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byline: Katherine Schulte

Fed’s Fifth District shows modest economic growth

The economy in the Federal Reserve’s Fifth District (a multistate region including Virginia, North Carolina, South Carolina, West Virginia and Maryland) grew modestly in recent weeks, according to the latest edition of the Federal Reserve’s Beige Book, released May 29.

Published eight times per year, the Beige Book is based on anecdotal information about economic conditions gathered from the nation’s 12 Federal Reserve Banks. It is compiled from reports by bank and branch directors, as well as information gathered from business contacts, economists, market experts and other sources. The May release is an update from the Fed’s April 17 report.

Here’s what the most recent Beige Book edition revealed about the direction the economy is taking:

Employment in the Fifth District grew moderately over the last reporting period. The availability of labor varied between industries. One seasonal outdoor recreational company reported it hadn’t been able to recruit some candidates because of the area’s lack of affordable housing. Many respondents listed a need for “quality” workers, and companies continued to increase wages and offer bonuses as part of their recruitment and retention efforts.

Price growth increased slightly this period, although the year-over-year rate remained moderate, according to the Fed. The growth in prices received by service providers remained high at around 4%, while manufacturers had a roughly 2.5% increase in prices received. Input and labor costs continued to rise for businesses in both sectors. In some cases, customers pushed back on additional price increases, so input costs increased faster than prices businesses received. Companies expected growth in prices received to moderate over the next six months.

Fifth District manufacturing activity was unchanged in recent weeks. Several firms cited increased pressure on margins because of global competition, and future market uncertainty has made several businesses uneasy. One textile company’s clients said they were not making long-term strategic decisions, which makes it difficult for the company to plan for the rest of the year.

Virginia and South Carolina ports reported to the Fed moderate to strong — up to double-digit — increases in imports, beyond the volume they picked up from diverted Baltimore cargo. Exports of commodities like textiles and apparel rose, while exports of agricultural goods flattened or decreased. Freight rates increased, and ocean carriers continued to add surcharges and fees for distance and hazards to compensate.

Inland ports had strong demand for rail transport, continuing the record levels seen this year. Auto, auto part, and agricultural equipment and tools manufacturers have preferred rail because of its lower carbon emissions and supply chain reliability, according to the Fed. Trucking volume in the Fifth District was up slightly, but spot rates continued to “spiral downward” because of oversaturation.

Consumer spending on retail and travel increased moderately this reporting period. Although sales were up, some retailers reported tighter profit margins caused by rising input costs that they weren’t able to completely pass along to customers. New vehicle sales declined slightly.

Restaurant and leisure travel picked up, largely from customers with discretionary income, while low- to moderate-income consumers pulled back on spending or trading down in the goods they bought.

Fifth District residential real estate activity picked up modestly in the past few weeks. Total closed sales increased. The total supply of homes for sale increased as more came onto the market, but supply remained below pre-pandemic levels. Average sales prices rose modestly, and homes sold at a slightly faster rate — particularly low- and mid-priced homes. New construction grew in areas with population growth.

Commercial real estate activity increased slightly. Retail leasing picked up; vacancy rates stayed low, and new inventory was absorbed quickly. Leasing for Class A office buildings increased slightly, but leasing for Class B and C properties declined. Leasing and absorption in new multifamily buildings were strong. Construction of existing projects continued, but developers said few new projects were greenlit because high interest rates and the continued high prices of material and labor made it difficult for deals to be financially viable.

Fifth District financial institutions continued to see a “modest softening” of loan demand, mainly in their commercial real estate and business loan portfolios. Most cited higher interest rates as the reason for softening demand. Deposit levels declined modestly, and competition continued for available balances. Loan delinquency rates remained stable.

Nonfinancial service providers reported that demand for their services and their revenues continued to be stable. Firms noted higher interest rates as a limiting factor for new capital expenditures, and some noted inflation and election-year politics as limiting factors for business expansion and for confidence in the economy. Wages and workforce issues continued to be less of a challenge and to modestly stabilize.

Norfolk property management firm promotes president, principal broker

John Chandler has been promoted to president and principal broker of Berkshire Hathaway HomeServices RW Towne Property Management, the Norfolk-based real estate firm announced Wednesday.

Chandler was previously director of facilities and compliance for Berkshire Hathaway HomeServices RW Towne Realty and chief operating officer of the property management division, according to his LinkedIn profile. He succeeds his sister-in-law, Lisa Chandler, who announced her retirement in October 2023.

“We are thrilled to announce John’s well-deserved promotion to president and principal broker. His experience and leadership and unwavering dedication to excellence will propel our company’s progress,” J. Van Rose Jr., Berkshire Hathaway HomeServices RW Towne’s executive chairman of the board, said in a statement.

Chandler helped coordinate the 2019 merger of Rose & Womble Realty with Chandler Realty and Chandler Property Management and the 2023 merger of Rose & Womble Realty, Rose & Womble Chandler Property Management and Berkshire Hathaway HomeServices. The combined firm is backed by TowneBank and is part of Warren Buffett’s Berkshire Hathaway luxury real estate franchise network. Its property management portfolio has more than 2,700 units and 16 property managers in Eastern Virginia, according to a news release.

Chandler entered the real estate industry after 23 years in the U.S. Navy, which he retired from as a captain. In 2005, he joined the real estate firm his mother founded in 1974, Nancy Chandler Associates, as chief operating officer. In 2017, the firm rebranded as Chandler Realty.

In 2019, Chandler became director of facilities and compliance for Rose & Womble Realty and chief operating officer of Rose & Womble and Chandler Property Management, according to his LinkedIn profile.

Chandler holds a bachelor’s degree in civil engineering from Virginia Military Institute and a master’s degree in national security strategy from the National War College. He serves on the Real Estate Information Network’s board of directors, which governs the multiple listing service for the Hampton Roads region.

40 acres in Spotsylvania sell for $6.36M

Close to 40 acres in Spotsylvania County sold for $6.36 million, according to a May 29 news release from Cushman & Wakefield | Thalhimer.

WorkSpace Property Group purchased 39.8 acres at 0 Northeast Drive from Cosner Industrial Park for future industrial development.

WorkSpace Property Group is registered to an address in Great Falls. According to the LinkedIn profile of the limited liability company’s listed agent, Robert S. Borris, the company develops logistics/distribution buildings in Virginia, Maryland and Washington, D.C., and repositions, develops, manages and leases office projects.

Virgil G. Nelson and Adam Nelson with Cushman & Wakefield | Thalhimer handled the sale negotiations for the seller. Wilson H. Greenlaw, also with Thalhimer, represented the buyer.

Weidmuller USA hires president and CEO

Randy Sadler is the new president and CEO of Chesterfield County-based industrial connectivity and automation company Weidmuller USA, German parent company Weidmüller Group announced Thursday.  

Sadler succeeds Bernd Schröder, who died unexpectedly in late 2023. Weidmüller Group creates smart industrial connectivity products and solutions to connect and automate electrical power and signaling for components, machines and installations.

Sadler will work to expand the company’s engineering and production footprint in the U.S. He started his career at Weidmuller USA, where he worked for 15 years and rose to the role of vice president of sales.

“I am thrilled to rejoin Weidmuller USA and lead the company forward at this pivotal time for our industry,” Sadler said in a statement. “I look forward to collaborating with the very talented local and global teams to accelerate the industrial internet of things innovation and create more value for our U.S. customers.”

Sadler has held sales and marketing managerial positions at several companies, including Dialight, Johnson Matthey, CoaLogix and SCR-Tech. Sadler also owned a catalytic reduction consulting business, Sadler Environmental Consulting. Most recently, Sadler was vice president of power generation for Catalytic Combustion’s power emissions group.

“We are pleased to have gained Randy Sadler for this challenging task,” Weidmüller Group Chief Sales Officer Timo Berger said in a statement. “He is an experienced executive who knows the company very well. Randy held various positions at Weidmuller from 1985 to 2000. … His many years of management experience and his broad industry expertise offer the best prerequisites for this.”

Sadler holds a bachelor’s degree in organizational management from St. Paul’s College in Lawrenceville. He’s held professional memberships in Electrical Generating Systems Association, 7×24 Exchange, and Western Turbine Users. He also has authored or co-authored articles on catalytic reduction and fuel cell technology in industry publications like Diesel & Gas Turbine Worldwide and Connector Supplier.

Founded in 1850, Weidmüller Group has production sites, sales offices and employees in more than 80 countries. It began operating in Chesterfield in 1975. The company is building a $16.4 million engineering and production facility in Chesterfield, adding 24,000 square feet to its current facility. Weidmüller Group and Gov. Glenn Youngkin announced the expansion in April 2023, and the company is on track to complete the expansion in September, according to a spokesperson.

George Mason receives $5M donation from Peterson Cos. family

The Peterson Family Foundation, the family behind the Peterson Cos. real estate development firm, donated $5 million to the George Mason University’s Center for the Arts improvement project, the university announced Tuesday.

The gift to the university’s College of Visual and Performing Arts will support modernization of the Concert Hall auditorium, part of George Mason’s Center for the Arts on its Fairfax campus. George Mason will also rename the auditorium. Built in 1990, the 1,935-seat venue has hosted U.S. president and Grammy-, Tony-, Emmy- and Academy Award-winning artists, as well as George Mason students.

Peterson Cos.’ late founder, Milton V. Peterson, and his wife, Carolyn, founded their family foundation in 1997. In April, Inova announced a $20 million donation from the foundation. The family foundation has previously donated to George Mason University, giving $10 million in 2015 for scholarships in the arts and to complete construction of the Peterson Family Health Sciences Hall.

“The Peterson family has stood behind so much of our success in building an exceptional community of artists — students, faculty and distinguished visiting professionals — at George Mason,” George Mason President Gregory Washington said in a statement. “This latest expression of visionary generosity makes possible a much-needed reimagination of our beloved Concert Hall, magnifying George Mason University’s standing as the artistic and cultural hub of Northern Virginia.”

The privately held, Fairfax-based Peterson Cos. was founded in 1965 by Milton Peterson, who died in 2021. It’s now led by his son, Jon Peterson, who became CEO in 2018 and is chairman of the executive committee. The company’s developments include National Harbor in Maryland, home to the MGM National Harbor casino resort, The Capital Wheel and the Gaylord National Resort & Convention Center; Fairfax Corner; Fair Lakes; Burke Centre; Tysons McLean Office Park; and numerous other retail, office and residential developments.

Jon, who is also vice rector of George Mason’s board of visitors, and Carolyn Peterson announced the gift at an event they held in Carolyn’s home to support the visual and performing arts college’s upcoming annual benefit.

“Our family’s commitment to this project is a testament to our steadfast support of Mason Arts programs from the earliest days of the Center for the Arts right up to the present,” Carolyn Peterson said in a statement. “This gift is significant because we know it will provide our excellent students, world-class visiting artists and the community of art lovers with a stellar Center for the Arts auditorium in which to share and experience the arts. We are honored to help move this initiative forward.”

The foundation’s donation contributes to Mason Now: Power the Possible, the university’s first $1 billion comprehensive fundraising campaign. George Mason also has a forthcoming capital initiative for the Center for the Arts, although it has not yet shared information about the project costs and timeline. In April 2022, the school announced a $10 million gift from Barry Dewberry and Arlene Evans to rename the Center for the Arts once its future renovation is complete.

George Mason University is Virginia’s largest public research university. As of the fall 2023 semester, the school had 40,184 students enrolled, of which 28,277 were undergraduates.

Capital One, Walmart end credit card agreement

McLean-based Capital One Financial is no longer the exclusive issuer of Walmart consumer credit cards.

The two Fortune Global 500 companies announced Friday that they had ended their consumer card agreement. The announcement follows problems first uncovered in late 2022 and early 2023, according to Reuters reporting.

Capital One became the exclusive issuer of Walmart’s private label and co-branded credit card program in the U.S. on Aug. 1, 2019, after the bank and retail giant announced the partnership in 2018. Their agreement followed the end of Arkansas-based Walmart’s nearly 20-year partnership with Synchrony Financial.

In April 2023, Walmart filed a lawsuit in the U.S. District Court for the Southern District of New York to end the partnership. The retailer said the bank failed to deliver customer replacement cards within five days and to promptly update transaction and payment information in customer accounts. A federal judge ruled in March that Walmart could end the credit card partnership with Capital One.

Cardholders, though, can continue to earn and redeem rewards, and until informed otherwise, can continue to use their Capital One Walmart Rewards cards wherever Mastercard is accepted, according to a news release.

Capital One retains ownership and servicing of the credit card portfolio, which, according to a Securities and Exchange Commission filing, totals approximately $8.5 billion in loans. The company expects to convert eligible customers into Capital One-branded cards.

The end of the agreement also terminates the companies’ revenue-sharing and loss-sharing agreements.

Capital One is in the process of buying Discover Financial Services in a $35.3 billion all-stock deal, but the deal has come under federal scrutiny.

As of March 31, Capital One and its subsidiaries had $351 billion in deposits and $481.7 billion in total assets. Capital One ranked No. 106 on Fortune magazine’s 2023 Fortune 1000 list and No. 386 on its 2023 Global 500 list.

Foster Fuels wins potential $442M FEMA contract

Brookneal-based fuel delivery provider Foster Fuels has won an up to $442 million contract to provide emergency services to the Federal Emergency Management Agency.

Under the five-year Defense Logistics Agency Energy (DLA) contract, which the Defense Department announced May 15 and Foster Fuels announced Tuesday, Foster Fuels will be the prime contractor for emergency fuel delivery services via truck, rail and/or transportation barge. The contract covers locations throughout the continental U.S. and its territories, according to the Defense Department.

The contract has a one-month option, with a May 31, 2029, completion date.

The fuel delivery company has held the federal emergency fuel delivery contract since its inception in 2006, according to a company news release. Its Mission Critical division has supplied fuel support during multiple natural disasters, including the 2010 Haiti earthquake, Superstorm Sandy in 2012, 2017 hurricanes Harvey, Maria and Irma, the 2021 winter storm in Texas and Hurricane Ian in 2022.

“This contract is not just a recognition of our company’s capabilities; it is a well-deserved acknowledgment of the joint efforts of our entire Foster Fuels team and our key partners,” Foster Fuels CEO Watt R. Foster Jr. said in a statement. “Our commitment to serving our nation as a mission-critical emergency fuel provider remains firm as we strive for continued excellence and perpetual growth in every aspect of our operations.”

Established in 1921, the privately held Foster Fuels provides residential, commercial, agricultural, transport and emergency fuel services, including delivering propane, diesel fuel, heating oil and lubricants.

Va. housing market warms up in April

Virginia’s housing market is heating up this spring, with April sales increasing 14.1% from sales in April 2023, according to Virginia Realtors data released Tuesday.

Last month, 9,416 homes sold in Virginia, up 1,164 sales from the same month last year. Sales activity in Virginia has been trending up in 2024, except for a dip in March, when sales dropped 7.3% from March 2023.

April’s year-over-year increase in closed sales is the largest increase in monthly sales that the Virginia market has had in nearly three years, although the 10-year average for closed sales in April is around 10,500 sales, according to Virginia Realtors.

Although 66% of municipalities in the state had an increase in sales compared with April 2023, the markets with the strongest sales growth were in the Shenandoah Valley, particularly the Winchester region, and the Roanoke Valley.

The Virginia market had 16,047 active listings at the end of April, an 18.1% increase from the same time last year. April was the fifth consecutive month that the number of active listings grew, according to Virginia Realtors.

There were 13,309 new listings, up 19.1% from April 2023. The jump in new listings is the largest increase in about three years, according to Virginia Realtors.

Homes in Virginia stayed on the market for a median of seven days in April, the same median reported in April 2023.

Home prices also rose in April. The statewide median sales price last month was $416,548, up $25,548, or 6.5%, from April 2023. Although listings and sales have increased, pent-up demand is putting pressure on home prices, according to Virginia Realtors.

“Rising prices are likely to continue as demand for housing is stronger than the increase in supply of listings,” Ryan Price, Virginia Realtors’ chief economist, said in a statement.

The statewide housing market had 9,819 pending sales last month, up 710 pending sales, or 7.8%, from April 2023.

Mortgage rates decreased for the second consecutive week in the week ending May 16, according to Freddie Mac data. For that week, the average 30-year fixed-rate mortgage rate was 7.02%, down 0.07 percentage points from the previous week. The four-week average rate for a 30-year fixed-rate mortgage was 7.13%.

“Mortgage rates have been trending down a little in May but are still higher than when 2024 began,” Virginia Realtors CEO Terrie Suit said in a statement. “Though rates have continued to hover above the 7% mark for a 30-year fixed, there are some signs consumers are adjusting to the higher interest rates.”

VIPC launches $100M fund partnership for Va. startups

The Virginia Innovation Partnership Corp. is partnering with seven venture capital fund managers to invest $100 million in 100 Virginia-based startups.

Through the partnership, announced Monday by Gov. Glenn Youngkin and named Virginia Invests, VIPC will commit $40 million to the seven funds using previously awarded funding from the U.S. Treasury Department’s State Small Business Credit Initiative. In December 2022, Youngkin’s office announced that Virginia had been approved for up to $230 million from the SSBCI program, with about $173 million of that going to VIPC.

“The lifeline of a high-growth, entrepreneurial ecosystem is the ability to tap into capital,” Youngkin said. “And that’s exactly what Virginia Invests is all about. How do we accelerate growth? How do we amplify good ideas? How do we unleash opportunity by bringing together people who want to invest in all of this and people who need the money to make it go?”

The funding firms have committed an additional $60 million, and they will select the 100 high-growth startups to invest in during the next three to five years. By contract, firms not headquartered in Virginia will have to provide 1.5 times the funding they receive, while firms headquartered in the state will make a 1:1 match, Youngkin told reporters.

“One of, I think, the really important steps was to recognize that picking companies is not something that we should do,” he said. “We should invest in funds that are picking companies, and that also allows us to have the ability, if companies are doing well and more capital is being put to work well, then potentially, we could invest some more. But the resources and the expertise that are represented by these seven funds, in particular deep sectors, is unique.”

The seven fund managers focus on founders who are typically underserved. They are 100KM Ventures, AIN Ventures, The Artemis Fund, The BFM Fund, Idea Fund Partners, Valor Ventures and Veteran Ventures Capital.

Washington, D.C.-based 100KM Ventures provides pre-seed through Series A funding, focusing on early-stage companies working in the future of work or women’s health. 100KM Ventures plans to partner with Virginia’s historically Black colleges and universities, said founder and Managing Partner Shalanda Armstrong.

New York-based AIN Ventures is a pre-seed and seed-stage fund that invests in veteran-led companies and in companies “at the intersection of deep technology and dual-use,” co-founder and General Partner Emily McMahan said. “We are particularly excited about Virginia because of the emerging life sciences research ecosystem, as well as software development,” McMahan said.

Startup founders will also have access to AIN Ventures’ Academy Investor Network, a syndicate of graduates from the five U.S. military service academies that invest alongside AIN and help with deal-sourcing, vetting and providing post-investment support.

The Artemis Fund leads seed rounds for female tech founders whose companies are in financial technology, commerce and care. One of the Virginia-based companies in the fund’s portfolio is Naborforce, a Richmond-based tech company that connects older adults to a network of people who can provide help around the home or around town and socialization. The Artemis Fund also plans to hire venture fellows from Virginia colleges and universities, said Stephanie Campbell, a co-founder and general partner.

The BFM Fund is an industry-agnostic seed-stage venture fund focused on founders who are Black, Indigenous and people of color. The firm is based in Portland, Oregon.

Chapel Hill, North Carolina-based Idea Fund Partners provides pre-seed and seed capital to technology companies in overlooked geographies or with overlooked entrepreneurs, said Managing Partner Lister Delgado.

“We are very excited to be working with South, Southwest Virginia and the Shenandoah Valley, and we are looking to develop strategies and develop entrepreneurial community,” he said. The firm is opening an office in Richmond.

Valor Ventures, an Atlanta-based seed-stage lead firm, is focused on B2B software and AI startups in the southern U.S. The firm has a podcast with more than 50,000 listeners, said investor William Leonard, and will be extending it to Virginia, focusing on founders, ecosystem builders and investors. Valor Ventures also plans to bring its VC Day, a private, investor-centric conference focused on bringing $5 billion of capital to Virginia.

Veteran Ventures Capital focuses on investments from the late seed through series A and B funding rounds in veteran-led companies creating dual-use technologies that have military and commercial applications. The firm relocated its corporate headquarters from Tennessee to Tysons, said Josh Weed, a general partner at Veteran Ventures Capital.

“This is the first round of [funding] commitments. There’ll be more,” Youngkin said.

VIPC is the nonprofit operations arm of the Virginia Innovation Partnership Authority. It provides strategic commercialization and funding support to Virginia-based tech startups.

NoVa home sales rise dramatically in April

Northern Virginia home sales in April rose 13.5% from April 2023, the region’s first double-digit growth in sales since November 2021, according to data the Northern Virginia Association of Realtors released Tuesday.

In April, the region had 1,623 closed sales, up year-over-year and up 36% from the 1,191 homes sold in March, reflecting a spring market uptick. In November 2021, the last time NVAR recorded double-digit year-over-year growth in home sales, 2,124 homes sold in Northern Virginia, which was an 11% increase from November 2020.

“As April and February’s market data show, we are experiencing a thawing in our region, as we break through post-pandemic market conditions and see a little more inventory and inspired homebuyers,” Rob Carney with TTR Sotheby’s International Realty, an NVAR board officer, said in a statement. “Consumers are accepting that higher mortgage rates are a reality for now and are choosing to sell and buy anyway.”

New pending sales last month totaled 1,843 units, up 5.3% from April 2023. Active listings in the region numbered about 1,830 units last month, up 9.7% from the same month last year, while new listings reached 1,504 units, down roughly 4% from the 1,565 new listings recorded in April 2023.

Houses sold quickly last month, remaining on the market an average of 14 days, down from 18 days in April 2023 and from 16 days in March. The month’s supply of inventory (MSI) — a measure of how many months there would be homes on the market if no new inventory were added — stood at 1.1 months, up slightly from April 2023’s MSI of 1.0 and March’s MSI of 0.9.

High demand and low supply have helped drive increases in home prices, despite higher mortgage rates, according to NVAR. The median sold price last month was $751,000, up 8.8% compared with April 2023 and up about 2.88% from the median sold price in March. The total sold volume in April was close to $1.39 billion, up 22.6% from April 2023.

NVAR reports home sales activity for Fairfax and Arlington counties, the cities of Alexandria, Fairfax and Falls Church, and the towns of Vienna, Herndon and Clifton.