. “If you take those two regions and smash them together, it scores better for a lot of models that people like me run, and that makes them more apt to be on the short list for further analysis,” says Martindale.

Focus on Charlottesville and Blacksburg

In the report, both Charlottesville and Blacksburg scored well on CBRE’s model evaluating potential sites for advanced manufacturing, particularly because of their large populations of adults with advanced degrees.

The report recommends updating statewide marketing material to illustrate how these areas score high against other locations. “I think that there were some insights from it that we had not perhaps considered,” White of the Virginia Maritime Association says of the report. “Some of them being how well positioned logistically other parts of the commonwealth are.”