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byline: M.J. McAteer

Wrapping up bargains

Outlet malls used to be a dumping ground. They were a place where major retail chains sent odd lots and flawed merchandise.  Shoppers had to cull through a lot of poorly displayed dreck on the chance of scoring a designer jacket at a deep discount.

Today, these malls are the hottest success story in retailing, both nationwide and in Virginia. They’re still a place to find bargains, and they are much more high-end.

Since 2006, 50 new outlet malls have opened across the country, according to Linda Humphers of the International Council of Shopping Centers. Compare that with the paltry three regional malls built during the same time frame.

Jeffrey Was, president of the Was Group — a real estate consulting firm that represents landlords and retailers nationwide — says he knows of 30 outlet malls in the pipeline now, making continued growth a given for this sector during the next few years.

Virginia currently has three major outlet centers: Potomac Mills, a 220-store mega mall in Woodbridge that mixes straight retail with discounters; Leesburg Corner Premium Outlets (110 stores); and Williamsburg Premium Outlets (135 tenants).  A fourth, the plain Williamsburg Outlet Mall, closed in 2013.

“It got old and outdated,” says Tony Nero, president of development for Armada Hoffler Properties in Virginia Beach. Nero’s company is razing the old 230,000-square-foot mall and replacing it with a traditional suburban shopping center anchored by a Harris Teeter supermarket.

Two more on the way
Yet that outlet mall’s demise is an anomaly. In fact, in Maryland, just across the Potomac River from Alexandria, Tanger Outlets opened in late 2013 at National Harbor and now has about 85 tenants with plans to expand. Two more outlet centers also are in development in the commonwealth.

Simon Property Group, the country’s biggest player in this area of retailing, owns 70 outlet malls in the U.S., including all three in Virginia. It is currently in negotiations to build a fourth, $75 million mall in Norfolk, at the site of the now defunct Lake Wright Golf Course, which abuts Virginia Beach.

Les Morris, director of corporate public relations for Simon Property Group,  says his company does not have a date to start construction, and he provided no particulars.  All the tax revenue from the mall would go to Norfolk, while initial parking and plans for access roads around the mall fell on Virginia Beach property, causing a dustup between the two localities. In an effort to keep Virginia Beach politicians out of the mix, Norfolk revamped sections of the project to bypass Beach property, although the route on one access road is still to be determined.

Simon’s outlet malls typically have about 90 stores, and an occupancy rate of 96.5 percent or better.  That’s higher than the 93 percent national occupancy rate for open (as opposed to enclosed) shopping centers in 2013, reported by the Institute of Real Estate Management (IREM).

According to an overview Simon presented to the Norfolk City Council, the Lake Wright development should generate at least 300 construction jobs and 800 retail jobs and produce estimated annual tax revenues of $3.3 million.

The other outlet project in the works in Virginia is the 350,000-square-foot The Outlets at Richmond near the Bass Pro Shops off Interstate 95 in Hanover County. It falls into the typical size range for outlet malls these days. Costar, a commercial real estate research and analytics company, reports that in 2009 outlet malls averaged 270,000 square feet. By the end of 2012, that size had ballooned to an average of 380,000 square feet.

Groundbreaking on the project has been delayed by land issues, but the developer, California-based Craig Realty Group, expects to begin construction in 2015. The mall is projected to have at least 75 stores, which probably will include retailers such as Nike, Coach and Tommy Hilfiger, which are regular tenants at other Craig properties.

High sales per square foot
What makes outlets so “white hot,” as Was describes them? The obvious answer is money. The International Council of Shopping Centers reports that a square foot of outlet space at a mall generates an average of $532 in sales, while a regional mall generates an average of $480 per square foot. This elevation of outlets’ earnings has come about thanks to a uniquely American trait: the talent for reinvention. 

As recently as 20 years ago, the stock-in-trade of outlets was seconds and wrong-sized or faulty merchandise, Was says.  “The outlets were a dumping ground for retailers,” he says bluntly.

Although outlet malls still target savvy bargain hunters, known in the industry as “value shoppers,” for the past decade or more they have been luring them with promises of a much more high-end experience. Today shoppers have a pick of first-quality products and lots of designer and luxury goods. 

Upscale department-store retailers such as Saks, Nordstrom and Neiman Marcus have followed the money, moving into discounting in a big way. Costar reports that the number of retailers with outlet stores grew since 2008 by nearly14 percent, to about 15,000. Nordstrom, for example, was planning to open only one full-service department store in the country this year, but Costar predicted that it could add as many as 60 off-price Nordstom Rack stores by the end of 2015. 

Today’s outlet malls rely heavily on brand-name stores, such as DKNY, Jones of New York, Ann Taylor, Brooks Brothers, Burberry, Theory, Kate Spade and Michael Kors. That trend toward fashion labels is going to continue.

“We are seeing a bigger influx of new brands that want to open in outlets,” Humphers says, adding that about 85 percent are apparel companies. “We’ve added 40 or 50 brands in the past couple of years,” she says, and even more high-end retailers are on the way, such as jeweler David Yurman; couturiers Tom Ford and Alexander McQueen; and European luxury good purveyors such as Tod’s and Brunello Cucinelli.

Upscale amenities
Amenities are going upscale, too.  At Potomac Mills, General Manager Sam Hosn says new restaurants include Bahama Breeze and the Cheesecake Factory. At Tanger, General Manager Juan Carlos says customers can dine at Johnny Rockets or take a short shuttle ride to National Harbor’s array of steakhouses, seafood restaurants, and Italian and Thai restaurants.

“Amenities are huge,” Morris says. Simon is pushing to provide healthier and varied eating options at its outlet malls, such as Great Salads, Green Leaf’s and Far East Asian Fire. Other common upgrades include renovated restrooms, children’s play areas and bag stores to provide shoppers with a convenient way to haul home the loot.

Increasingly, those shoppers won’t have to travel as far anymore to get to outlet malls, either. Once upon a time, discounters kept their distance from regional malls so as not to cannibalize their business.  “The old model was to have outlet malls located 45 minutes outside city centers,” Morris says. “Now, more are being located in denser areas.” That move represents a shift in the targeted demographics of outlet shoppers. While tourists continue to be the mainstay, tapping into the permanent population has become the new growth area.

Yet with all these upgrades can outlet malls still provide deals this holiday season? And what about e-commerce? Why fight the crowds when consumers can find discount deals online?

Not surprisingly, mall managers say deals are still to be had at outlet stores. Hosn, who expects a 3.8 percent increase in business for the holiday shopping season, says 70 percent off is not uncommon at Potomac Mills, while Carlos says everyday discounts combined with special promotions can mean as much as 75 percent off at Tanger Outlets. Morris cites discounts of 25 percent to 65 percent off at the Leesburg and Williamsburg outlet centers. Was, however, says that “prices are not dirt cheap now, not a giveaway.”

Regardless of whether shoppers can get a steal anymore, outlet malls expect to be bustling this holiday season. The thrill of the hunt for high-end goods at low-end prices is a lure that value shoppers just can’t resist.

Hot jobs of the future

What are the hot jobs of the future?

In Virginia, plenty of openings are expected in health-care support and STEM occupations.  That means work for scientists, actuaries, nurses, and home-health and personal-care aides.

STEM-H stands for science, technology, engineering, math and health. It’s an acronym people will be hearing a lot as Virginia prepares for employment growth.

By 2022, the commonwealth expects to add 534,207 jobs to its workforce, many of them skilled, well-paid positions in high-tech fields. To prepare, the state is taking deliberate steps now to ensure it will have workers with the skills to fill and keep those positions. 

In August, Gov. Terry McAuliffe issued an executive order directing state agencies to “take immediate action to marshal the commonwealth’s education and training resources” to meet the shifting demands of the workplace. His initiative puts particular emphasis on generating 50,000 so-called STEM-H credentials — licenses, apprenticeships and associate degrees.

Secretary of Commerce and Trade Maurice Jones estimates that in the coming decade at least 50 percent of Virginia’s jobs will require “these sorts of technical know-how.”

McAuliffe’s directive comes with a sense of urgency not always associated with bureaucratic undertakings. By late October, agencies, including the Department of Labor and Industry, the Virginia Economic Development Partnership and the Virginia Department of Education, were to have reported on where the state stands on workforce credentials. Their reports were to cover recommendations for a three-year strategy for meeting the governor’s STEM-H objectives. 

Jones is tasked with using that information to produce a plan for monitoring and measuring progress toward the initiative’s goals.  The directive comes with a deadline — the end of December.

Another key part of the governor’s initiative is a “Patriot Pledge,” a push to get 10,000 businesses to commit to hiring veterans. Virginia is home to about 840,000 veterans, many of them still in their 20s, and that number is expected to grow. Jones’ secretariat has until the end of November to deliver its plan for increasing veteran employment.

Diversifying the state away from its heavy reliance on Washington is still another priority. Currently, 30 percent of Virginia’s economy depends on the federal sector. Reduced federal spending has driven home the importance of diversifying the state’s economy. A plan to encourage industries that do not rely on federal contracts or grants is due Dec. 1.

Working across agencies is going to be a challenge. “The workforce system is diverse and diffuse and encompasses 24 different programs,” says Jones. “Our key role will be to turn them into a high-functioning team to work with the private sector. We are clear about what our priorities are. We are all aspiring to the same results.”

The state’s colleges and universities also will be essential to the push to modernize Virginia’s workforce. “We will need to up our education game to close the skills gap,” says Glenn DuBois, chancellor of the Virginia Community College System, which includes 23 colleges with 40 major campuses serving 400,000 students.

Not only will community colleges have to produce more associate degrees, they will have to institute “more short-term career pathway programs,” the chancellor says, some requiring as brief a commitment as five or six weeks. Billing and coding for health care, commercial driver’s licenses and welding certificates are three of the short-term pathways DuBois cites as targets for rapid expansion.

“Too many people come [to community colleges] without leaving with credentials,” DuBois says. “We want them to leave with something that is worth something in the marketplace.” 

During a recent conference on workforce training in Richmond, DuBois urged the state to re-examine the lack of financial aid for students enrolled in licensure and certification programs. Currently, state financial aid is restricted to credit-degree programs only.

Community colleges will be crucial in training veterans, too. Part of DuBois’ mission will be to find ways to certify the skills that veterans learned during their military service.

David Tysinger, an economist with the Virginia Employment Commission, specializes in labor market information, including unemployment rates, occupational projections and wage rates. For 2012-2022, he predicts an overall 13.5 percent increase in employment, or those more-than-500,000 jobs. Health-care support positions are expected to see a 33.6 percent growth in numbers while STEM occupations will grow by 24.6 percent.

If Virginia is allowed to drill offshore for oil and natural gas, supporters say, that development would birth a new industry with the commonwealth seeing as many as 31,000 new jobs over 20 years, starting in 2017 — the earliest date drilling could begin.

The types of jobs in demand will vary widely by region. Although Richmond economist Chris Chmura says low-paying retail and service jobs will predominate statewide, computer and IT positions are expected to surge in Northern Virginia.

In Hampton Roads, which Jones describes as “the capital of the country for shipbuilding and repair,” machinists and welders will be highly employable. Meanwhile in Southern Virginia and the Shenandoah Valley, the better-paying work will be in factories.

Having an appropriate workforce is vital. “When firms consider relocating or expanding, they ID the skill sets of the region,” says Chmura. With computer and technology increasingly central to manufacturing, the state must show that it has the workers with the skills to fill potential new factory jobs. “Manufacturing is not your grandfather’s manufacturing anymore,” says Jones.

Rolls-Royce could be a model for the governor’s vision of businesses, communities and educational institutions cooperating in the future. The British company’s 1,000-acre Crosspointe campus in Prince George County is home to a $170 million jet components factory that employs 150 tech-savvy workers. Rolls-Royce added a $136 million airfoil-machining plant that will employ 140, but it is not yet operational. The company has committed to eventually investing $500 million and hiring 500 workers at Crosspointe. It expects some of its suppliers to locate to the campus as well.

To ensure it would have skilled workers, Rolls-Royce joined in training efforts with the state, the county, the University of Virginia, Virginia Tech, Virginia State University and the Virginia Community College System.  It has teamed with the Community College Workforce Alliance, which draws particularly on efforts by John Tyler Community College. 

Furthermore, Will Powers, executive vice president and chief financial officer of Rolls-Royce North America, says his company is joining with the state and other concerned parties to develop an apprentice academy through the Commonwealth Center for Advanced Manufacturing, a collaborative research organization.

“This academy would establish a strong pipeline of skilled workers to support the growing needs of Rolls-Royce and other companies in the state,” he says. 

Powers, not surprisingly, is bully on the governor’s plan to train workers for the future. “There is a great opportunity for improvement in the area of workforce development,” he says, “and we are happy to see the Governor’s Workforce Initiative focus on growing the pool of skilled workers in Virginia.”

Looking for a job?

David Tysinger of the Virginia Employment Commission runs the state’s Labor Market Information site, www.virginialmi.com. He says it is a tool for job seekers, students, educators, analysts and government managers.

The site includes statistics on wages and job openings broken down by county or city and by industry.  Searches can be done that compare jurisdictions.

For example, as of Sept. 20, Richmond had 12,422 advertised job openings with a mean wage of $45,337. Its highest average wage among the top 10 job openings was $102,666 (computer programmer), while sales and related workers could anticipate making $15,080.

Rockbridge County, in contrast, had 133 jobs at a mean wage of $29,484. Its highest wage was $119,565.79 (manager), while a nursing assistant could expect to earn $24,383.21.
The useful statistics don’t stop there.

In Richmond, only 7.61 percent of the openings had no minimum education requirement, while in Rockbridge County that figure was 40 percent.

Only 5.46 percent of Richmond employers would hire someone with less than a year’s experience, while lack of experience was not a factor in 19.35 percent of openings in Rockbridge County.

Site users also can compare industries within the same field. They can find educational and training programs and look for jobs posted by individual employers.

Better than all right

Fairfax County has always been a company town, and, historically, that company, the U.S. government, has been generous. Lately, though, Uncle Sam has turned tight-fisted, and the county now needs to find a new way to maintain the lifestyle to which it has become accustomed.

In the past couple of years, Fairfax County — and all the rest of Northern Virginia, for that matter — has been suffering from the full effects of curtailed federal spending and sequestration. During 12 months extending into the first quarter of this year, Northern Virginia (NOVA) lost 10,000 government and government-related jobs. They paid an average of $100,000 a year, so the job losses hit hard. Partly as a result, for the first time in recent memory, NOVA is underperforming the U.S. economy.

In 2012, NOVA had a growth rate of 0.8 percent, while the country grew by 2.8 percent, says Stephen Fuller, director for the Center for Regional Analysis at George Mason University. Last year, the region grew by an even more anemic 0.4 percent rate, compared with an admittedly less than stellar 1.9 percent national average.

The $23 billion in federal procurement spending Fairfax County saw last year is not likely to increase anytime soon, either.  “There are clear directives to continue to reduce spending,” says Bobbie Kilberg, president and CEO of the Northern Virginia Technology Council. So, best-case scenario: While the county’s public sector should be about done shrinking, in the short term, it isn’t likely to expand.

But Fairfax County is going to be all right — actually quite a bit better than all right.  Although it may take awhile to build momentum after its recent reversal in fortunes, the last two quarters of 2014 and each of the next three years are expected to be stronger than the last, according to Fuller. With an unemployment rate of 3.8 percent (as of April), people are working and starting to spend money again on retail and consumer services, he says. A pent-up need for housing will mean both new construction and renovation work. But more important to a sunnier day is the potential for growth in private-sector business.

Gerald L. Gordon, president and CEO of the Fairfax Economic Development Authority (FEDA), says the county has almost 35,000 businesses with paid employees, including 10 Fortune 500 companies, and more than 400 foreign-owned firms. Many of these companies will need to continue to reduce their dependence on federal money, but the expertise they have offered their public-sector clients — in health care, unmanned vehicles and IT specialties including cloud computing, data analysis and cybersecurity — luckily is in demand in the private sector, too, Kilberg says.

Fairfax has the potential to reinvent itself as a center of national and international business, and Fuller is so confident that that is going to happen, that he has the title for a talk he will give later this year all picked out: “Fairfax County: From Company Town to Global Business Center.”
County’s advantages                                                 

Fairfax has many well-known lures for private companies.

  • It is close to the nation’s capital, and it has a business-friendly environment.
  • It has a highly educated populace, with close to a third holding advanced degrees.
  • It has an enviable standard of living. Even in 2012, a bad year, Fairfax’s median household income was $107,096, third-highest in the country.
  • It has world-class health care. For the second year in a row, Inova Fairfax has been named the top hospital in the Washington, D.C., area, and it has cutting-edge research in personalized medicine going on at its Translational Medicine Institute. The Wounded Warrior program based at Fort Belvoir offers veterans the best in acute-care and rehabilitative services.
  • It has an excellent education system. Thomas Jefferson High School for Science and Technology, for example, consistently is ranked as one of the top schools in the country. 

Superintendent Karen Garza, who was appointed just a year ago, admits that she is dealing with “the greatest financial challenge the school system has ever faced.” She has had to make some painful decisions, such as cutting 731 positions and increasing class sizes. But she is seeking collaborative ways to deal with budgeting realities and has held more than 100 community meetings “to listen and to educate.”

“The reputation of the system is known nationally,” she says. “My goal is to build on that history of excellence.”

Fairfax has still another plus to offer businesses that other jurisdictions can only envy, not duplicate. It has what Fuller calls “extreme connectivity” to the world and to the region.

The county is one of the rulers of cyberspace, with a phenomenal one-third of global Internet traffic moving through its borders. Add to that virtual access, the ability of Washington Dulles International Airport to give business travelers direct service to destinations as far flung as Seoul and Abu Dhabi. Last month, Air China extended Fairfax’s reach to another huge market by initiating direct flights to Beijing. Fuller expects that proximity of Dulles will spur expansion along the Route 7 and Interstate 66 corridors that could account for as much as 40 percent to 45 percent of the growth in the region in coming years. 

The county has outstanding regional connectivity, too. With the expansion of the Beltway to 12 lanes in NOVA, it has the best road network in the D.C. metro area, and the expected opening of the first phase of Metro’s Silver Line, with four stations  at Tysons Corner and one in Reston, puts the cherry on that Beltway sundae.

Construction activity
One proof of the importance of connectivity is the construction ongoing at Tysons despite an overall bear market for commercial real estate in NOVA. The fallout from the contraction in government spending has left Fairfax County with 18 million square feet of vacant commercial space. That’s more empty offices than Richmond has in its entire inventory, Gordon says. 

Contractor demand for 1.1 million square feet of new office around Fort Belvoir and the Route 1 corridor in southeastern Fairfax, for example, has yet to materialize, with a resultant vacancy rate there of a painful 26.4 percent. In the county overall, the rate is 17.7 percent. 

Yet at Tysons, the 526,488-square-foot, 22-story Tysons Tower opened last month, with the professional services firm of Deloitte and the satellite company, Intelstat, already signed up as tenants. The latter is moving its headquarters from the District and bringing more than 400 jobs along with it.

Construction also has resumed on the 476,000-square-foot, 18-story 1775 Tysons Boulevard, slated to open in 2016, and Capital One won approval for a massive complex near the McLean Silver Line stop that eventually will include 3.1 million square feet of office space, several apartment buildings, a hotel, restaurants and retail.   

“Metro will be transformative for the market,” says Scott Homa, vice president of mid-Atlantic research for the commercial real estate company Jones Lang LaSalle, which tracks vacancy rates. “Public transit is an important box to check for many tenants.”

Although Tysons still lacks walkability, Homa expects it eventually will come to resemble the Rosslyn-Ballston corridor in Arlington, with self-contained nodes of multi-use development around each Metro stop.

“The demand for the suburban office park is not what it used to be,” he says. Tenants now prefer a walkable model of development, and Reston, the original suburban city, has a vacancy rate of less than 5 percent to prove it. Metro’s new Silver Line station at Wiehle-Reston East will only broaden its appeal.

So, for Fairfax County, 2014 is something of a pivotal year. Obviously, things could be better, but, happily, most observers think they will be soon.

“Our economy has diversified from an overdependence on federal contracting,” Gordon says, and that lays the groundwork for future prosperity. “Still,’ he admits, “it’s good to have the federal government in our backyard.”

Getting a boost

Fairfax County has more than 35,000 businesses, and most of them are small. The business of the Mason Enterprise Center (MEC) is to make that number of small businesses bigger.

The Small Business Administration reports that more than half of all business startups fail in the first five years, and MEC tries to keep would-be business owners from adding to that statistic. The fledgling enterprises in its program are given free research and information services and administrative support. They also have opportunities for networking, mentoring and counseling, and office space is available at attractive rates.

“We cover the full life cycle of business development and then graduate them out into the community,” says MEC Executive Director Keith B. Segerson. “Eighty-four percent meet or exceed the goals that have been agreed upon, usually after two to three years.”

The center, which is based on the Fairfax campus of George Mason University, has five business incubators in Northern Virginia, the most recent of which opened in Warrenton this spring.
MEC also recently added a global gateway program aimed at attracting small and medium-size foreign entrepreneurs to Virginia and plans to open an “I” hub on the GMU campus later this summer. This center for innovation will provide a space where young entrepreneurs can be creative. It will have “a very Silicon Valley look,” Segerson says.  MEC is one of the largest university-based economic development enterprises in the country, and it is funded by the federal government, the commonwealth and the localities in which it operates.

MediaForce PR, a provider of marketing campaigns for the government and nonprofits, is an MEC graduate. It began in 2005 as a virtual client of the center, then took an office at the GMU facility. When the company graduated from the center in 2011, it had expanded to 11 offices there.

“Part of the value they offer entrepreneurs is the infrastructure and relationship building,” says company President Robert Gaudian. Not having to invest right away in equipment and administrative personnel also was a huge plus, and the office space provided “at a low price point was critical.”

Gaudian’s company, which has grown to 12 full-time and several part-time employees, had more than $2 million in revenue last year. It moved out of the center about two years ago, but it didn’t go far — its offices in Fairfax City are just two blocks from MEC.

Visionary Consulting Partners, founded in 2008, is still in residence at the enterprise center. Its focus is in the management of chronic disease initiatives and programs.

“Every aspect of our business was vetted through the leaders at the institute,” says Chief Operating Officer Michael D. Thornton. “They put us through our paces, gave us our homework. When we are considering a proposal on a bid, they take a look and challenge us.”

Fairfax County has the largest percentage of minority-owned firms in Virginia. With the help of MEC, Visionary Consulting, headed by Thornton’s wife, Eleanor, an African-American woman veteran, has been able to leverage its minority-owned status to land direct, or no competition, government contracts. Last year, the company had about $675,000 in revenue. This year, thanks to landing three contracts in February, that figure will explode to $12 million.

Despite that jolt of success, the Thorntons have no plans to leave MEC.  “It’s always good business to have a board of advisers,” Michael Thornton says. “We will stay as long as they will have us.”

Up from the ashes

Along with all its many other high-end assets, Fairfax County can boast of being the home of Wolf Trap, the country’s only national park for the performing arts.

Back in 1982, when the park was still a preteen, its central stage, the Filene Center, burned to the ground. It took two years to rebuild after that devastating loss, and this year marks the 30th anniversary of the amphitheater’s phoenix-like rise from the ashes.  CEO and President Arvind Manocha decided to celebrate that occasion with “a season of big names from across all genres.”

Performers on stage at the nearly 4,000-seat, open-air theater this year include classical heavyweights such as Yo-Yo Ma, the Philadelphia Orchestra and the National Symphony Orchestra; jazz greats such as guitarist Pat Metheny and trumpeter Wynton Marsalis; popular music stars The Fray and Counting Crows; and dance innovator Trey McIntyre in his final Washington-area performance.

Wolf Trap is expanding its outreach programs, too, Manocha says. Its Institute for Early Learning will reach eight to 10 new cities in 30 states, and for the first time, it will have an artist in residence for its opera program. Bass baritone Eric Owens, an alumnus of the company, will spend six weeks at the Vienna park performing, mentoring young artists and giving master classes.

Manocha, who managed the Hollywood Bowl before arriving at Wolf Trap in January 2013, says, “I knew Wolf Trap as an institution with a broad and varied mandate. I was happy to come and join the story.” Now, he says, “The focus of our efforts is on raising the bar.”

“We take care of our own”

The Windy Hill Foundation made a big decision a few years back. Although it is a charitable enterprise, it would go into business. Now, the nonprofit is turning a profit by doing what it knows how to do best: create affordable, green housing.

The private, Middleburg-based foundation, which has 538 active donors — all anonymous — started in 1981 with the modest goal of improving living conditions at Windy Hill, a neighborhood at the west end of the little town in the heart of western Loudoun County’s hunt country.

The 12 African-American families who lived at Windy Hill used outhouses and had to haul their drinking water in buckets from a couple of community spigots. The foundation raised $1 million to buy nine houses from their landlord, and, with the help of a HUD grant, brought living conditions into the late 20th century. The cottages at Windy Hill still are part of the foundation’s inventory of affordable rental housing.

But the foundation didn’t stop there. Despite Middleburg’s association with toney boutiques and grand estates, many people — some of whom worked in those shops and on those fabulous equestrian spreads — were struggling to make ends meet. Windy Hill stepped up to help them.

“We take care of our own,” says Kim Hart, the foundation’s longtime executive director, citing the foundation’s policy of giving affordable housing priority to those who live or work within 10 miles of Middleburg.

Low monthly rents
Monthly rents at Windy Hill properties in Middleburg are hard to beat. They range from $400 to $975, far below the $1,239 for one-bedroom, $1,469 for two-bedroom, and $1,885 for three-bedroom units that HUD considers fair market rents in Loudoun and Fauquier counties. The units come with annual leases, “and almost everyone renews,” Hart says.

Despite the low rents, the properties don’t look at all down-market.

Virginia Lane, a 14-unit multifamily development won a design award from Loudoun County and has an advanced heating and cooling system that keeps utility bills low. Levis Hill House, a 20-unit building for the low-income elderly and disabled, was the first apartment building in the county to win an Energy Star award for being green. It features a rain garden to minimize pollution from its own runoff and that of the fire station next door. 

Hart says Windy Hill Foundation is the only nonprofit that offers affordable rental housing in western Loudoun County, and it now has expanded to 67 rental units in Middleburg. Those units house a rather remarkable 20 percent of the town’s population (which hovers around 700 people).

“We’re proud to have them as part of our town,” says Middleburg Mayor Betsy Allen Davis. “What we lose in taxes [because of the foundation’s nonprofit status] is a small price to pay to help people.”
The foundation’s last project in Middleburg was Virginia Lane, completed in 2004. “We’re built out,” Hart says, “but does that mean we fold our tent? Maybe we have an obligation to help our neighbors.”

Moving beyond its base
So, rather than waste more than 30 years of experience in funding and building workplace housing, in 2005 the foundation formed the Windy Hill Development Co. to work on affordable, green projects outside its home base. All net profits would come back to the foundation.

The development company’s first project, the 16-unit Piedmont Lane in the nearby hamlet of The Plains, was completed in 2012. It produced $170,000 in development fees, or 10 percent of the foundation’s $1.7 million in income for that year. The extra money allowed the foundation to expand services, such as tutoring, recreational programs and health screenings that are part of its mission to improve the lives of its Middleburg tenants.

Piedmont Lane was built to look like a row of Virginia farmhouses to fit with the ambience of The Plains, a picturesque village. The real innovative thinking, however, is hidden underground. Its geothermal heating and cooling system, using pipe donated by REHAU, a German company with its North American headquarters in Leesburg, was a first for housing built with the help of the Virginia Housing Development Authority’s Low Income Housing Tax Credit Program. Piedmont Lane also was named one of the three most energy-efficient apartment buildings in Virginia by green-building certifier EarthCraft.

Vickie Atkins lives at Piedmont Lane with her children, Nicholas, 7, and Brooke, 18. Atkins was laid off from her job and lost her home and car when the economy went sour a few years back — and she was pregnant. Today, she has a job within walking distance of her home, her kids have their own rooms for the first time, and she recently was able to afford to send her daughter on a senior trip.

“We are making it on our own,” Atkins says. She pays $1,075 for a three-bedroom, all-electric apartment. Thanks to the geothermal system, her heat and electric bills have never cost more than $80 a month.

The nonprofit advantage
Windy Hill partnered with TM Associates on developing Piedmont Lane, and it is now co-owner with the property management company, which also handles its Middleburg properties. That partnership is continuing on a second project in Brambleton in eastern Loudoun County.

“A community-based nonprofit is able to bring resources such as funding mechanisms that are not available to for-profit companies,” says Adam Stockmaster, a vice president of TM Associates. “Windy Hill has an excellent relationship with Loudoun County.”

The first apartments in the 98-unit project in Brambleton called Shreveport Ridge will open in increments beginning in June. Like Piedmont Lane, the development has a geothermal system. “Cheaper electric bills allow more people to qualify for housing,” Hart says.

And this year, thanks to contributions from its for-profit arm, the Windy Hill Foundation is for the first time ever “at break even.” That means it can put more money toward family services and foundation operations. “This,” Hart says, “is where we want to be.”

Food, fitness and fun

“Virginia Is for Lovers” may be emblazoned on some of the commonwealth’s license plates, but the truth is that family vacations always have been the mainstay of tourism for the state. That said, in the past couple of years, the commonwealth’s motto has become truer than it used to be. More couples without children, including many millennials, are now booking stays at the state’s resorts.

“Generation X and Y are spending as much on luxury travel as baby boomers,” says Janet Kurtz of Keswick Hall of her experience as director of sales and marketing for the Charlottesville resort.

“We see mostly families in the summer,” says Michael Snapkoski, director of sales and marketing for Lansdowne  Resort near Leesburg. “But in winter, spring, and fall, we see couples.”

Visitors of all ages and marital statuses make Virginia tourism a growth industry. They spent $21.2 billion in 2012 (the most recent year for which figures were available), a 4 percent increase over the previous year. Caroline Gibson, director of corporate communications for Virginia Tourism, says the industry supported 221,000 jobs in 2012 and generated $1.36 billion in local and state taxes.

Virginia’s rich history and great outdoors remain its primary attractions, but three trends among visitors also have meant major contributions to the commonwealth’s coffers.

Today’s tourists:

  • Have an intense interest in food and drink. Farm-to-table dining, wineries and craft breweries have morphed into major draws. “Virginia has become a destination for the sophisticated culinary traveler,” Gibson says.
  • “Craft beer and farm-to-table are as popular as champagne and caviar these days,” says Patt Burnette, marketing manager for Charlottesville’s Boar’s Head Inn.
  • Value fitness and wellness.  A bigger focus on healthy activities takes many, disparate forms in the commonwealth, from a desire to hurtle down a 900-foot zip line at 40 miles per hours at Wintergreen Resort in Nelson County to getting horizontal for a lomi-lomi massage at Kingsmill Resort in Williamsburg.
  • Want one-of-a-kind experiences.  At Keswick Hall, guests can shoot clay pigeons or walk foxhounds with the Keswick Hunt Club. “They want something to make a memory of,” says marketing director Kurtz.

Other resorts strive hard to offer unique outings. At the Omni Homestead in Hot Springs, for example, guests can take falconry lessons. At Salamander Resort in Middleburg, they can ride bikes at sunset through horse country, and at the Tides Inn in Irvington, they can go crabbing or do paddleboard yoga. At Airlie in Warrenton, they can take a lesson on organic gardening, while at the Boar’s Head Inn in Charlottesville, they can take a hot air balloon ride from the front lawn.

Some of Virginia’s premiere destinations are providing other new amenities, too.  

The venerable, 573-acre Boar’s Head Inn has expanded its package deals to include more winery tours, cooking classes, individualized sports lessons and lavish spa treatments. Its clients, particularly the younger ones, put such a premium on staying in touch that the inn now has free Wi-Fi and recently upgraded its download and upload speeds. “IT is always trying to keep up,” says marketing manager Burnette.

At Keswick Hall, the big news is the opening later this summer of the Pete Dye-redesigned, 18-hole golf course. It will present “a challenge for the advanced golfer and give more novice players a fair game,” says Kurtz. Most tourists to the commonwealth continue to come from the mid-Atlantic region, Gibson says, but Kurtz expects the new golf course to draw international travelers, as well.

Like other resorts, Lansdowne is offering more culinary-centric events, such as chili cook-offs and cupcake challenges. For loco-vores, it has added beehives to produce its own honey and provide attendant learning opportunities for guests.

Like the Boar’s Head Inn, the Northern Virginia resort has upgraded to unlimited free connectivity and increased bandwidth throughout the resort.  “Fifty percent of our guests search on mobile devices,” says sales and marketing director Snapkoski, so Lansdowne markets itself heavily through social media outlets such as Facebook and LinkedIn and alerts guests to special activities with text messages.

For the first time in 30 years, Mountain Lake Lodge in Pembroke became a year-round resort last year. “We were sold out at New Year’s,” says general manager Heidi Stone, who says wintertime guests can snowshoe and cross-country ski through the 2,600-acre nature preserve in the mountains of Southwest Virginia. New to the lodge is Treetops Adventures. These aerial courses feature rope bridges, zip lines, tightropes, Tarzan swings and log walks.

Mountain Lake also has gotten on the foodie bandwagon with a farm-to-table restaurant, Harvest, which features cuisine with Appalachian flavor, but it is bucking the widely popular move toward more couples and more connectivity. “People want to unplug their kids from electronics and TV,” Stone says. “We are about reconnecting to nature with the family all together.”

That may be true, but another mountain resort that has always been an oasis of scenic serenity — where cell phones can’t get a signal and rooms have no land lines — found that its guests might want peace and quiet, but only to a point.

“Everyone wants to get away and unplug,” says Ryan Kasperski, who handles publicity for the resort, “but at the end of the day people want to connect.” Yes, even Peaks of Otter in Bedford now has free Wi-Fi.

A sure bet?

MGM Resorts International, owner of such luxury hotels as the Bellagio and Mandalay Bay on the Las Vegas Strip, knows a sure bet when it sees one. That’s why it’s putting money on the table to build a 300-room resort and casino at National Harbor in Maryland, just across the Potomac River from Old Town Alexandria.

“National Harbor is the most ideal site [for a resort] in the continental United States,” says Gordon Absher, MGM Resorts International’s vice president for public affairs. “We are confident that we can keep our hotel sold-out pretty consistently. At any given moment, we will have locals, hotel guests, tourists from D.C., and walk-ins from National Harbor.”

“It wasn’t love at first sight,” Absher admits, when his company first approached Prince George’s County about bringing gambling to the waterfront complex just east of the nation’s capital. The promise of 3,600 jobs and $40 million to $45 million in annual tax revenues, however, helped adjust people’s thinking. That and the amenities MGM promised to provide to a county that has lacked sophisticated shopping and entertainment options.

Milt Peterson, the Fairfax-based developer of National Harbor, had been courted by the gambling industry before, but he was never tempted. Down-market slots operations did “not fit our character as a family or a company,” he says.

But MGM was different. “Its properties are the best in the world,” says the developer. “It is the pick of the litter.”

In addition to the casino, the $925 million, MGM National Harbor will offer a spa, high-end retail, haute-cuisine restaurants and a 1,200-seat theater that will book A-list performers.

The 18-story, 1,600-foot-long hotel and casino will sit atop a pedestal in a monumental design meant to echo some of the famous landmarks in the capital. It will be built about a mile from the center of the 350-acre National Harbor. A shuttle service will connect the new resort to the 2,000-room Gaylord Hotel, Tanger Outlets, and the restaurants and shops in the village, where a 175-foot tall observation wheel was recently added to the attractions.

MGM hopes to break ground this summer with a completion date of summer 2016.

Patricia Washington, CEO of the Alexandria Convention and Visitors Association, shared many people’s initial reservations about the arrival of gambling across the Potomac, but she’s had a change of heart. “It will be a boon to tourism. It will mean more people coming to our shared waterfront.”

A water taxi already runs from Alexandria’s OldTown to National Harbor and other popular tourist destinations across the river, including the National Mall, Georgetown and Nationals Baseball Stadium, so joint marketing is a symbiotic fit. “It is all about connectivity,” Washington says.

The state of construction

In a nutshell, the outlook for construction in Virginia in 2014 can be summed up in three words: not too bad. While the market remains stubbornly below pre-recession levels — mostly because office construction is practically comatose — certain sectors of the industry are taking up some of the slack.

Multifamily projects, higher education facilities, hotels, medical facilities, restaurants and stores are going up across the commonwealth. In addition, developers are rehabbing many historic and outdated structures.

Ryan Doupe, market research manager at the Newport News-based Ferguson Enterprises, the country’s largest wholesale distributor of plumbing supplies, is optimistic about 2014. “I don’t expect a quick bounce back,” he says. Yet overall he foresees growth in the high single digits.

Nationally, construction investment grew by 3 percent last year, making it the best year since the 2008 economic crash. Virginia, however, saw a 1 percent decline, according to Ken Simonson, chief economist for the Associated General Contractors of America in Arlington. Some of the growth elsewhere in the country was due to the surge in the popularity of natural gas, he says. In Virginia, federal spending cuts have been having an outsized effect on Virginia’s two largest markets, Northern Virginia and Hampton Roads, and that drag is likely to continue.

Tim Boothroyd of McGraw Hill, which tracks building starts nationwide, predicts a $2.1 billion investment in construction in NoVa this year, which represents a 2 percent drop off from 2013, and he expects close to $800 million in investment in each of Virginia’s two other largest markets, Hampton Roads and Richmond. For Hampton Roads, that represents a 2 percent decline; for Richmond, almost a 20 percent decline, largely because of the slowdown in office construction. Boothroyd still considers Virginia’s construction prospects for this year good, though, because, despite the 1 percent decline from the pre-recession high, 2013 was an exceptionally strong year.

Northern Virginia
In NoVa, where the ripple effect of reduced federal spending has resulted in high office vacancy rates, large, ground-up office builds will be few. However, Tysons Corner is showing plenty of activity. With the new Silver Line Metro expected to open early this year, 3.7 million square feet are under construction around the four new Tysons stations. So far, much of the new product has been high-rise residential buildings with about 2,185 rental units recently completed or under construction.

Some new office buildings are going up, too, including a 10-story, $100 million office tower scheduled to break ground in the fourth quarter of 2014.

Meanwhile, a continuing, multiphase expansion at Inova’s Fairfax Medical Campus is ongoing with a women’s and children’s hospital slated to deliver in 2015. In Alexandria, a 660,000-square-foot headquarters is underway for the National Science Foundation in the Hoffman Town Center area.

“There’s not many opportunities from the federal standpoint at all,” says Leon Blondin, president of Balfour Beatty Construction in Fairfax. Luckily, he says, “residentially based product is hot and heavy.”

Balfour Beatty is building 700 apartments in Crystal City and also has two buildings under construction on the campus of George Mason University.

Rehab work is another mainstay for Balfour Beatty. It’s doing a retrofit of a 14-story office building at the Hoffman Town Center, which involves replacing the skin and roof and putting in a new lobby, bathrooms and elevators.

HITT Contracting, a large builder based in Falls Church, has picked up jobs modernizing older buildings, too, as tenants demand amenities such as rooftop terraces and fitness centers.

“We have a lot of product from the ’80s that is having to update to be competitive,” says N. Michael Bellusci, vice president for HITT’s institutional section. Last year, HITT did six or seven office updates after doing just a couple in 2012. So far this year, Bellusci already has a backlog of five projects in the institutional sector.

Many properties that HITT updates are in Crystal City, which was left with thousands of square feet of aging space when the Department of Defense vacated because of Base Realignment and Closure Commission (BRAC) mandates.

On the retail side, the biggest story is the impending completion of a Wegman’s, the lynchpin of a 350,000-square-foot retail and office development in Alexandria.

Hampton Roads
As in NoVa, the contraction in  federal spending is keeping the market tight. One bright spot, however, could be the Panama Canal expansion. Simonson, the economist, says the larger ships that will be using the canal will require infrastructure improvements at the Port of Virginia, including longer piers, bigger yards and better rail and road connections. That will mean construction.
Right now, though, the market “is difficult,” says John Lawson, president and CEO of the general contracting firm W.M. Jordan, based in Newport News. “We are doing a lot of nondefense efforts and higher education work across the commonwealth,” he says.

The builder is involved in high-profile hospitality initiatives, as well. He is partnering with developer Bruce L. Thompson on the restoration and expansion of the 87-year-old Cavalier Hotel at Virginia Beach along with a redo of the dowager’s sister hotel across the street. The retrofitting should be completed this fall, with the addition of cottages and estate homes on the hotel grounds planned as the next stage of development. In all, the project, expected to reopen in March 2016, which includes an oceanfront tower, a garage and the refurbishment of a beach club, is expected to cost close to $260 million.

A second joint venture with Thompson, a $26 million, 300-room Hilton Hotel and convention center in downtown Norfolk, will break ground this year.

Lawson also is bully on an ambitious multiuse development based around a research center targeted for 100 acres at Oyster Point in Newport News. The first phase of the $250 million undertaking has a completion date of summer 2015.  

Supermarket building continues to drive retail construction in the Tidewater. This year, Norfolk gets a Harris Teeter and a Fresh Market, Virginia Beach gets a Harris Teeter, and Newport News will see construction of a Whole Foods, set to open next year.

Richmond
The most ambitious undertakings in the office market are the 18-story, 315,000-square-foot Gateway Plaza downtown, and a Capital One Data Center that should complete major construction by year’s end. Otherwise, most of the activity in Richmond is in multifamily housing.

W.M. Jordan is teaming with Commonwealth Architects on the high-visibility transformation of the 23-story former Central National Bank into residences envisioned mainly for Virginia Commonwealth University students; about half the units are slated to be ready by summer, with retail planned for the ground floor.

Virginia’s generosity with tax credits for historic renovations is playing a role in that. When combined with federal incentives, “you can get back 45 cents on every dollar,” says Bob Mills, a principal with Commonwealth Architects, “and that can get you some leverage.” Add the rising demand for housing in urban centers and the available stock of buildings to retrofit, and rehabbing old properties for new uses has become a growth business.

Michael S. Logan Jr., business developer for MGT Construction in Richmond, says his company has done several adaptive-use projects and now has 1,000 multifamily units under construction in Richmond and Hampton Roads and 900 units backlogged.

Richmond’s historic Manchester area is seeing lots of action.  MGT has finished up construction of 325 units there and has 526 under construction or due to start shortly. At Mosby Court, it has 151 units in progress, and downtown, it’s converting the 700 Centre building into 174 residential units that should be ready by August.

Like the rest of the state, supermarkets remain a mainstay of retail development. A Kroger’s at Staples Mill Marketplace should finish construction and open this year, and a 74,000-square-foot Martin’s will open midyear at Midlothian Turnpike and Charter Colony Parkway. 

Roanoke
In this region, a couple of major mixed-use projects are underway. Following a stall during the 2008 recession, activity has resumed at South Peak, a 60-acre, $200 million retail, office and housing development on Route 220. Some condos already are up and sold, and construction began last summer on a $15 million, 80,000-square-foot Hilton Garden Inn.