Prime for development

In the past year, Amazon.com continued its march across the commonwealth, announcing plans to build a 650,000-square-foot fulfillment center and a 219,000-square-foot delivery station in Virginia Beach, which are collectively expected to produce more than 1,000 jobs.

About 60% the size of the Pentagon, Virginia’s second largest building belongs to Amazon — a 3.8 million-square-foot robotics fulfillment center in Suffolk that opened in October 2022. The e-tail giant says it has invested more than $109 billion in Virginia since 2010, creating more than 36,000 jobs and contributing more than $72 billion to the state’s gross domestic product.

Amazon opened its first Virginia fulfillment center in 2006 in Loudoun County. With the Virginia Beach facilities, the Fortune Global 500 company will have 14 fulfillment centers and 17 delivery stations in the state, as well as its Arlington County-based HQ2 East Coast headquarters campus, 15 Whole Foods Markets, five Amazon Fresh stores and three Prime Now Hubs.

Amazon Web Services, meanwhile, spent nearly $52 million between 2011 and 2021 to set up data centers in Fairfax, Loudoun and Prince William counties, and in 2023 pledged to invest an additional $35 billion to build more data centers in the state by 2040.

Not surprisingly, economic development officials love Amazon, especially as its influence spreads beyond Northern Virginia.

Doug Smith, president and CEO of the Hampton Roads Alliance, says the Virginia Beach Amazon jobs help “cement the region’s dominance in fulfillment and technological innovation within the distribution space.”

The new delivery station is expected to open in time for the 2024 holiday season, and the fulfillment center is expected to come online in late 2025, an Amazon spokesperson told Virginia Business in March. About 1,500 workers work at Suffolk’s $230 million fulfillment facility in Northgate Commerce Park. While there’s no specific push for hiring right now, there are open positions there, Amazon says.

Smith, who was previously Norfolk’s city manager and served as deputy city manager for Virginia Beach and Portsmouth, views Amazon’s investments in Hampton Roads as a net positive.

“Not only is Amazon already employing thousands of Hampton Roads residents and raising awareness of our strategic location for distribution, through their robotics fulfillment centers they are empowering workers to learn about the latest in robotics and automation,” Smith says. “Amazon offers tremendous workforce development and upskilling services in conjunction with our state and local partners, and these skilled employees will attract not only more logistics companies but also emerging industries like robotics and uncrewed systems manufacturing.”

Economist Vinod Agarwal, deputy director of Old Dominion University’s Dragas Center for Economic Analysis and Policy, sees Amazon as filling a gap left by Norfolk Southern, the Fortune 500 railroad company that moved its headquarters from Norfolk to Atlanta in 2021.

Norfolk Southern’s departure, he says, caused some companies to question whether to locate in Hampton Roads, but Amazon’s increasing presence helps reassure businesses, especially companies with similar warehousing and logistics needs.

“Anytime you can have firms of significant importance, known quantities so to speak, come to this area, that obviously has effects on other companies for their decision-making processes,” Agarwal says, noting that Amazon coming to Hampton Roads is “a big plus.”

Speculative buildings are under construction for the first time in Suffolk, following Amazon’s activity and the Port 460 Logistics Center’s development by Matan Cos. and Rockefeller Group, which also builds interest, Agarwal notes.

“We’ve always asked, ‘If we build it, will they come?’ Well, they’re here, so the answer is, yes, 100%,” says Gregg Christoffersen, who heads JLL’s industrial market for the region.

Port 460, a 5 million-square-foot industrial warehouse complex, is being developed on 540 acres in Suffolk near U.S. routes 460 and 58, with construction expected to begin this summer. According to Matan, the first phase will include about 2.4 million square feet of space, costing between $300 million to $350 million, with expected delivery in 2025. The Virginia Port Authority announced in January it will give the City of Suffolk $1 million to improve Route 460, part of an $86 million initiative to widen the road.

Agarwal notes that Hampton Roads localities working together — rather than competing against each other — is starting to pay off in terms of attracting big companies like Amazon to the region. But the Port of Virginia, he adds, is a big factor, too.

Although Amazon isn’t the only player in town when it comes to Virginia’s industrial market, it has had an outsized impact on industrial commercial real estate in Virginia Beach, Suffolk and other parts of Hampton Roads, says Christoffersen. 

As Agarwal puts it, after companies like Amazon enter a region, they “expect lots of other businesses to come in.”