A local investment group from Hampton Roads has purchased a 400,000-square-foot industrial manufacturing and distribution facility located in Virginia Beach for $8.5 million.
According to Harvey Lindsay Commercial Real Estate, which brokered the deal, the building at 1440 London Bridge Rd. includes two 200,000-square-foot warehouses on 33 acres, with 10 acres reserved for future development. It is the largest industrial facility available in Hampton Roads.
Lindsay W. Himelright of Harvey Lindsay Commercial Real Estate handled the sale negotiations representing the seller, General Foam Plastics Corp. John Lee & Associates represented the buyer.
Tuckahoe Orthopaedics has signed a lease to occupy 14,749 square feet in a new medical office building in Henrico County. Construction will begin this summer on the 45,000-square-foot building at GreenGate, a mixed-use development on Broad Street between Short Pump Town Center and 288 that’s under development by Markel l Eagle Partners.
The building is slated to open in fall of 2018.
Tuckahoe Orthopaedics, based in Richmond, has been providing orthopedic care in Central Virginia for more than 40 years. This will be the company’s fourth location.
”We are very excited about our new location at GreenGate as it gives us the opportunity to better serve our patients in this rapidly growing part of the metropolitan Richmond area” Dr. Jed S. Vanichkachorn, president of Tuckahoe Orthopaedics, said in a statement.
GreenGate is being designed to have the feel of a city street. According to the developers, it will have access to some of the city’s retail and restaurant brands, with the convenience of suburban living.
Popular local restaurateurs that have signed onto the project include The Daily and Coast as well as Red Salt, a new steak and sushi concept from EAT
Restaurant Partners, Mellow Mushroom, and Starbucks.
Retailers Lidl, CarytownBikes, CycleBar, and Polished Nail Lounge also have committed to the project.
Bill Reynolds of CBRE | Richmond represented Tuckahoe Orthopaedics in the transaction.
Construction has begun on a second medical office building on the Sentara BelleHarbour campus in Suffolk.
Officials from Sentara Healthcare, based in Norfolk, and Sentara BelleHarbour held a groundbreaking ceremony Tuesday, May 2, on the $34 million, 85,000-square-foot building.
It will offer an ambulatory surgery center with two operating rooms, an expanded emergency department, 14 observation beds for emergency and surgery patients, new medical office space and a helipad.. The project should be completed in early 2019.
“At 420 square miles, it can take quite a while to drive from one corner of Suffolk to another,” Steve Julian, president of Sentara Obici Hospital in Suffolk and the Sentara BelleHarbour campus, said in a statement.
“With that reality, Sentara set out to bring our services closer to home for people in North Suffolk. “
The new four-story building will be positioned on what is now a surface parking lot in front of the current three-story building, which opened in 2008. The two buildings will be connected and replacement surface parking will be added.
Sentara BelleHarbour currently includes a 24-hour, ambulance-accessible, emergency department staffed by the same emergency physicians who serve Sentara hospitals. The expansion calls for the emergency department to grow from 17 beds to 23 or 24.
The current campus also offers advanced imaging including MRI and CT scanning, a breast center with 3-D mammography, family and occupational medicine, a certified sleep center, and a community room for health education programs. and group meetings.
A master plan for Sentara BelleHarbour includes long-term potential for up to four medical office buildings, an urgent care center and a parking deck, depending on population growth and demand for services in the area.
American Institute of Architects (AIA) Virginia announced Monday that R. Corey Clayborne will become its executive vice president/CEO starting June 1.
Clayborne will work in conjunction with departing AIA Virginia Executive Vice President/CEO Helene Combs Dreiling whose last day is June 30.
Nicholas E. Vlattas, AIA Virginia’s immediate past president and search committee chair, said in a statement that Clayborne is an architect known for his leadership skills and participation in the American Institute of Architects on local, state and national levels. “We look forward to working with him to mentor the next generation of architects and strengthen architecture and design professions at all levels.”
Currently a project manager and senior architect with Wiley |Wilson, Clayborne’s responsibilities include financial health, quality control, operational management and project management for a wide variety of local, state and federal projects.
He has been active in AIA Richmond and AIA Virginia, serving on both boards of directors. He has won many awards, including the AIA 2017 Young Architects Award and the AIA Virginia 2016 Award for Distinguished Achievement.
Clayborne also has served on several community boards including the Charlottesville Planning Commission, Virginia Board for Architects and the 100 Black Men of Central Virginia Mentoring program.
He lives in Charlottesville and earned his degree in architecture from Virginia Tech. He will be AIA Virginia’s sixth executive officer since the position was created in 1970. According to AIA, he was one of 70 candidates who applied to lead the group that represents nearly 2,500 architects throughout Virginia.
Dreiling plans to focus on her own consulting firm. Through her company, The Plum Studio, Ltd., she will provide creative and consulting services to nonprofits and design firms.
Virginia Women’s Center (VWC) has completed construction of its new Short Pump location and is open for business.
The 36,000-square-foot facility, completed on April 1, is located off West Broad Street and Gayton at 12129 Graham Meadows Drive in Henrico County. It has a staff of 65, including 13 doctors and three nurse practitioners.
“Our vision was to meet our patients where they live, work, shop and play, and we believe we’ve achieved that goal with the opening of our new location,” Dr. Kay Stout, VWC’s president said in a statement. “Not only are we able to offer more services to our patients, but the location is easy to find and very accessible to women throughout the area.”
At the new location, VWC will offer gynecologic and obstetrical care along with numerous subspecialties — including urogynecology, urology, maternal fetal medicine, genetic counseling, clinical research, mental health, bone health and breast-health services.
The new location features a 300 square-foot community room where lecture series will be offered as well as prenatal yoga classes.
VWC, a women’s health-care practice, also has offices in Midlothian, Mechanicsville, Richmond’s West End, Tappahannock and Kilmarnock.
Dominion Virginia Power executives rolled out a long-term energy plan Monday that would dramatically expand its use of solar power, shrinking the carbon footprint for customers and paving the way for extensive upgrades to the state’s energy grid.
With the installed cost of large-scale solar projects dropping by 50 percent over the past four years, solar is now more cost competitive with traditional forms of power generation. Dominion wants to capitalize on that trend by adding at least 3,200 megawatts of new solar capacity by 2032 and at least 5,200 megawatts, cumulatively, of new solar generation by 2042.
Put another way that means that in the next 25 years solar eventually could generate enough electricity to power more than 1.3 million homes, or about half of the company's customers in Virginia and North Carolina. Currently, Dominion has developed 400 megawatts of utility-scale solar generation and has a dozen new projects underway, enough to power 100,000 homes.
“For the first time, the subsidized costs of utility-scale universal solar power are expected to be low enough to make it a component of future generation additions at reasonable cost to our customers,” Paul Koonce, CEO of Dominion Generation Group, said during a press conference Monday at the company’s headquarters in Richmond.
The conference coincided with Monday’s release of Dominion’s annual Integrated Resource Plan (IRP), a 15-year energy forecast Dominion is required to file with the state’s utility regulator.
Besides solar, added Koonce, natural-gas generation and Dominion’s two nuclear power stations are key to a low-carbon future.
“Gas-fired generation is clean, dependable and provides balance to the variable energy flows from solar and wind. Nuclear, with its 24/7 operations and no-carbon emissions, provides a solid base … We believe this balance of solar, natural gas and nuclear hits the sweet spot in terms of cost, environmental performance and reliability for our customers,” said Koonce.
More natural-gas infrastructure, including the proposed Atlantic Coast Pipeline, is needed, he said, “as an enabler to deploy this much solar.”
One environmental group, the Southern Environmental Law Center, said that Dominion's IRP fails to transparently address the question of the need for the pipeline. “Rather than deliver a clear energy plan, this document only serves to raise more questions about what Dominion really wants to do over the long-term and who really stands to benefit,” said Will Cleveland, a SELC attorney. “While Dominion is taking a good step toward expanding solar, they are simultaneously taking two steps back by doubling down on dirty fossil fuels.”
On the nuclear front, Dominion is seeking federal relicensing for its reactors at North Anna Power Station in Louisa County and Surry Power Station in Surry County. Together, they have a generating capacity of 3,349 megawatts. Under one of eight alternative plans listed under its IRP, the company also calls for a possible third nuclear unit at North Anna if certain conditions are met, including approval by the federal government of a construction license for that project.
Another alternative calls for the development of two 6-megawatt offshore wind turbines off the coast of Virginia Beach as early as 2021. The project was dropped from a federal Department of Energy demonstration program, making it ineligible for $40 million in funding because Dominion couldn't guarantee the project would be in service by 2020.
The IRP examines options to meet electricity needs of customers over a 15-year planning cycle, while also considering a longer 25-year study period. However, it did not make a commitment to build or request regulatory approval for any particular project.
With the combination of solar, natural-gas and nuclear power, Dominion said that more than a third of its Virginia service territory could be powered with carbon-free electricity by 2032.
A greater reliance on solar would shrink the carbon footprint for a typical customer by as much as 25 percent during the next eight years, the company said. When added to reductions already made, officials said carbon emissions would fall by up to 46 percent between 2007 and 2027. “We think this is very good news for our customers and the environment,” said Koonce.
Proponents of solar power welcomed Dominion’s plans for expansion, but they noted that, even with the growth the company plans to implement, Virginia would remain far behind other states in terms of solar development.
“We see the announcement from Dominion as a positive sign that they are beginning to take solar more seriously as the viable energy resource that it is,” said J. R. Tolbert, Virginia’s vice president of state policy for Advanced Energy Economy, a group based in Washington, D.C. “However, at the end of the day, the numbers that Dominion puts forward in the IRP are still way far behind what other states are doing. “
For instance at the end of 2016, Tolbert said North Carolina had more than 3,000 megawatts of solar capacity installed. “It’s definitely a good thing that Dominion is doing this, but it’s not all that accurate for Dominion to be cheerleading this proposal when, really, what it is is a move for Virginia to get into the game when we’re already well into the second quarter.”
Expanding solar use would require updates to the grid. Robert M. Blue, president and CEO of Dominion Virginia Power, talked about what changes would be needed. “Widespread solar use — both utility-scale universal solar and private systems — will require a modern energy grid, upgraded from the one-directional grid system that has worked so well to deliver power to generations of customers,” he said. “When the variable nature of solar becomes a major factor on the grid, it must become a flexible, two-way network, so we can deliver energy seamlessly to everyone.”
Dominion officials didn’t have an estimate on how much such upgrades would cost. Blue said that modernization would not only advance the development of renewable energy, but also help strengthen the grid against cyber or physical attacks, provide more control and information for customers, and improve Dominion’s ability to restore power promptly after outages.
Asked about the possible demise of the Clean Power Plan (CPP) and how that might affect Dominion’s plans, Koonce said, “Dominion will continue moving toward cleaner power sources with lower emissions, whether the Clean Power Plan lives or dies. Our customers want more renewable energy …”
The company said it anticipates future national and state energy policy to include limitations on greenhouse gas emissions in some form. The U.S. Environmental Protection Agency (EPA) imposed major reductions in power station carbon emissions in August 2015 through the CPP. However, that plan is now under federal court review, and President Donald Trump has ordered the EPA to review the rule and to begin the process of revising or rescinding it.
Still, Koonce noted, the federal government remains under a legal requirement to address carbon as a regulated pollutant.
Because of the possible repeal of the CPP, some Virginia legislators have called for an end to a rate freeze put in place by the General Assembly in 2015 for Dominion that was predicated in part on the CPP and stricter emission rules.
The freeze on base rates, which represents about 60 percent of the typical residential bill, is supposed to be in place for five years. It was designed to provide price stability for customers at a time when Dominion expected to be dealing with stricter air-quality federal regulations. Since that’s now in question, though, some legislators want the freeze rescinded.
The rate freeze was part of a bill that required Dominion to develop 400 megawatts of large-scale solar generation facilities in Virginia by 2020. The company has invested more than $1 billion in solar and already has reached that goal, officials say.
Dominion officials pointed out Monday that the Virginia State Air Pollution Control Board is considering a petition on carbon limitations. Also, a taskforce set up by Gov. Terry McAuliffe is developing proposals to reduce carbon emission in Virginia, regardless of what happens with federal CPP rules.
Dominion says it has lowered carbon emissions in recent years through a number of measures. It has converted four coal-fired power stations to natural gas or renewable biomass; built efficient natural gas power stations in Virginia to reduce imports of electricity from higher-carbon sources outside the state; encouraged energy conservation; and increased efficiency of its existing stations to produce more energy with the same amount of fuel.
“It doesn’t feel like we’re in Norfolk anymore,” Dana Jo Decker remarked to friends while standing in line recently to check in at The Main, Virginia’s newest luxury hotel and conference center. “It feels like we’ve been transplanted somewhere else.”
While Norfolk’s downtown landscape was visible from the lobby’s glass atrium, a festive gala was underway inside during The Main’s soft opening in late March. Hotel staffers served champagne to guests waiting to collect room keys, while dancers — whose costumes evoked Norfolk’s mermaid sculptures — performed under giant helium-filled balls.
Visually, there was plenty to take in. A hot-pink ice cream sculpture stood near the elevators while a red, baby-grand piano added to the ambiance of Varia, the hotel’s Italian restaurant. Another stricking feature was a bookcase that opened into a private dining room.
“It was just a great vibe — happy, uplifting, energetic,” Decker, a local resident and member of a prominent business family, says of the $175 million, 22-story property.
“The magic word in any marketing is new,” says Bruce Thompson, CEO of Gold Key|PHR, the Virginia Beach-based hospitality company that built the Main in a public/private partnership with the city of Norfolk. “People are starting to get the idea that, sort of like Busch Gardens, you have to have a new ride.”
Across Virginia, 46 new, expanded or renovated hotel properties are scheduled to open later this year and next year, representing an investment of $1.1 billion and more than 6,000 guest rooms.
According to HotelMarketData, which tracks projects in the planning and construction stages, the full pipeline of projects now in the works in the Old Dominion includes a projected 171 properties, with up to 25,000 rooms and a potential development investment ranging from $2.4 billion to $3 billion.
That’s a pretty healthy indicator, says Eric Terry, of the improved fortunes of Virginia’s hotel industry. It struggled after the Great Recession and the 10-year lows in occupancy and “RevPAR” (revenue per available room) seen during 2010. “I’m really encouraged by the amount of new investment that we’re seeing in the state,” says Terry, president of the Virginia, Restaurant, Lodging & Travel Association.
Driving the growth is Virginia’s thriving tourism and meeting industry, which drew more than 41 million domestic visitors to the commonwealth in 2015.
Those travelers spent $63 million a day, with total tourism industry revenue reaching $23 billion in 2015, a 2.3 percent increase over 2014. A portion of that business comes from the meeting and convention sector, which can pull in a weekend crowd of more than 1,000. (Tourism figures for 2016 will not be available until later this spring.)
Rita McClenny, president and CEO of the Virginia Tourism Corp. (VTC), the state’s promotional arm for the industry, says she is “thrilled” by the new development. “If we want to compete with other states, and we want more people to come to Virginia, one way to grow tourism is to have new product.”
New properties also offer amenities that today’s travelers are looking for: cutting-edge technology, keyless entry systems and high-end beverage and restaurant service that immerses visitors in the local culture. In other words, they give Virginia the modern “vibe” that Decker liked at The Main. One of its amenities is Grain, a fifth-floor beer garden and restaurant that serves 100 craft beers in a space that offers live music, a photo booth and two outdoor terraces, one with waterfront views of the Elizabeth River.
Geographic diversity
McClenny notes that new development is occurring not only in urban centers, but also in areas of Virginia that are turning to tourism as a way to diversify struggling local economies.
For instance, in far Southwest Virginia where coal used to be king, the Western Front Hotel in St. Paul is scheduled to open in September. The $7.2 million, 30-room boutique hotel will have a restaurant, Milton’s, run by Travis Milton, an award-winning chef known for preserving the culinary traditions of his native Appalachia. Other amenities include rooftop dining and a banquet and music hall. The hotel is close to Spearhead Trails, which offer more than 100 miles of trails for ATV enthusiasts. The hotel is expected to create 25 jobs in its first year.
The project’s developers are Williamsburg-based Cornerstone Hospitality and Roanoke-based Creative Boutique Hotels. The partners specialize in revitalizing historic buildings, transforming them into boutique hotels. Cornerstone Hospitality has several other hotels in the works: The Virginian Hotel in Lynchburg, a 115-room property scheduled to open by the end of the year; Hotel Weyanoke, a 70-room property in Farmville that plans to open in April 2018; and the Sessions Hotel in Bristol, a 70-room hotel opening in late 2018. The Sessions Hotel is located next door to the Birthplace of Country Music Museum and also will have a Travis Milton restaurant called Shovel and Pick.
Kimberly Christner, president and CEO of Cornerstone Hospitality, says boutique hotels represent one of the fastest-growing segments of the hospitality industry. “The neat thing about each of these properties is that they are all very different. This creates an opportunity for a traveler to go to different destinations in Virginia and experience the community that they’re in.”
Tourism gap financing
The Hotel Weyanoke in Farmville is one of five hotel projects that have taken advantage of the state’s Tourism Development Financing Program begun in 2011. The capital cost is $12.2 million, and the developers applied for 22.5 percent of that cost, or $2.7 million, in gap financing. The hotel is expected to create 76 full-time jobs.
Gap financing money isn’t taken from the state’s general fund. “All the money the state contributes is from the new taxes from the new revenue that the project creates,” says Wirt Confroy, director of business development for VTC. “It’s up to the developer to make the business a success. If for any reason, it ceases generating revenue, the locality and the state are not liable for anything. It’s a performance-based tax rebate, really.”
The program is designed to compensate for a shortfall in project funding that can’t exceed 30 percent of a project costing under $100 million or 20 percent of a project greater than $100 million. To get financing, a developer must partner with a locality. “The locality has to decide, ‘Do we have a deficit in the tourism business? Do we need lodging, dining or something new?’” says Confroy.
The program supports larger-scale tourism development projects that create jobs, tax revenue and visitor spending. VTC will assist a locality in creating an application for the financing, which must be submitted to and verified by the state comptroller. Applicants pay a $500 application and processing fee. If an application is approved, the project doesn’t get money until it opens for business and generates revenue.
At that point, the developer, locality and the state begin paying an amount equal to 1 or 1.5 percent (for projects over $100 million) of the project’s quarterly revenue to the lender until the gap’s debt service is complete. So, if a project’s quarterly revenue was $1 million, for example, the three parties would each pay 1 percent, or $10,000, for a debt payment of $30,000.
Developers still must get financing, and they still own all the debt, explains Confroy. State gap financing, however, reduces the amount developers would need from lenders.
Bruce Thompson and his partners got gap financing on two projects: The Main in Norfolk and the ongoing renovation of the historic Cavalier Hotel in Virginia Beach. According to Confroy, the Norfolk project was approved for 9 percent in gap financing on $77.5 million for the hotel portion only. The city of Norfolk also kicked in nearly $87 million for the conference center and parking garage for the project, with the developer responsible for coming up with the rest of the $175 million total. The Main is expected to create 250 full-time jobs.
On the Cavalier, the state approved 12.4 percent in gap financing, or $18 million, for what was expected to be a capital cost of $145 million (for the Cavalier renovation and a new 300-room hotel on the oceanfront). However, Virginia Beach plans to update its application, Confroy says, since the City Council recently voted to let the Cavalier’s development group borrow an additional $6.5 million to build a third hotel at the resort complex.
Originally Cavalier Associates LLC planed to invest more than $300 million in the project, including more than $90 million in private investment, to renovate the Cavalier, build a Marriott Hotel across Atlantic Avenue on the oceanfront and add town homes, condos and a beach club. Plans to include a timeshare property were scrapped, with the developers opting to build an Embassy Suites Hotel to add more rooms and conference space to the oceanfront market. The Cavalier and Marriott projects are projected to create 385 full-time jobs.
Thompson says that, if it weren’t for public/private programs, major projects like The Main and the Cavalier “would never have been built.” During a recent hospitality roundtable sponsored by Virginia Business, Thompson acknowledged that he had a hand in shaping the gap financing legislation while serving in 2010 as chairman of a tourism subcommittee under then-Gov. Bob McDonnell’s Commission on Economic Development and Job Creation. Now the program “sits in the toolbox ready to go to provide the differential between market-rate deals and the aspiration of where a community wants to be to fill a void or gap in the market.”
Doing a gap-financing project, though, isn’t easy. “You have to have a lot of patience and some thick skin to get through the process,” says Thompson. “You know when you get involved that it’s going to be highly contested politically and the second piece … while there’s a lot of economic incentives that come along with public/private partnerships — it’s expensive to do from a documentation and legal standpoint, and it’s lengthy.”
Case in point: The rerouting of Atlantic Avenue to accommodate the renovation and expansion of the Cavalier resort complex has taken more than a year. In addition, Thompson says, he has been castigated in the local media on a regular basis, with members of the public questioning whether he has received preferential treatment over other developers and challenging whether public/private partnerships are appropriate for hotel projects.
New brands While controversy simmers over public/private projects, Virginia continues to attract new hotel brands. Hotel Indigo, a boutique brand launched by IHG (InterContinental Hotels Group) is expected to open in May on the waterfront in Old Town Alexandria. Construction also is underway on a 106-room Tru hotel in Farmville. Tru is a new, lower-cost brand offered by Hilton designed to appeal to younger travelers. The company also has plans for a Tru hotel in Montgomery County near Radford University.
Virginia Beach also welcomed its first Hyatt House hotel last month. The 19-story, 156-room oceanfront hotel cost nearly $80 million.
Another new brand is The Graduate Hotel. It opened in Charlottesville about a year ago, and AJ Capital Partners plans to open another of its college-themed hotels near Virginia Commonwealth University in Richmond this spring.
The hotel industry is segmenting products to broaden its appeal, and the fact that it wants to put new design concepts in Virginia helps give the state an edgier feel, says McClenny.
In another effort to make Virginia tourism-friendly, the VTC has launched a campaign to be more inclusive. “We are expanding our outreach to include LGBT travelers,” says McClenny.
Under Gov. Terry McAuliffe, the state created an LGBT (Lesbian Gay Bisexual and Transgender) Tourism Taskforce in 2014. Out of that initiative came new information that’s posted to the VTC website about how Virginia tourism businesses, communities and attractions can maximize their tourism potential with LGBT visitors, a group with high discretionary income that tends to spend more and stay longer than other visitors, according to the VTC.
Robert G. Roman, a Norfolk businessman who served on the taskforce, says he’s pleased with the efforts. “When people go on vacations, they want to be welcomed. And in certain parts of the state, it would be difficult to go and have a good experience. When the governor of the state says Virginia is open for business, it’s open to the LGBT community, we want them to come and we want them to come to our hotels and our cities … It sends a message of inclusivity.”
Travel officials only need to look to neighbor North Carolina for a cautionary tale. In late March, the Tar Heel state repealed its year-old “bathroom bill,” which required transgender people to use public restrooms that corresponded to the sex listed on their birth certificates.
Backlash from the legislation cost the state economy millions and, over a dozen years, could have cost as much as $3.76 billion, according to an analysis by The Associated Press. Some major companies, including PayPal and Deutsche Bank, canceled plans to expand in North Carolina. In addition, the NBA moved its All-Star Game from Charlotte, and the Atlantic Coast Conference and NCAA canceled plans to hold football and basketball championship games in the state. Since the repeal, the NCAA has said it would reconsider North Carolina as a host for future championship events.
Travel bans create uncertainty
International travelers have been on edge this year after President Donald Trump issued two executive orders prohibiting travelers from several Muslim-majority countries from entering the U.S. The orders have been blocked by federal courts.
Trump says the travel bans are intended to protect national security. While the U.S. Travel Association supports efforts to improve security, it has urged Trump’s administration to welcome legitimate travel. “Mr. President, please tell the world that while we’re closed to terror, we’re open for business,” Roger Dow, CEO and president of the country’s largest travel organization, said in a recent statement.
Drawing international visitors through Washington Dulles International Airport in Northern Virginia has typically been a benefit for Virginia, because frequently visitors coming to see the nation’s capital take side trips to Virginia. So far, Trump’s travel bans don’t seem to be having a negative impact, with international traffic up 12 percent in January at Dulles International.
Yet travel bans contribute to an environment of uncertainty, which isn’t good for travel. “Our industry is doing everything we can to get the administration’s attention on that,” says Jonathan Grella, executive vice president of public affairs for the U.S. Travel Association. “We hope that the president’s hotelier industry instincts kick in, and they issue a statement of some type of reassurance. If international travel dips, we’ll end up with two problems: the security problem and an economic problem.”
What are the major challenges facing Virginia’s hospitality and tourism industries? That was the topic for a group of industry executives who gathered recently for a freewheeling discussion at the Town Point Club in Norfolk.
Sponsored by Virginia Business and the Virginia Restaurant, Lodging and Travel Association (VRLTA), the roundtable coversation touched on topics ranging from transportation to the growing importance of social spaces as modern technologies make hotels more impersonal.
Participating were: Beth Erickson, president and CEO, Visit Loudoun; Vinay Patel, president, Fairbrook Hotels; Juliellen Sarver, community relations manager, Stone Brewing Co.; Matthew Simmons, president, Capital Ale House; Bryan Stephens, president and CEO, Hampton Roads Chamber of Commerce; Bruce Thompson, CEO, Gold Key | PHR; and Mark Treadaway, vice president, business outreach/acting vice president, corporate risk and strategy, Metropolitan Washington Airports Authority.
Paula Squires, managing editor at Virginia Business, and Eric Terry, president of VRLTA, served as the moderators. An edited transcript follows.
Terry: There’s always discussion when we look at some of the public/private partnerships. How do you work through the public debate of some of those things?
Thompson: I’ve done three public/private partnerships now, with two in the city of Virginia Beach and now one with the city of Norfolk. The projects that we’ve built, starting with the Hilton at the oceanfront on 31st, would have never been built without some public participation … The one that we have ongoing today, The Cavalier Hotel [in Virginia Beach], I think will be another defining moment for the commonwealth. Just know when you get involved that it’s going to be highly contested politically … You have to have a lot of patience and a thick skin to be able to get through the process.
Terry:How do you view that in terms of the craft brewery industry?
Sarver: Richmond is benefiting from Stone [Brewing]. Stone is certainly benefiting from Richmond. We’re delighted to be there [with the California company’s East Coast brewery now in operation]. We’re in a part of town that was erased by urban renewal in the 1970s. It was the oldest neighborhood in Richmond, and it languished for over 40 years.
Most of the misunderstandings, though, have to do with the bond financing [that was part of the incentives deal offered to Stone]. The argument that you hear is: Why couldn’t we have used that money for schools? I think once people understand that bonds need to be repaid with interest, and that schools don’t produce that income, then they realize that that money couldn’t have been used for schools …
We will receive $5 million from the state from the [Commonwealth’s] Opportunity Fund and then $2 million from the city. That’s grant money. The rest of it is $31 million in bond money. So when we say that it really is only a $7 million true investment, then people can understand that, and I think the city is benefiting. We’re paying taxes. We’re paying the lease payments every month, and I think we’re bringing a lot of people to Richmond. … We have one customer who drives from Raleigh every month to pick up a keg of beer, and we don’t even have the [Richmond] restaurant open yet.
Patel: I will tell you one thing from a small business owner. You look at the numbers, and, obviously, we’re not going to do anything until the numbers [add up]. Without some of the public/private partnerships, some of these big deals just are not going to happen.
Terry: Vinay, you just opened a hotel in Charlottesville. Bruce has got multiple developments underway. We’re seeing the Renaissance [hotel] over in Portsmouth just purchased by Shamin hotels. Have market conditions finally gotten to where the economics are right?
Patel: The markets are definitely getting better, and the financing is what makes it a lot easier in terms of doing something new. I think we live in a really positive, pro-business state that makes it easier for us to do business. I’ve got a hotel in Maryland, and just to do business there is a lot more difficult compared to doing it in Virginia.
Erickson: If I could pick up on that, we, as an industry, are doing a better job of telling the story of the importance and the impact of tourism and hospitality to our state. It is starting at the very top all the way down to local councils and elected officials, and their understanding of the connection between those opportunities to drive revenue for the state, for our municipalities. That’s why I think you’re seeing these businesses flourish.
Thompson: Down in this area when we were faced with sequestration and defense cutbacks and the idea to diversify our economy, people started talking about … how every dollar that we spent in hospitality marketing generated $5 in state and local taxes. From our standpoint, we’ve had several calls from other localities that have said, “What can you do to come up and help us get our hospitality program going?” … If you can say we have a new product and a new attraction, and you realize the benefit of what that can do for your overall market … I think people are starting to catch on to it.
I’m very excited and optimistic with the campus we’re putting together on the oceanfront with Virginia Beach. I’m building a bourbon distillery. We have a wonderful spa complex. We’ve got a golf program.
When [The Cavalier] opens, we’ll be able to do food and beverage service on the beach, which you’re currently not able to do in any other section of Virginia Beach. We’re going to have a real resort complex with the rerouting of Atlantic Avenue. These dynamics are going to play well for this region as far as a hospitality destination. We’re going to have a substantial amount of conference space on the oceanfront, which now opens up all of Hampton Roads [as a meeting destination].
Squires: The craft beer, distillery and wine industries are booming in Virginia. How important are food and beverages in attracting tourists and hotel guests, and what is the impact on existing restaurants and bars?
Simmons: About 60 percent of the products we carry, and about 75 percent of our sales are Virginia beer. We’re proud to commit to buying all of our beef from Virginia processors. We’re very local-minded. The craft beer industry has been great for Virginia. It has brought in a lot of tourism. I think it’s brought some cool factor to how people perceive Virginia, and I think the quality of life for its citizens has increased. But to say it’s been helpful for a lot of restaurants would be false. There are a lot of restaurants that feel that these breweries are competing with them on somewhat of an unfair level with different entitlements they have that restaurants don’t. I’m in the middle of it.
The analogy I give is if you sold Nathan’s hotdogs at your restaurant, sold a lot of them, and then Nathan’s opens up a hotdog stand on the street, and you see a lot of your customers buying hotdogs from Nathan’s, are you going to want to continue to buy Nathan’s hotdogs, or are you going to switch to Hebrew National? A lot of restaurant owners are feeling that pain and having to make that decision.
Sarver: What if that Nathan hotdog stand is going to bring in people who otherwise wouldn’t come? They’re not only going to go to Nathan’s, they’re going to go to other restaurants around there because, quite frankly, they’re not only going to want to eat hotdogs. I think the same thing is true for us. Stone is going to bring people to Richmond who wouldn’t otherwise come, and they’re going to come to our bistro and [beer] gardens once, then they’re going to spread out. So, it’s going to help put Richmond on the map.
I also want to address some of the criticism from the restaurant industry. There are 11 different city economic development programs for any restaurant that wants to come and develop on that side of town … If you come to Fulton or even Church Hill, there are programs there for restaurants to open, to come to those areas that are underserved.
Thompson: It’s kind of like being against Uber if you own a taxicab business. Green Flash [a California craft brewery] opened up down the street from me [in Virginia Beach]. I’m probably the largest restaurant operator in the state, or if I’m not, I’m certainly in the top 5 percent or more. There are a thousand people in Green Flash over the course of the evening drinking beer. Eighty-five percent of those are guys from down at the base, but they were drinking beer someplace else before. Green Flash didn’t have to put in food and beverage. They didn’t have to put in any of the other things we had to do.
That being said, Green Flash is a great economic tool for Virginia Beach. I’m glad to have them there. Let me just tell you what I did to deal with this … Across the street [at The Main hotel in Norfolk], I’ve built a rooftop beer garden. On that roof I have 100 craft beers. So if you like Stone and you like Green Flash, and you like to be up on a roof where 600 people can go with live entertainment, I’m going to give you all the craft beer you want.
Terry:Let’s talk a bit about infrastructure and transportation. In Northern Virginia, we spend a lot of time talking about [Washington Dulles International Airport] numbers. I know there have been discussions in [Hampton Roads] about a regional airport.
Stephens: Infrastructure, specifically transportation, is a huge enabler or an inhibitor to business, and that certainly is applicable to the tourism and hospitality industry. It’s especially true here in Hampton Roads. We put it in four broad categories. One is roads. … When you look at a road system, it’s all about congestion relief. How do we open Hampton Roads to allow people to come in and easily get out?
The second is air service. In my opinion and the chamber’s opinion, we’ve got inadequate air service in Hampton Roads. We need to expand our routes. One of the ways that you do that is to improve the airport that we have now. Optimally, what you want to do is build a new airport here in the Hampton Roads region, a mega-region type airport that’s going to be a hub. We’re in full support of doing a feasibility study on that, but while we wait, we believe that we have to improve our current airport.
The third is a rail system. We have a passenger rail system here, an Amtrak system, but it’s totally inadequate. There is a plan for high-speed rail to go from the Northeast all the way down through Richmond, down to Roanoke and on down to Atlanta and areas further Southeast, bypassing Hampton Roads completely. We think that a spur of that high-speed rail has to come down to Hampton Roads, and we’re working hard to try to make that happen.
The fourth category is public transportation … It’s especially applicable to those who work in the hotel and restaurant industry because a lot of your employees are the ones who are using public transportation. We’ve got a fractured system right now where a worker at a hotel may take a bus to work and can’t take a bus back because the bus system stops at 5 p.m. We’ve got to work with organizations to fix that. The other is light rail. We had a referendum to approve light rail to Virginia Beach Town Center, which was voted down. I think there’s a place in Hampton Roads for light rail [expansion.]
Treadaway: The airport authority in the Metropolitan Washington region is definitely going to make it a high priority to go after any kind of infrastructure funding that could become available. Anything we can do to lower our costs and increase our revenues, increase customer service and keep our routes that we have and develop new ones, we have an obligation to do that. Last year, about 45½ million people passed through the two airports [Dulles and Ronald Reagan National] generating 387,000 jobs in the region. Many of those were in Northern Virginia.
Erickson: One of the things that’s been mentioned on the panel several times has been regional opportunities. The five regions up in our area — Prince William County, Arlington, Alexandria, Fairfax and Loudoun — work together, especially when going after the international market, because we recognize that international visitors don’t see boundary lines. These five regions of Northern Virginia drive 40 percent of the revenue to the Commonwealth of Virginia from tourism. We recognize that, by bringing the five [localities] together, we have the opportunity to focus on culture and history, to focus on culinary experiences, shopping, to really give that robust product.
Patel: I echo that. Going back to the question about infrastructure, the Metro for us along the toll road will be absolutely critical. Two years ago when [a nearby Metrorail station] opened, probably one or two of our guests were taken to the Metro. Today we’re probably taking five to 10 guests to the Metro station. I think that’s absolutely critical, and people today are moving in that direction.
Terry: The Silver line has shocked me up in your area in terms of how many tourists are using it. They’ll find the cheaper room rate out that way, and they don’t pay $500 dollars a night [to stay] in the District. They stay in Tysons and spend $200 dollars a night and Metro in. That’s a real driver.
Sarver: For Richmond, we don’t have light rail. But we do have under construction a bus rapid transit line. It’s going to go right past the Stone bistro, and we’re very excited about that. Access to and from the airports is very important. Right now, you land in Richmond — it’s a great little airport — but if you don’t have an Uber app or a car, you’re kind of up the creek. Why can’t we have the bus rapid transit go to the airport, then go through downtown?
Squires: We’re going to move to hotel amenities. Are they becoming more important as a way to compete against short-term, online rental companies?
Patel: I think the most important amenity is internet. It seems like the bandwidth needs are always growing … We were talking earlier (and I tried this a few weeks ago at a Hilton product) where I didn’t have to go to the front desk anymore. I literally go straight to the room and push the button. It’s moving in that direction — the lack of the interpersonal. For us the public space is critical. A lot of the public spaces are becoming friendlier, more soft seating and outdoor seating today. A lot of our hotels are coming out with outdoor fire pits because people don’t want to be stuck inside their rooms.
Squires: What about you Bruce?
Thompson: We were talking just yesterday about iPads for wine lists, and I said, ‘You know, these iPads are great. We have them in a half dozen or more of our restaurants, but what happens is it takes out the interaction with the guest and our server.’ Now it’s one less touch point that we have with the customer. Pretty soon we’re starting to feel like Airbnb. So if you don’t need to talk to anybody about your wine, you don’t need to go to the front desk, so what are you going to do? From our standpoint, it is about creating social spaces, really vibrant and active social spaces where people can get together and feel good about it. The other piece of it is quality and service. We’re loading our properties up with technology, service, social spaces and quality products. Airbnb can’t compete with that.
Treadaway: If I had to say what our biggest challenge is, it’s that we have to look ahead and adapt to the change that’s coming. Uber has already arrived in our market. How does that impact garage occupancy? How does that impact taxi usage, and what about when we were going to kick off our billion-dollar construction project at the Ronald Reagan Washington National Airport? How is that going to worsen congestion? I would say that it’s never one thing. It’s always a combination … We have to play the cards we’re dealt in terms of where these changes are coming and how far we can get in front of them to manage them.
For $2,500 a month, a tenant can rent a space in Alexandria that provides a place to live, a place to work — or both. “The goal of the product is to give them the space and flexibility to live the life they want,” says Robert Seldin, CEO of Novus Residences, which formed a multifamily partnership with Conrad Cafritz and Cafritz Interests to develop the project.
Novus calls the Alexandria rental units “e-lofts.”
Since December, 40 of the 200 units have been leased to what Seldin describes as “an interesting and diverse mix. We have a variety of ages, a variety of household types,” everything from empty nesters to entrepreneurs.
About 12 of the current tenants use the 1,000-square-foot lofts as offices. “The rest are choosing to live there or to live and work in the same apartment. We have different kinds of small businesses [including] a law firm, a couple of photographers, a restaurant headquarters and a wellness company.”
The mostly one-bedroom lofts are located in what was previously an office building. For years, after the U.S. Army moved out of the 14-story, 240,000-square-foot building at 4501 Ford Ave., the building sat empty — one of many vacancies among suburban office buildings in Northern Virginia.
These empty buildings, says Seldin, have the potential to be a growth industry. “They have open floor plans, lots of space, and they’re in good locations.” A challenge is making sure that a locality’s zoning will allow for the multiple uses.
His company already is planning another e-loft development in a vacant, 10-story Fairfax County building on Columbia Pike. “In the next five to 10 years, our goal is to have 50 to 100 around the country. We think it’s a new and greatly improved asset class that combines the best features of multifamily with the best features of office space.”
Novus has applied for a patent, Seldin says, on the e-loft system, which allows for a space to be used as an apartment, a workplace or both at all times.
He declined to say how much was spent to renovate the Alexandria building into lofts. The loft concept offers more living space, bigger bathrooms and air-conditioned closets large enough to store servers and other fiber optics if tenants choose to use units as an office.
The property also offers Wi-Fi and common areas including a fitness space, a community kitchen, meeting facilities, a pet space, two soundproof music practice rooms and an outside area for lounging, pingpong and yoga.
The lofts especially appeal to entrepreneurs because living and working from the same space trims business overhead costs. “A small office space or co-working space around here is $1,000 a month for 100 square feet,” notes Seldin. “Here you’re only writing one rent check. You’re renting an apartment, but getting an office for free.”
The leaders of about 20 Virginia-based companies are mid-Atlantic finalists for EY’s Entrepreneur of the Year Award.
The program recognizes entrepreneurs excelling in areas such as innovation, financial performance and commitment to their businesses and communities. Award winners, selected by a panel of independent judges, will be announced at a June 15 gala at The Ritz-Carlton in Tysons Corner.
The majority of the Virginia-based companies hail from Northern Virginia, and some of them are online firms.
Among leaders from that region is Rami Essaid, cofounder and CEO of Distil Networks, which has its corporate headquarters in Arlington. According to EY, Distil Networks is a global leader in bot detection and mitigation.
Another finalist is Rohyt Belani, cofounder and CEO of PhishMe, based in Leesburg. It provides phishing defense solutions for customers in the defense industrial base, energy, financial services, health-care and manufacturing industries.
In the Richmond area, Louis Rogers, CEO of Capital Square, also made the list. Capital Square is a national real estate investment and management company that sponsors institutional-quality real estate exchange programs that qualify for tax deferral under Section 1031 of the Internal Revenue Code.
Now in its 31st year, the EY Enterpreneur of the Year has expanded to recognize business leaders in more than 145 cities and more than 60 countries throughout the world.
Regional award winners are eligible for consideration for the Entrepreneur Of The Year national program, which will be announced in November.
Other finalists from Virginia:
Ashish Kachru, cofounder and CEO, Altruista Health, Reston.
Mike Baird, CEO and partner, Avizia, Reston.
Sukumar Iyer, founder, president and CEWO, Brillient Corp., Reston.
Carroll Ross, founder and CEO, Collaborative Solutions, Reston.
Alicia (founder and CEO) and Ryan (president) Davis, Dietitians On Demand, Henrico County.
Dev Ganesan, CEO, Fishbowl, Alexandria.
Amit Puri, president and CEO, Ingenicomm, Chantilly.
Kevin Kelly, CEO, LGS Innovations, Herndon.
Amy Wright, president and CEO, Macro Solutions, Arlington.
Joe Fluet, CEO and chairman, MAG Aerospace, Woodbridge.
Rick Torres, president and CEO, National Student Clearinghouse, Herndon.
George Zoulias, president, Perfecta Federal, Springfield.
Duane Slyder, founder and CEO, Seasonal Roots, Virginia Beach.
Julian Setian, president and CEO, SOS International (SOSi), Reston.
Adam Vincent, CEO, ThreatConnect, Arlington.
Chris Spanos, CEO and cofounder, Urgent.ly, Vienna.
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“The magic word in any marketing is new,” says Bruce Thompson, CEO of Gold Key|PHR, the Virginia Beach-based hospitality company that built the Main in a public/private partnership with the city of Norfolk. “People are starting to get the idea that, sort of like Busch Gardens, you have to have a new ride.” 
While controversy simmers over public/private projects, Virginia continues to attract new hotel brands. Hotel Indigo, a boutique brand launched by IHG (InterContinental Hotels Group) is expected to open in May on the waterfront in Old Town Alexandria. Construction also is underway on a 106-room Tru hotel in Farmville. Tru is a new, lower-cost brand offered by Hilton designed to appeal to younger travelers. The company also has plans for a Tru hotel in Montgomery County near Radford University.
Sarver: Richmond is benefiting from Stone [Brewing]. Stone is certainly benefiting from Richmond. We’re delighted to be there [with the California company’s East Coast brewery now in operation]. We’re in a part of town that was erased by urban renewal in the 1970s. It was the oldest neighborhood in Richmond, and it languished for over 40 years.
Patel: The markets are definitely getting better, and the financing is what makes it a lot easier in terms of doing something new. I think we live in a really positive, pro-business state that makes it easier for us to do business. I’ve got a hotel in Maryland, and just to do business there is a lot more difficult compared to doing it in Virginia. 
Thompson: Down in this area when we were faced with sequestration and defense cutbacks and the idea to diversify our economy, people started talking about … how every dollar that we spent in hospitality marketing generated $5 in state and local taxes. From our standpoint, we’ve had several calls from other localities that have said, “What can you do to come up and help us get our hospitality program going?” … If you can say we have a new product and a new attraction, and you realize the benefit of what that can do for your overall market … I think people are starting to catch on to it.
Simmons: About 60 percent of the products we carry, and about 75 percent of our sales are Virginia beer. We’re proud to commit to buying all of our beef from Virginia processors. We’re very local-minded. The craft beer industry has been great for Virginia. It has brought in a lot of tourism. I think it’s brought some cool factor to how people perceive Virginia, and I think the quality of life for its citizens has increased. But to say it’s been helpful for a lot of restaurants would be false. There are a lot of restaurants that feel that these breweries are competing with them on somewhat of an unfair level with different entitlements they have that restaurants don’t. I’m in the middle of it. 
Stephens: Infrastructure, specifically transportation, is a huge enabler or an inhibitor to business, and that certainly is applicable to the tourism and hospitality industry. It’s especially true here in Hampton Roads. We put it in four broad categories. One is roads. … When you look at a road system, it’s all about congestion relief. How do we open Hampton Roads to allow people to come in and easily get out?
Erickson: One of the things that’s been mentioned on the panel several times has been regional opportunities. The five regions up in our area — Prince William County, Arlington, Alexandria, Fairfax and Loudoun — work together, especially when going after the international market, because we recognize that international visitors don’t see boundary lines. These five regions of Northern Virginia drive 40 percent of the revenue to the Commonwealth of Virginia from tourism. We recognize that, by bringing the five [localities] together, we have the opportunity to focus on culture and history, to focus on culinary experiences, shopping, to really give that robust product.
Treadaway: If I had to say what our biggest challenge is, it’s that we have to look ahead and adapt to the change that’s coming. Uber has already arrived in our market. How does that impact garage occupancy? How does that impact taxi usage, and what about when we were going to kick off our billion-dollar construction project at the Ronald Reagan Washington National Airport? How is that going to worsen congestion? I would say that it’s never one thing. It’s always a combination … We have to play the cards we’re dealt in terms of where these changes are coming and how far we can get in front of them to manage them.