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byline: M.J. McAteer

‘Not for the faint of heart’

Defense contracting, once a reliable mainstay of Virginia’s economy, has been hit hard by sequestration and the federal government’s emphasis on austerity. For small and midsize defense contractors, in particular, doing business has become particularly challenging.

Take the case of Global Dimensions in Fredericksburg, headed by Army veteran Chris Newton. In 2014, the firm, which specializes in language and linguistic services, had $8.2 million in revenues and 104 employees. In 2015, its revenues dropped to $6.3 million, and it employed 54 workers.

Even though many of Global Dimensions’ jobs are mission-critical, a designation that generally escapes the budget ax, its CEO says the draw-down of forces in Afghanistan decreased demand for his company’s services. To compete, he also must submit the lowest possible bid while simultaneously differentiating himself from the competition by having higher — i.e., more expensive — standards, such as employees with advanced degrees and top-level security clearances. These competing factors make it hard to make a profit.

So, like other small contractors looking for an edge, Newton tapped into a Small Business Administration program to help him survive in a hyper-competitive environment. In 2012, he moved Global Dimensions from its initial location in Alexandria to Fredericksburg, which the SBA has designated as a HUB Zone, or Historically Underutilized Business Zone. Under this program, small firms that locate in HUB zones get special access to federal contracts in exchange for hiring 35 percent of their employees locally. If Fredericksburg should lose its HUB designation, though, Newton says he will be forced to relocate again.

“Defense contracting these days is not for the faint of heart,” says Mark Moore, executive vice president and chief lending officer for John Marshall Bank in Reston. “The downward pressure on permitable profit is more difficult than it has ever been.”  

Of all the states, Virginia is the most dependent on federal contracting. In 2014 (the most recent year for which figures were available), the U.S. Department of Defense spent $54.7 billion in the commonwealth — including $38 billion in contracts. That represented 11.8 percent of the state’s gross domestic product. A formidable figure, to be sure, but less than what the DOD once spent. Even before sequestration arrived in 2013, its spending had begun a retreat, and from 2011 to 2019, the U.S. budget office estimates that it will decline by 28 percent.

Moore is on the front lines of seeing how this shrinkage is affecting small and medium-size defense contractors, such as Global Dimensions. He works extensively with minority- and women-owned firms, which, like businesses in HUB zones, are eligible for preferential treatment or set-asides to compete with bigger businesses.

Even with that initial advantage, however, Moore says they must find a way to hold their own quickly.

“I am seeing an increased number of companies putting up the ‘for sale’ sign,” Moore says. “After two or three years, some decide it is just not worth it.”
Companies fighting to stay solvent are finding new ways to stay in the game. Some are moving into industries not as affected by cuts, such as cloud technology, cyberspace, counterterrorism and health care. Some are considering selling to foreign markets, although adapting to different cultures and accounting systems can be difficult — and profits sometimes can be several years down the road.

Many are trying to wean themselves from total dependency on federal money by diversifying into other sectors, both public and private.
All are looking to cut costs.

Staci Redmon is the CEO of Strategy and Management Services (SAMS) in Springfield. SAMS, which specializes in facility operations, has about 150 employees and had revenue of $17 million in 2015. Redmon recently ordered an assessment of the business, and the firm is diversifying by pursuing state and local clients. At the same time, its CEO is determined to eliminate all waste and frills while pursuing marketing platforms that are free or low-cost, such as an expansion of its online presence.

“We’re thinking about survival every day,” she says. “Even coming in at the same [revenue number as last year] would be a good number for us.”
The belt-tightening is not confined to Northern Virginia. Bob Campbell is president and CEO of Alliance Solutions Group (ASG) in Newport News, which specializes in emergency response and mass-casualty incident planning. ASG has 620 employees and had revenue of just under $13 million last year. It qualifies for set-asides because Campbell is a disabled veteran.

Even so, the past three or four years have been “painful and evolving,” he says. Money for preparedness training has dried up, and former clients invest what reduced funds they have in maintaining equipment. Contracting strategies have shifted, too, and procurement officers have become more risk-averse and less willing to commit the funds they do have.

Compounding this fiscal reality, Campbell says, the government has a growing tendency to award a bigger share of its jobs to larger companies. Where Alliance Solutions Group once was the primary contractor on jobs, now it usually is the subcontractor, a status shift that reduces its profit margin. “Work share hurts,” he says.

To stay afloat, ASG has begun to target the commercial market and has added Exxon Mobil and a Midwestern utility company to its client list. In addition, it opened an office in the United Arab Emirates, and Campbell says that the foreign sector now represents 10 percent of ASG’s work.  
In its push to expand internationally, ASG has been assisted by the Virginia Economic Development Partnership’s Going Global Defense Initiative, which helps the commonwealth’s contractors develop strategies for operating overseas.

Paul Grossman, the VEDP’s vice president of international trade, says that 290 companies, representing 25,000 employees, have participated in the initiative and that 68 percent of them do defense work. The program is in its third year, and until now, has been largely funded by the Department of Defense. Virginia’s General Assembly this year agreed to fund the program through 2018.

Not all of Virginia’s small and midsize defense contractors are struggling. Dynamis, whose clients include the Department of Defense, Homeland Security and several branches of the military, has adapted well to the cost-focused environment.

The Fairfax-based firm, which has 150 employees, reported $18 million in revenues last year, but Chairman and President John Braun projects $25 million in revenues this year. That success, he says, comes from being aggressive on pricing and bids.

Dynamis was able to move in and under-bid companies that didn’t take the government’s focus on cost-cutting seriously. Dynamis also “doubled down” on hiring the best employees it could find, many more of whom were available because of staff cuts among competitors.

“We’re very opportunistic,” Braun says. “We try to go after everything that goes through our crosshairs.”

Many defense contractors worry that the government’s laser-like focus on cost-cutting could ultimately be detrimental to U.S. security. Cameron Hamilton, chairman of the Small and Emerging Contractors Advisory Forum in Falls Church, says “contractors are having to cut overhead and indirect costs to maintain thinner margins. This reduces the attractiveness of the industry and makes it harder to retain talent at all levels.”

Yet, even with those thinner margins, Moore, the Reston banker, predicts that the industry “will not be going away,” and the reason is simple. “The country wouldn’t work without it,” he says.

Enduring allure

Tradition is trending in the tourism industry, but at The Omni Homestead Resort, it never has gone out of style. The venerable resort, ensconced on more than 2,300 acres in Hot Springs, turns 250 years old this year, and it attained that impressive longevity by never abandoning a standard of hospitality that melds luxury and elegance with a homey Southern charm.

Like many of the guests of the Homestead, Channing M. Hall III and his brother, J. Lesslie Hall III, both of Williamsburg, have been regulars for years.  So were their parents and their grandparents. Seeing multiple generations under the one roof is common at the scenic mountain sanctuary.

“The great thing about the Homestead is the constancy of the genteel Virginia hospitality,” says Lesslie Hall. “It is a paragon of grace and gentility.”

“A visitor in 1890 and a visitor today would find the same hospitality,” says his brother, although, admittedly, back then, they wouldn’t have encountered a snow-tubing park or Segway tours or a paintball course, some of the attractions that the Homestead has added to appeal to today’s travelers. “The Homestead is never trendy,” says Channing Hall. “It does, however, adapt.”

In July 2013, the Homestead faced the possibility of having to make a major adaptation when it was bought by Omni Hotels. The resort’s new managing director, David Jurcak, arrived that fall and made establishing the Omni culture at the property his first priority. That culture, he says, strives to equally balance the needs of customers, associates (employees), and owners. “A happy associate makes for happy guests,” Jurcak says.

That philosophy turned out to be a good fit for the Homestead, where guests say they are attracted by the kindness and cordiality of hotel employees as much as by a  fly-fishing stream or the opportunity to take falconry lessons.

Right from the very beginning in 1766, when homesteaders in what would become Bath County helped build the Homestead’s original 18-room wooden lodge, the people of the area have been an intrinsic part of the retreat’s appeal.

Employees such as maître d’ Woody Pettus, a fifth-generation employee who has worked at the Homestead for 55 years, are revered. “Woody is a true Virginia gentleman,” says Channing Hall.

Or Jimmy Cauley, who has logged 65 years at the resort, teaching thousands of visitors — including Charlton Heston — how to improve their shooting. “Giving lessons became a part of me,” he says.

Or Don Ryder, another fifth-generation employee whose wife is a sixth-generation staffer. Ryder, who recently retired, grew up caddying and rose to become director of golf. “I had guests that I taught as kids and then I taught their kids,” he says.

“The local people just show what a great area it is,” says Tim Siviter of Virginia Beach, who first visited the Homestead as a child and began taking his 20-year-old daughter there when she was 4. Along with memories of “killer luncheons on the lawn” and “the biggest Christmas tree you ever saw,” one of Siviter’s most vivid recollections is of the “wine guy with the big key around his neck. He remembered my dad,” he says.

Jurcak, who has been with Omni for 21 years, says that the warm atmosphere at the resort is “unlike what I have seen over my career. My biggest surprise has been the community and how everyone embraces [the Homestead]. It really takes a village.” 

It also takes constant maintenance, and the Omni’s immediate focus has been to repair and replace aging electrical, mechanical and plumbing systems. “We’re still trying to get our hands around” a property that includes 73 buildings of varying vintages, Jurcak says.

Among the most precious is the Men’s Bath House at the Jefferson Pools, which will be the centerpiece of a long-term restoration and renovation plan. It is the oldest, still-operating men’s bathhouse in the country. The country’s third president, Thomas Jefferson, took the waters there in 1818, pronouncing them to be “of the first merit.”

With tourists, especially millennials, increasingly in search of what is known in the hospitality industry as “an authentic experience,” it’s hard to beat wriggling your toes in the same mineral springs that a Founding Father enjoyed. As Lynn Swann, director of marketing and communications for the Homestead, points out, “You can’t build instant history.”

That history includes a roster of colorful and notable guests, such as the Duke and Duchess of Windsor, who arrived with three trucks full of luggage and 12 servants and stayed for a month in 1943, and Cornelius Vanderbilt III and his wife, Grace, who not only honeymooned at the wilderness haven in 1896 but returned there for R&R each spring and fall for the next half century. More recently, Richard Gere caused a stir when he and the cast of “Sommersby” stayed at the Homestead during the filming of the 1993 post-Civil War drama.

The resort, not surprisingly, has no shortage of events planned to mark its 250th anniversary, including a different special cake for every day of 2016 (on New Year’s, it was a red velvet).

Each month also will have a theme with special events. In January, most appropriately, the focus was on the Homestead’s employees. February was dedicated to U.S. presidents — 23 have visited — and March spotlights fashion and entertainment.

As always, guests can opt to participate in these events as well as a long roster of activities that covers all day and all evening year round. Or, they can choose to do none of that. Instead, they can claim a rocker on the front porch and enjoy what Lesslie Hall calls “Homestead time, where every day feels like Saturday.” And, that, obviously, is an attraction that has never gotten old.

Tourism with a purpose

When Chris Canfield of the Virginia Tourism Corp. was soliciting ideas for how a community might make itself more appealing to visitors, one suggestion was to change the color of the locality’s logo. Canfield had something more substantive in mind.

For the past several years, Canfield, who is vice president of partnership alliance marketing for VTC, has been the point man for DRIVE, a just-completed $1 million tourism development program that is picking up speed in 23 localities across Virginia.

DRIVE’s purpose was to assist communities in determining not only how to make the most of existing tourism assets, but how to go about creating new ones. From sprucing up downtowns, opening farmers markets and developing transit systems, DRIVE encourages localities to set tourism goals that translate into economic impact. 

Tourism is no minor contributor to Virginia’s economy. In 2014, it was the fifth largest industry in the commonwealth, responsible for 217,000 jobs and $1.5 billion in state and local revenues. Visitors spent $22.4 billion in Virginia that year, which, according to the VTC, works out to about $1 million every 29 minutes. These figures, says Rita McClenny, VTC’s president and CEO, represent an increase of 5.7 percent over 2013.

The DRIVE initiative, designed in partnership with PricewaterhouseCoopers LLP, began in 2010 with a period of extensive research. Through surveys, workshops, interviews and meetings, data were compiled from individuals from every aspect of the industry, including tourists; members of local and state agencies and private organizations; managers and owners of entertainment, sporting, cultural  and outdoor attractions; and hoteliers, restaurateurs, brewers and vintners.

Canfield says an examination of 100 tourism plans from across the country and from overseas showed how few, at least in the U.S., focused on anything other than marketing strategies — such as changing a logo to a more eye-catching color. “It was a big shift just to adopt a product development idea,” he says.

In 2014 VTC, along with communications partner, Charles Ryan Associates, began holding DRIVE tourism workshops in localities. VTC helped localities map out a route toward achieving immediate goals, two-year goals and, ultimately, a game-changing, five-year goal.  

Wytheville
Wytheville was the first of the 23 to complete the requisite series of three workshops that usually were spread across six months to a year. The meetings started out with philosophical questions such as “What is your identity?” and “How do you maintain your authenticity?” and then moved on to nuts-and-bolts concerns such as how to find partners to accomplish desired changes. Workshops covered possible financing options for projects, too, some of which involved public-private efforts.

“The workshops were like taking a real course,” says Rosa Lee Jude, director of the Wytheville Convention & Visitors Bureau. “We had homework.”

Wytheville’s takeaway from DRIVE was to steer its energies toward the growth and revitalization of downtown. To that end, it is at work on a feasibility study for a possible entertainment center that could host theater, film, art classes and other community activities. The opening of such a venue, if shown to be doable, would be the town’s five-year objective. Meanwhile, Wytheville already is making progress on a  two-year plan to open a year-round farmers market, expecting to lock down a building to house the market sometime this spring.

“We’re not newbies [to the tourism industry], but we still learned something about ourselves,” Jude says of DRIVE. “It was a good way to put a mirror up.”

Northern Neck
At the other end of the state, in the Northern Neck, the biggest focus was on the recently opened Virginia Oyster Trail. Lisa Hull, coordinator of tourism and economic development for the Northern Neck Planning District Commission, says that although the region’s immediate mission is to expand the operating hours at the Dahlgren Heritage Museum at the foot of the Gov. Harry W. Nice Memorial Bridge, the trail will be its priority for the next couple of years.

The Northern Neck intends to add more site markers along the route and conduct an outreach effort to area businesses, educating them on being ambassadors for the region’s newest draw. Five years down the road, Hull says, the Northern Neck hopes to have made infrastructure improvements to the Route 3 corridor to make it friendlier to cyclists. 

Lynchburg
Lynchburg, roughly halfway between the Northern Neck and Wytheville, was the last community to finish the DRIVE workshops, holding its final one in September. Sergei Troubetzkoy, the city’s  tourism director, says that the city saw an immediate unanticipated benefit from its decision to participate: Many business owners who had never met before began networking.

As in Wytheville, the collective opinion of the Lynchburg DRIVE participants was that the fastest way to attract more visitors to the area would be to make downtown more attractive. Five years ago, the city’s streets were deserted at night, but new housing there has triggered “a renaissance,”  Troubetzkoy says. 

Unfortunately, some downtown businesses had not updated their operating hours to reflect that change, so Lynchburg’s quick fix for attracting more tourists is to encourage shopkeepers to stay open later and on Sunday.

Its midterm priority is to support the restoration of the 1905 Academy of Music Theatre, which has been shuttered since 1958.  The city recently voted to contribute to the fundraising campaign to reopen the theater as a performing arts center. That looks to be on track to happen in just two years, Troubetzkoy says. 

In five years, the tourism director hopes, downtown will have a transit system. Lynchburg is a hilly city, he says, and the prospect of having to do a lot of huffing and puffing to get around probably discourages some visitors the city is trying to woo. A bus or trolley would remedy that problem. (See community profile on Lynchburg.)

Other communities
Other communities that participated in DRIVE came up with a broad array of major projects to showcase their best assets. In Abingdon, the five-year goal is to develop a mountain outdoor recreation resort. In Richmond, it is to add a hotel or at least more rooms near the convention center. Bristol hopes to initiate passenger rail service, and Chesapeake will enhance a sports complex. In Chincoteague, the target is an improved sewer system, recognition that expansion of tourism often is predicated on basic infrastructure upgrades.

“The DRIVE program was an incredible capacity-building exercise,” says Maurice Jones, Virginia’s secretary of commerce and trade. “It coalesced a team locally. It forced them to become scholars of their own story and present it in a way that attracts visitors.”

And that, says the secretary, “is a game that every community can play.”

A different focus

This summer, the Chinese economy got the wobbles, and the stock market responded by doing a nosedive.  At the same time, the excruciatingly slow and persistently fitful recovery of the American economy was hardly a confidence builder. As a result, August and September were bear months for investors.

These kinds of “corrections” in the marketplace may be inevitable, but the key to building a sound portfolio, say Virginia financial advisers, is not to be overly reactive to them. Have an investment strategy that is prepared for volatility, they say. Keep emotion out of investment decisions and focus on the horizon. And, if their clients happen to be women, they just might listen to that advice.

“Men want to outperform a benchmark. They want to outperform their brother,” says Brenda Blisk of the Blisk Financial Group in McLean. “Women want to have security.”

Everyone, regardless of sex, wants a retirement that is free from money worries, of course, and financial advisers say they give the same advice about wealth accumulation to both men and women. Nonetheless, for women, much more than men, they find that the most common driver for investment planning is a deep-seated dread of a destitute old age.

“It doesn’t matter how much money they have, they don’t want to be a bag lady or be dependent on their children,” says Dalal Salomon of the wealth management company Salomom & Ludwin in Richmond, which is associated with the Wells Fargo Advisors Financial Network.

Such fears are not unfounded. According to USA LifeExpectancy, on average, women in Virginia now live 81.3 years, while men in the commonwealth live 76.6 years. That means that whatever assets women have must be stretched to cover more years.

At the same time, women’s assets may be more limited than their male counterparts. More than half the women over 65 are widows, and many are left with little income. Women who have worked outside the home usually have accumulated a third less money in their retirement plans than men,  Blisk says, and 48 percent have no retirement plan at all. 

These dismal statistics are partly because women still are being paid less than men for equivalent work, but they also are the result of them going in and out of the workforce to raise children and to tend to other familial obligations.  A Transamerica survey recently found that 45 percent of American women work part time, with a corresponding figure of just 24 percent for men. That differential also affects the size of women’s Social Security checks, which are a mainstay income for many retirees.

Paradoxically, though, women often acquire assets through a divorce or from a spouse who predeceases them.  Susan Kim of Kim, Hopkins & Associates in Vienna, a financial advisory practice of Ameriprise Financial Services, says that at some point in their lives, 80 percent to 90 percent of American women end up in charge of their own financial well­being. Many, however, are unprepared for that responsibility or are intimidated by it. Further, says Blisk, many women also wait until they are into their 50s before turning their attention to retirement planning, which leaves not that many working years to accumulate a nest egg.

“Women should be encouraged not to abdicate a basic understanding of financial plans to their husbands,” says Susan Colpitts of Signature wealth management in Norfolk. “They really need to lean in on their financial planning and be responsible for their own preparedness, single or married.” 

Educating clients thus is an essential part of a financial adviser’s job. “They don’t need to be able to make the clock, but they need to be able to tell the time,” Salomon says.

Luckily, financial advisers say, most women want to understand their finances better and learn the facts. One of those facts, though, is that women sometimes put the welfare of others ahead of their own and make supporting their children, church or college a top priority. Kim tells these clients that they must look to themselves first.

Another essential and potentially destructive fact is that many women are naturally conservative in their investments. They have a money-in-the-mattress mentality, preferring to put their assets in low-risk options such as certificates of deposit and bonds, which may barely keep them ahead of taxes and inflation and do little to grow their portfolio. At the same time, they can be suspicious about advice to put more of their money into higher-risk growth investments, usually because they feel they don’t understand finances.

On the issue of building trust with these clients, women financial advisers say they might have an edge. First, women often like to work with other women. Further, Virginia’s female advisers take noticeable pride in their willingness to hear what their clients have to say and their patience in explaining portfolio strategies to even novice investors. “Listening is the most important skill an adviser can have,” Colpitts says.

These innate pluses for female financial advisers would seem to make the field a natural for women. A recent study by the Boston-based research firm Cerulli Associates, however, found only about eight out of 100 financial advisers are women. Those stats haven’t budged much for years, even though the Bureau of Labor Statistics projects that the investment industry is expected to grow more than 30 percent this decade.

William J. Rolser of Aeon Wealth Management in Sterling says his firm would love to hire a female financial adviser — if it could find one. “Since entering the industry in 1995, the lack of women advisers has been an ongoing topic,” he says.

Salomon, whose Richmond firm manages $800 million in assets, says one reason for the dearth of female advisers may be the entrepreneurial and highly competitive nature of the work. Rolser concurs, saying that many firms in this male-dominated industry emphasize short-term results rather than the forging of long-term relationships, which can be a turnoff to many women.

Being a financial adviser is also a demanding job.  “It’s not like being a teacher,” says Blisk, who has been in the business for 29 years and runs a firm managing $380 million in assets. “It takes a full, 12-month focus. It’s like running a doctor’s practice, when people need to talk to you NOW.”

Kim, whose firm manages about $950 million in assets, is perhaps more blunt about why female financial advisers remain a minority.

“Many women are people pleasers,” she says, and that trait can be at odds with the service that financial advisers are paid to provide.

“I’m a Type A,” Kim says. “I have no problem telling clients what to do. I see myself as their money personal trainer.”

NoVa sees incremental gains in 2015

Northern Virginia’s commercial real estate market still is overcoming the outsized effects of sequestration, but the pace of expansion this year picked up in some areas.  And as the region heads into 2016, things are looking more positive, thanks to a recent deal on the country’s budget.  

Congress agreed to a spending plan in October that one real estate analyst describes as “a sigh of relief and a step in the right direction.” 

Scott Homa, senior vice president of Mid-Atlantic Research for JLL, says the two-year federal budget that removes more than $80 billion in sequestration cuts is an encouraging sign to NoVa tenants and government contractors who have faced an uncertain environment since budget austerity began in 2010. “Having some meaningful increase in the budget is a good thing for those groups, and the downstream effect it would have on the office market is a positive,” says Homa.  

As of the third quarter, JLL reported that NoVa had 319,221 square feet of absorption (the net change in occupied space over a given time). Homa expects that trend will make 2015 the strongest year since 2010. “We’re starting to see gains across more diversified sectors of the tenant base, outside of government contracting,” he says.  McLean-based Capital One Financial Corp. continues to expand along with technology firms and shared workplace providers.

However, recovery in the region remains not only sluggish but also spotty. In some areas, new office buildings, retail outlets and housing options are in the pipeline. In others, construction is next to moribund.  

The magic pill? Metro accessibility. When markets have access to Metro stations, especially those with mixed-use amenities, vacancy rates are dramatically lower, in most cases, than in markets where Metro is not an option.  

For instance, market reports from several real estate companies were showing overall office vacancy rates for Northern Virginia, in ranges from 14.8 to 20 percent in the third quarter. Yet in certain pockets, such as the Eisenhower Avenue section of Alexandria in the I-395 corridor, CoStar Group Inc. reported a vacancy rate of 4.3 percent for top-tier, Class A office space.

The National Science Foundation has signed a lease to take 700,000 square feet of space on Eisenhower Avenue in 2017. Another large federal lease on Eisenhower Avenue, 625,000 square feet for the Transportation Security Administration at Victory Center I near the Van Dorn Metro stop, was voided by a federal court last month in response to a lawsuit filed by Boston Properties, which had filed a bid for the lease at another competing site. In the suit, Boston Properties raised challenges about environmental issues at Victory and the General Service Administration’s selection process.

The Eisenhower section is one of five subsectors of the Alexandria/I-395 corridor, with vacancy higher in some of the other sectors. Yet, it makes the point about Metro. 

“Ninety-two percent of all leasing activity is within a half mile of Metro or planned Metro stations,” says Homa. He adds that as of the third quarter, 37 percent of the NoVa market not served by Metro captured just 8 percent of leasing activity.

In lockstep with this demand for Metro access is a shift in what commercial tenants find desirable. “Walkability, urban environment, you pick your buzzword,” says David Gast, executive vice president of Colliers International.  In the past five years, some office parks have fallen out of favor, replaced by a call for commercial space mixed with housing, retail and entertainment options within a single setting.

Tysons goes more residential  
Tysons is a prime example. Even though CoStar reported that Tysons had an overall vacancy rate of 19.5 percent in the third quarter, large-scale builds, nevertheless, are going up in areas close to the new Silver line Metro stations.

One of the biggest is the Boro, located about a quarter of a mile next from the Greensboro station.  The first phase of this joint undertaking of the Meridian Group and Kettler should break ground next summer. It will encompass 626 apartments, 124 condos, 223,000 square feet of retail and 400,000 square feet of office space. Those 1.4 million square feet will feature a 70,000-square-foot Whole Foods store, slated to open in 2018, and a 15-screen movie theater. Eventually, the complex is expected to expand to 3.7 million square feet spread across 18 acres. “The Boro is creating that sense of place that people want,” Gast says.

Michael Caplin, president of the Tysons Partnership, whose members include Fairfax County representatives, landowners, businesses and residents of Tysons, says the Boro will be self-contained, and he points to other Metro-centric projects at Tysons pursing the same integrated agenda.  

The Macerich Co., for example, has approval to add several more residential and office buildings at its 60-acre Tysons Tower site. It already has a Hyatt Regency hotel, a residential tower, retail outlets and a pedestrian plaza. Lerner Enterprises, which should deliver the 476,913-square-foot Corporate Office Centre at Tysons II by early next year, also plans to erect two new residential towers on the same 50-acre plot across from the Galleria shopping mall.

Tysons may not have been envisioned as a traditional city, Caplin says, but with 500 to 1,000 residential units anticipated to come on line there annually in the foreseeable future, what was once a 2,000-acre office park could become a network of urban villages.

More of an urban mix for Rosslyn
Inside the Beltway, the most ambitious venture is linked to Metro as well: JBG’s Central Place near the Rosslyn station in Arlington County. JBG should open a half-million-square-foot office building there in 2017, followed by a residential tower with 377 residences in 2018. The enterprise includes 45,000 square feet of retail space and a 17,000-square-foot public plaza, envisioned as a venue for community events.

Rosslyn has had a reputation as a sterile office canyon, similar to Crystal City, yet this expansion represents a crucial move toward an “urban mix,” says Mary-Claire Burick, president of the local business improvement district.
Elsewhere in Arlington, Christina Winn, director of business investment for the county’s economic development office, says the $200 million to $300 million redo of the Ballston Mall will enliven its neighborhood, too, as the shopping center is “turned inside out” to make it more street friendly. A 27-story residential building linking the Kettler Capitals Iceplex and the mall should further merge the neighborhood’s residential, retail and entertainment elements. All this is taking place near the Ballston Metro stop.

Back outside the Beltway, the biggest news after Tysons comes from Loudoun County.  Buddy Rizer, executive director for Loudoun economic development, says the county collected $1.3 billion in commercial real estate taxes in fiscal 2015, a 459 percent increase over the previous year. Much of that good fortune comes from the expansion of data centers, and that growth looks to continue. In October, Northern Virginia became the No. 1 data center market in the country for 2015, moving ahead of the New Jersey/New York region, with nearly 20 percent of the market share, according to JLL.

That same month, Equinix broke ground on a $2 billion data and technology campus near the Loudoun County Parkway. Before year’s end, Rizer promises the announcement of another unnamed tech campus in the $2 billion range.

Waterside – Loudoun County’s future edge city?  
Another bright spot for Loudoun is Waterside, which Loudoun County Supervisor Ken Reid describes as “a future edge city.” It will be located on a 355-acre industrial property near the intersection of Route 28 and the Dulles Toll Road.

In a build-out expected to take 25 to 30 years, Waterside eventually should offer 3.8 million square feet of commercial use space and be home to more than 2,500 condos and apartments. It will be served by the future Route 28 stop on the Silver line.

The enterprise has cleared all the regulatory hurdles necessary for groundbreaking, yet work there probably won’t begin for several years. Ed Hoy, president of Chantilly Crushed Stone, which owns the property, says his company has commitments to complete before construction can commence — including supplying materials for the Metro expansion. Furthermore, the quarry at the site probably will take eight to 10 years to flood to make a lake — the “water” in Waterside’s name.

But what’s the rush?  Like other big projects in the region, one of the reasons  Waterside won county approval was its promised access to Metro. Earlier this year, the transit authority announced that the opening of the second phase of the Silver line would be delayed. With an expected opening in 2019, Waterside’s builders will have at least four years to fine tune their ambitions.

The triple-net guys

When Jonathan W. Hipp, founding president and CEO of the commercial real estate firm Calkain Cos., is asked to pick one word to describe the reason for his success, he doesn’t hesitate: “Persistence,” he says. “I keep on pushing.”

His clients can attest to that.  Back in the mid-1990s, when Hipp was a broker at Grubb & Ellis in Tysons Corner, John L. Gibson III was building Advance Auto stores in the Tidewater area. Hipp decided that he wanted to sell them for the developer, so he cold-called Gibson. No response. But, Hipp kept on calling and then drove down from Northern Virginia to see Gibson in person. The developer was impressed by the broker’s commitment, and they struck a deal. “We’ve had a fantastic relationship ever since,” Gibson says. “His work ethic speaks volumes.”

These days, Gibson’s dealings with Hipp are through Calkain, the company that Hipp and his partner, David Sobelman, founded in 2005 to focus on a class of real estate known as single-tenant, triple-net leases.

The term is applied to leases in which solo tenants are responsible for paying the taxes, insurance and upkeep (the three “nets” or NNN) on the properties they are leasing. These long-term tenants tend to be nationally known retail chains, such as drugstores, convenience stores, dollar stores, and fast and casual food restaurants such as Wendy’s and Hooters. Health clubs, day-care centers and dollar stores are other examples of common NNN leases.

“No one else in the entire country was hyper-focused on that one property type,” Sobelman says. “We did not create the industry, but we professionalized it.”

“I wanted to become the go-to guy in Virginia for triple net leases,” Hipp says. “Then the go-to guy for triple-net leases in Maryland. I decided to become a one-trick pony.”

Today, less than a decade after Hipp and Sobelman started out in Reston as two optimists in an empty office that didn’t even have phones, Calkain has grown to nine offices nationwide, 40 employees and $10 billion in net-lease investment sales. The firm offers brokerage, consulting and investment services for private and institutional clients, in Southeastern states such as Virginia, Florida and North and South Carolina. Its asset management unit recently reached $100 million. To accommodate its expansion, Calkain recently moved to a larger space in Herndon where 21 of the company’s staff members work.

Hipp hopes eventually to open offices in California, Chicago and Texas. “We don’t want to be the biggest [in our field], but the most dominant,” he says.

Hipp describes a triple net lease as being like “a bond wrapped in real estate.” Like a bond, the lease is low risk and long term, usually 10 to 15 years. It offers a steady return, although not as high a one as more volatile investments, such as stocks.
Unlike a bond, though, at the end of the day, the holder of the NNN lease owns a tangible asset — usually prime property — which almost always appreciates, even if a lease expires or a tenant defaults.

Some of the most common buyers of NNN leases are people involved in retirement or estate planning who want a reliable, predicable income without having to field a lot of phone calls. A client with a net worth of $15 million to $30 million typically buys a property valued at $2 million to $5 million, says Sobelman.

About 30 percent to 50 percent of Calkain’s business involves 1031 exchanges. Under this model, the IRS allows a seller of a commercial property to defer long-term capital gains for six months. Calkain subleases the property to a qualified intermediary who holds the money until the sellers can reinvest in a new property — in Calkain’s case, almost always a triple-net lease.    

Nancy Miller, a senior vice president of Bull Realty’s National Net Leasing Group in Atlanta — a Calkain competitor —  says about  half of her NNN lease buyers are able to pay cash, while the rest take advantage of low interest rates to find favorable financing.
“This sector has a higher demand than I’ve ever seen,” she says. “Sellers are getting top dollar, and the supply and demand curve are fighting one another. With so many people in the market, it is difficult to find quality property and be first at the table.”

Part of that increased demand is coming from real estate investment trusts, known by the acronym REIT. The minimum  investment by a REIT used to be about $20 million, says George Renz of Renz & Renz real estate brokerage in Gilroy, Calif., another Calkain competitor.  Now, the floor has dropped to $5 million. “We’ll have to see what happens when interest rates go up,” he says. “Values may take a hit.”

Miller and Renz speak well of Calkain.  The company “hires solid brokers, not newbies,” Miller says. “They have a fine reputation.”

“Calkain is successful because of its ultra-specialization,” Renz says. “They almost exhaust the category [of NNN leases]. I give their ‘Little Book of Triple Net Leasing Investing’ to my customers.”

Indeed, Hipp and Sobelman are renowned as NNN-lease experts. Last March, Sobelman was tapped to co-chair the International Council of Shopping Centers’ first-ever conference on that investment class. In September, he was a keynote speaker at the ICSC’s Western Division conference in California.

Meanwhile, Calkain’s business keeps growing. In August, the company signed a brokerage agreement to sell eight Northern Virginia Burger Kings valued at $20 million, and it also recently listed an $8.8 million property in Stafford anchored by Chipotle and Verizon.  In June, it made headlines by selling a CVS drugstore in Tysons for a record $24.7 million — or $1,915 per-building-square-foot — to Rappaport, a commercial real estate company that normally focuses on shopping centers.

“Jonathan helps me understand the value of properties on the market,” says company founder Gary D. Rappaport. “My investment was made on the security of the tenant, the knowledge that I could replace that tenant and the long-term recognition that that corner can only get better.”

All this pursuit of dominance in the NNN lease arena doesn’t leave Hipp, in his early 50s, with a lot of room for recreational pursuits, though. “Free time, what’s that?” he says.

Nonetheless, the broker, who lives in Lansdowne with his wife, two children and two rescue dogs, makes time to give back to his community. In October, Calkain held a black-tie dinner and auction at Salamander Resort and Spa in Middleburg to raise money for the training of service dogs for wounded veterans and other people with disabilities.

“Jonathan is one of the good guys,” says Rappaport. “He understands the importance of telling the truth, which fosters long-term relationships. He understands that if you want to be a good businessman, first you have to be a good man.”

A star patient

At a time when commercial real estate is still bouncing back in the slow-growth economy of recent years, the medical sector has been a star patient.

In the state’s three largest markets — Richmond, Northern Virginia and Hampton Roads — projects ranging from hospital expansions to medical offices and urgent-care centers have become key drivers for growth.

One reason for the vitality of health-care facilities is the aging of the baby boomers. This large cohort of the state’s population — pegged at more than 3 million by the website Suburban Stats — is in need of more health-related services now, and that demand will only grow in the next couple of decades.

In addition, as of February, the U.S. Department of Health and Human Services reported that more than 385,000 formerly uninsured Virginians now have access to medical care through the Affordable Care Act, another number that’s expected to rise.

These demographic changes are like a shot in the arm for health-care real estate assets, which include hospitals and related facilities such as doctors’ offices, outpatient satellite clinics and assisted-living and rehabilitation facilities.

“We’re bullish on medical properties,” says Louis Rogers, CEO of Capital Square Realty Advisors in Richmond. He explains that doctors not only make good tenants, they are in a recession-resistant business. People get sick in good economic times and bad. His company’s portfolio includes medical office buildings and drugstores nationwide, including four properties in the Richmond area.

Last year, in a typical transaction, Capital Square bought the 20,000-square-foot Virginia Women’s Center in Mechanicsville from the doctors who had built it and then leased the property back to the OB-GYN practice.

Rogers says many doctors prefer to invest in their practices rather than in property, yet some elect to be their own landlords. Richmond Nephrology, a practice of kidney specialists, paid $1.9 million for a vacant Centura College building on West Broad Street in Henrico County. After renovations, the practice plans to move into the 25,000-square-foot structure in December. It will occupy about 5,000 square feet and lease the rest.

Demand for new medical office space is expected to remain strong. “Doctors’ offices are full,” Rogers says, “and we are anxiously acquiring more.”

The Short Pump corridor in Henrico is seeing lots of medical office buildings — not as standalone developments but as part of mixed-use developments.  For instance, the first of three buildings in the West Creek Medical Park at the Notch development near the Goochland County line opened in March.  The 66,000-square-foot Medarva Stony Point Surgery center located in a 230-acre project that’s projected to have apartments, retail, other office buildings and a hotel when it is built out. The developer, the Henrico-based Lingerfelt Cos., has constructed nearly a million square feet of medical office buildings in the region during the past five years.

Urgent-care centers also are emerging as a popular real estate asset, and they’re seeing a parallel increase in patient visits. In response, Chippenham and Johnston-Willis hospitals in Richmond, part of the Hospital Corp. of America (HCA) chain, recently closed a deal to build an $10 million emergency clinic on Hull Street Road in front of the Hancock Village shopping center in Chesterfield County. The 11,500-square-foot clinic, which should open in the first quarter of 2016, will have separate entrances for adult and pediatric patients, a CT scanner and a “telemedicine” link to the hospital to provide clinic patients immediate access to specialists.

Hospital CEO Tim McManus says the location was based on where population growth was occurring. “Minutes matter,” he says. “We are creating an alignment farther out into the community so that people don’t have to come into the hospital.”

If they do need to come to the hospital, though, they now can be transported by helicopter. McManus says a record 100,000 patient visits to Chippenham and Johnston-Willis in 2014 led the hospital to add a helipad late last year. Next up, it hopes to expand its emergency room and add beds.

In Northern Virginia, HCA also is on the move in areas where the population is surging. In southern Loudoun County, where thousands of houses are being built along Route 50, the health-care system will open the $147 million, 230,000-square-foot StoneSpring Hospital Center later this year.

Also expected to open this year in that area is a $31 million 50,000-square-foot “healthplex” built by one of HCA’s rivals, Inova. The Ashburn facility, located seven miles from the StoneSpring Hospital, will include a 24-hour emergency room, diagnostic imaging center, labs and doctors’ offices, but no inpatient beds.

Neil Rolfes, Inova’s associate vice president of strategic planning, says the Ashburn center is just one example of Inova’s burgeoning investment in NoVa. Another is its nearly complete $400 million women’s hospital tower at the Inova Fairfax Hospital in Fairfax County. In addition, fundraising continues for a $4.5 million modernization and expansion of Inova’s hospital at Lansdowne in northern Loudoun.  Inova also is looking at three sites for new urgent-care centers in the region.

In Mount Vernon and Tysons, Inova is undertaking a joint venture with Sunrise Senior Living to develop assisted-living facilities, and it continues to expand its physician’s offices, with 22 locations for primary-care doctors and 50 for specialists. “The big trend is to grow medical groups by acquisitions and acquiring new doctors,” Rolfe says.

Inova’s most ambitious undertaking, however, will be the development of the former ExxonMobil campus near its Inova Fairfax Hospital. The health system is in the preliminary stages of developing 1.2 million square feet at the 117-acre site, which will feature a cancer center, a personalized medicine research institute and IT space.

Northern Virginia is seeing lots of growth in population. The 2010 Census found a 23 percent increase in the region’s population since the previous census, and projections are for a 15 percent increase for a population of nearly 3 million by 2020.

The surge has helped fuel an equally ambitious agenda for another competitor to HCA and Inova, North Carolina-based Novant Health. Melissa L. Robson, president of Novant’s Northern Virginia Market, says her company is focused on operating “a network of care” in the region, and the rapidity and intensity of its expansion, particularly in Prince William County, is evidence of the seriousness of that intent.

Last year, Novant opened a $100 million, 60-bed hospital in Haymarket along with a nearby ambulatory surgical center that it runs in partnership with physicians based in the community. It also opened a small cancer treatment facility three miles away in Gainesville.

Less than 10 miles from its Haymarket Medical Center, Novant is in the midst of a $38 million renovation of the 50-year-old Prince William Medical Center in Manassas, which it bought in 2009. The “refresh and modernize” effort will feature a new façade to allow for separate corridors for patients and visitors, more conference rooms and a new chapel.

Other expansions include an express-care clinic in Warrenton, which opened in September, staffed by a nurse practitioner, and an urgent-care facility to open in Bristow in early 2016.

Like Inova, Novant is intent on acquiring medical groups. “Four years ago we didn’t have any medical groups,” Robson says. “Now we have 80 providers,” including the recently acquired Bull Run family medicine, just a 10-minute drive from Novant’s two Prince William hospitals.

In the state’s other large population area, Hampton Roads, the medical sector of the real estate market had been dormant until recently.

“For 10 years we didn’t see any real growth, but now new units are coming in,” says Robert M. Thornton, senior vice president of Cushman & Wakefield |Thalhimer. In June, Thornton’s company handled a $1.1 million land purchase in Yorktown for Smith/Packett Med-Com, which will build a 102-unit senior-living facility on the site.

The location of The Crossings on the Peninsula was chosen for its proximity to a hospital complex and because of the many retirees moving into the area. “Boomers don’t see themselves as old yet,” Thornton admits, and “many remain intent on staying in their homes.”

Reality, though, will have a way of changing that. “We’ll be adding supply,” Thornton says, “at the rate of the demand.”

International presence

A couple of years ago, George Mason University received a by-invitation-only opportunity to expand its operations overseas when Songdo Global University came a-courting.
Songdo is a new and growing conglomerate of institutes of higher learning located about 35 miles from Seoul, South Korea. So far, the State University of New York, the University of Utah and Ghent University, along with South Korea’s Yonsei and Incheon universities all have branches on the campus. The well-regarded music school, the St. Petersburg Conservatory, is expected to be the next to arrive.

“Songdo is bigger than any particular institution,” says Solon J. Simmons, GMU’s vice president for global strategy. “It is like a luxury department store where Korean students can find all the best offerings in one place.”

Mason Korea, at least for now, is small and self-sustaining and uses no Virginia money. Courses are limited to global affairs, management and economics. Its first class was offered just last spring. All of its students will spend a year abroad at one of Mason’s Northern Virginia campuses.

Mason is taking it slow at Songdo, perhaps keeping in mind its previous attempt at an overseas operation in the United Arab Emirates. That effort was unsuccessful in attracting students and closed in 2009 after just three years.

Mason’s first Songdo class has only 34, mostly Korean, undergraduates, though this fall semester’s class is expected to reach 200.  Simmons envisions as many as 1,000 students at Mason Korea in five to 10 years.

Songdo Global University is one element of an ambitious work in progress called the Incheon Free Economic Zone, which hopes to become a hub of world commerce and technology. The zone is located about 20 minutes from an international airport, which is expected to help Mason Korea draw students from across Asia and the globe. “We haven’t cracked the China market yet,” Simmons admits, “but we have American students and Korean ex-pats.”

Songdo is “an opportunity to get the Mason brand recognized worldwide in ways that are disproportionate to GMU’s name recognition back home,” Simmons says. “It is Mason’s high-profile adventure in Korea.”

An ‘extroverted campus’

George Mason University does not believe in the ivory tower. The old image of a lofty institution of higher learning isolated from the practical realities of life is contrary to its mission. Its goal is to be not only a “comprehensive research university” but also “an innovative and inclusive academic community committed to creating a more just, free and prosperous world” — with emphasis, perhaps, on the “prosperous.”

From its beginnings in 1957, as a branch of the University of Virginia with 17 students attending classes in a renovated elementary school in Arlington County, and its subsequent founding as an independent state university in 1972, GMU has transformed itself beyond recognition. It now has about 33,000 full- and part-time students — more than any other four-year public Virginia school — and campuses in Arlington, Fairfax, Loudoun and Prince William counties. Last year, GMU went international and opened a fifth campus in South Korea (see story).

Much of its remarkable expansion can be attributed to its adamantly outgoing attitude.  “We are an extroverted campus,” says economist Stephen S. Fuller, director of the university’s Center for Regional Analysis. “The university set out to be connected to the various communities, and it uses the real world in the classroom.”

That connection has been mutually beneficial to Mason and Northern Virginia. In the latest available figures from a study done by Fuller’s center, the university had a $1.14 billion economic impact on Northern Virginia in fiscal year 2012 and employed the equivalent of 7,119 full-time workers. Indirectly that year, it produced another $440 million in economic activity and supported an additional 5,897 jobs. In Virginia overall, it had a $1.56 billion impact and was responsible for more than 16,000 jobs.

Two presidents
The university’s development is due largely to dynamic longtime presidents George W. Johnson (1978-1996) and Alan Merten (1996-2012). Both sought to entwine GMU with Northern Virginia’s economy by forging lasting partnerships with business leaders. Under the presidents’ consecutive tenures, the student body and the physical infrastructure of the university expanded. Mason, once considered a commuter school, became a well-regarded institution, no small feat for an upstart university.

The two presidents brought about these changes, in part, by pursuing A-list faculty. The university wasn’t shy about “stealing” talent from the likes of Harvard, MIT and Stanford, Fuller says. And these scholastic stars were willing to be recruited because GMU gave them freedom to pursue their interests. “[GMU] didn’t tell them what to do,” Fuller says. The university “took a facilitating approach and got out of their way.”

The university’s biggest gets included  James M. Buchanan, a 1986 Nobel Prize winner in economics, and Vernon Smith, who would win the same award in 2002 after being recruited by GMU. Smith would go on to be an influential fellow at the Mercatus Center, the university’s free-market economic think tank in Arlington. That center’s raison d’etre is, not surprisingly, in perfect keeping with Mason’s overall mission: to narrow “the gap between academic ideas and real-world problems.”

Angel Cabrera, who became GMU president in 2012, is committed to building on the framework erected by his predecessors by continuing the push for quality and the furthering of Mason’s relationships with the business sector. He has put the creation of a roadmap to guide the region’s economic growth at the top of his agenda, and a little more than a year ago, he brought in David Wu as provost to assist him. Wu is clear on where to put his energies. “First,” Wu says, “we see ourselves as a magnet for and a producer of human capital.”

Landing Northrop Grumman
Northern Virginia’s prosperity is driven by white-collar and high-tech companies and government contractors, including an enviable number of Fortune 500 corporations. Wu intends to further strengthen academic programs that best align with the needs of these businesses, with a special concentration on IT, the biosciences, law and economics. Cybersecurity also is a potentially huge market for Mason. Right now, positions in that field are going unfilled because companies can’t find qualified personnel.

Northrop Grumman’s decision to locate its headquarters in Fairfax County five years ago showed just how important the synergy between higher education and the local economy can be. In 2010, the corporate giant wanted to relocate to the East Coast, and it was being courted by a number of eager jurisdictions.

Gerald L. Gordon, president and CEO of the Fairfax Economic Development Authority, contacted GMU’s Merten for help in pleading the county’s case. Merten arranged for Wes Bush, Northrop Grumman’s CEO, to visit GMU so that he could see that the university could support the company’s recruitment needs.

The effect of the visit? “Enormous,” Gordon says. Northrop Grumman is now headquartered in Fairfax County near Falls Church. 

Half in graduate school
Undoubtedly, thanks to Merten’s help, some Mason graduates now work for the giant defense contractor, which has 65,000 employees worldwide. Mason graduates, in general, do well in finding employment. Christine Cruzvergara, the assistant dean and deputy director for University Career Services, says that within six months of graduation, 74 percent of the class of 2014 had either snagged jobs, at an average annual starting salary of $40,000-$50,000, or were in grad school. More than 75 percent stayed in the metro area, a testament to how well their schooling fit the available job opportunities.

Fully half of Mason students are enrolled in graduate programs, an unusually high ratio compared with, say, the University of Virginia, where undergraduates outnumber graduate student by more than 2-1.  That’s because so many GMU students are older — the average age is over 30 — and already working. Many return to school to “upskill” their credentials in order to stay current and advance in their fields. “The ability to process knowledge is rapidly changing,” Fuller says, and George Mason is there to help them keep pace.

SWAT team for businesses
Wu says his second priority for Mason is to reinforce its role as “a convener, an honest broker in pursuit of the greater good of the region.” Fuller calls it “being a SWAT team for local businesses.” 

Since Cabrera became president, the university has stepped up its interactions with area businesses, interviewing CEOs and holding workshops with venture capitalists and other players in the Northern Virginia economy. The emphasis is on “what innovations are needed to fill the vacuum left by federal cuts and to develop entrepreneurship,” Wu says. The university’s last business forum drew 200 to 300 attendees.

Wu’s final priority is probably the most visible one of late: “to become an innovation and development engine for the region.”
To further that end, in April the university rebranded its Prince William campus as a science and technology center, and in conjunction with the name change opened the $40 million Institute for Advanced Biomedical Research on the campus.

The Mason Enterprise Center in the Fairfax campus has been helping to incubate a variety of businesses for years and now operates in several locations, and the new institute will play a parallel role for scientific startups. 

Mason, in partnership with area hospitals and medical centers, intends for the institute to speed the development of medical devices and diagnostic and therapeutic procedures to the marketplace, Wu says.

Inova Health System is one such partner. “The economic benefit of joint investment is substantial,” says Brian Hays, director of the Inova Center for Personalized Medicine. “People don’t realize the extent of cooperation. It’s actually very broad, and we anticipate a giant increase in that relationship.”

The new biomedical research institute joins other advanced   research facilities on the Prince William campus that focus on personalized medicine, including the Center for Applied Proteomics and Molecular Medicine and the Center for the Study of Genomic Liver Diseases. The campus is also the site of other high-tech research facilities such as the Serious Games Institute.

GMU’s Volgenau School of Engineering’s 6,000 students specialize not only in traditional fields such as civil and mechanical engineering, but in 21st-century technologies such as bio-engineering and cybersecurity.

“Engineers don’t just design cars anymore,” says Dean Kenneth Ball.  Instead, they do cancer research using lasers and learn how to testify in court about computer fraud. “The old boundaries between disciplines are starting to become irrelevant,” he says.

Each of the school of engineering’s eight departments has an industrial advisory board to help shape curricula. Northrop Grumman, for example, was heavily involved in the creation of a new bachelor’s degree program in cybersecurity engineering, which began in January with 100 students. GMU offers 13 specialties in cybersecurity, and its Center for Secure Information Systems, the nation’s first such academic center, works on dozens of joint research projects with the Navy, the Marines, the Army and the Department of Defense.

“Having a university willing to embrace an entrepreneurial way of thinking can’t be underestimated or understated,” says Jeff Kaczmarek, executive director of the Prince William Department of Economic Development.

See related story about GMU's Center for the Arts

Knockout performances

George Mason University’s Center for the Arts hosted five days of boxing matches on its flagship Fairfax campus this summer. Hardly a typical booking, but it was a special occasion: Northern Virginia was hosting the World Police and Fire Games.

“The ring looked good up there,” says Rick Davis, the dean of the College of Visual and Performing Arts and the executive director of Mason’s other arts complex, the Hylton Performing Arts Center on the Prince William campus.

Hosting an athletic event might have been outside the box for a performing arts center, but it was in line with Mason’s commitment to serving the region. The university’s arts centers, for example, provide venues for the Fairfax Symphony and the Manassas Ballet.

For 25 years, the nearly 2,000-seat GMU Center for the Arts has provided Northern Virginians with a convenient alternative to driving to Washington, D.C., to see nationally known performers.

The GMU Center was joined five years ago by the 1,100-seat Hylton Center, a joint project of the university, Prince William County, the city of Manassas and the commonwealth. The Hylton has a 240-seat family theater, too, which is available for special events.  “We’re a friendly rental,” Davis says. “We view ourselves as partners.”

Most of the arts centers’ patrons live within a 10-mile radius of the venues, Davis says, and about 350,000 come through the doors annually. 

In the latest available figures compiled in a 2010 study by the nonprofit Americans for the Arts, direct spending by nonprofit arts and culture organizations and their audiences in Fairfax County alone totaled almost $80 million, bringing $1.65 million into local government coffers.  Mason’s share in those statistics wasn’t quantified, but, obviously, art centers are doing their part to punch up the local economy.