Richard Foster Archives - Page 44 of 48

Building a labor force

One of just a handful of manufacturers of hand-tuned wind chimes left in the U.S., Manassas Park-based QMT Windchimes is seeking an assistant maintenance supervisor.

In fact, Jamie Baisden, the chief executive officer of QMT, has been looking for someone to fill the new position for about 18 months. The problem is he can’t find anyone with the training and skill set to meet the company’s needs.

“We’re not talking about building maintenance; we’re talking about maintenance of our industrial equipment that we use, some of which we design and fabricate and automate using our own equipment, because we have very specific processes we use that don’t exist in industries other than ours,” says Baisden. “We need individuals who are competent with electrical, with pneumatics, with hydraulics … and certified in those types of areas, and they’re very difficult to find.”

Baisden is now considering filling the job with an employee from within the company and helping that person get the necessary training, a task that should be considerably easier thanks to the General Assembly’s passage this year of the New Economy Workforce Credential Grant Program.

As of July 1, the state government will fund two-thirds of the cost of workforce credential programs for students who successfully complete vocational certification programs and earn industry-recognized credentials and certifications. The grants cover 124 different community college training programs in Virginia that lead to certifications for 170 in-demand jobs. Eligible professions range from welding and commercial truck driving to advanced manufacturing, energy, health care, information technology and cybersecurity.

“People see this and they say, ‘Ah, it’s another grant’ or they say it’s just workforce training, but it really is much, much more than that,” says Brett Vassey, president and CEO of the Virginia Manufacturers Association, adding that Virginia has never before invested in workforce credentials for individuals in this way.

Virginia has long offered financial support and scholarships for students pursuing two-year and four-year college degrees but has never really devoted any significant resources to noncredit vocational credentials. “It’s been an afterthought at best,” Vassey says. “This is one of the most important workforce development higher education bills that has been passed in a decade.”

“Higher education is not just about college degrees,” says Wendy Kang, SCHEV’s director of higher education innovation. “We recognize that higher education includes workforce credentials as well as a college degree and that [credentials] are just as meaningful in the marketplace.”

Students pay one-third of the enrollment fee upfront, and the state government reimburses Virginia’s community college system for the rest upon completion. The credentials are stackable, meaning they can build on each other, and are available to anyone who wants to enroll.

“These kinds of professions really offer an alternative [route] to success for the majority who won’t earn a baccalaureate degree and need another way to get family-sustaining wages,” says Elizabeth Creamer, adviser for workforce development in the Virginia Office of the Secretary of Commerce and Trade. “We still have about 35 percent of our high school graduates who don’t go on to any type of secondary education, and there haven’t been sufficient vehicles to train them for jobs that offer them good wages. … We needed workforce training that could be delivered in weeks or months instead of years, as is the case with traditional college instruction.

“The fact that a young person can come out of [high] school and for a third of the cost they used to be facing take a fairly short welding course and get hired … that’s a real victory.”

This new workforce development grant program is “providing a good opportunity for adult education students, for high school graduates, for our veterans” and anyone who wants to pursue a new career path or add to their existing vocational credentials, Creamer says.

The Virginia Board of Workforce Development, an advisory body appointed by the governor and largely made up of business leaders, developed the list of qualifying professional credentials that are eligible for reimbursement.

The certification programs, which do not earn college credit, are taught at Virginia’s state community colleges and higher education centers. Students who don’t complete the programs must pay an additional one-third of the enrollment cost.

The grants program is being overseen by the State Council of Higher Education for Virginia (SCHEV), which also will begin tracking related data such as how many students earn noncredit credentials, in which vocational fields, and the change in their wages after earning credentials. Virginia is believed to be the first state in the nation to begin collecting such data.

Virginia’s program also is the first in the nation to be performance-based, requiring that a student successfully earn the industry credential before the community college can be reimbursed, says Craig Herndon, vice chancellor for workforce development services for the Virginia Community College System (VCCS). This ensures that the community colleges and the individual seeking certification both have motivations to see the program through to a successful conclusion. (Nineteen other states offer reimbursement programs for noncredit vocational credentials.)

So far the General Assembly has allocated $4 million in grant funding for the program’s first year and $8.5 million for its second year.

Because the program is so new, there are no data yet for how many students are participating, let alone successfully earning credentials. And the community college system is still putting together its outreach and marketing plans for the initiative, says Jeffrey Kraus, VCCS assistant vice chancellor for communications.

The legislation for the grant program enjoyed bipartisan support as well as the backing of Gov. Terry McAuliffe. Groups that lobbied in support of it included the Virginia Manufacturers Association (for which Baisden serves as vice chairman), the Virginia Chamber of Commerce and various Virginia electric cooperatives. As the legislation was being crafted, more than 1,500 business leaders across Virginia offered their input on the workforce needs of businesses at a series of 22 statewide town hall meetings sponsored in 2015 by the Virginia Community College System.

A December 2014 JLARC report had stated that Virginia’s workforce development programs were “fragmented, complex and disjointed” and that credential programs that were available were not aligned with the employment needs for businesses regionally and statewide. The report’s major recommendations were adopted in the new legislation.

In 2013 the Virginia Chamber of Commerce issued the results of a survey that found that the most pressing issue of concern among its membership of 25,000 Virginia-based businesses was workforce readiness.

In 2015 Burning Glass Technologies conducted a study for Capital One that showed Virginia had 175,000 vacancies for so-called “middle-skills” jobs — those that require more education than a high school diploma but less than an associate or bachelor’s degree. According to the Virginia Employment Commission, those jobs paid an average $58,000 in annual salary. And it took an average of 26 days to fill each vacancy, resulting in 36 million hours of lost productivity, Creamer says.

Some studies estimate that Virginia will need to fill about 1.2 million new middle-skills jobs during the 2020s, and McAuliffe has set a goal for the Virginia workforce to earn at least 460,000 new high-demand vocational credentials by 2030.
“We know that these jobs, with the right training, can improve our competitiveness” as a state, says Barry DuVal, president and CEO of the Virginia Chamber of Commerce.

Says Kraus, with the community college system: “Increasingly you’ll find economic development professionals will tell you tax breaks are great, new roads are beautiful, but if you don’t have the talent, if we don’t have the pipeline to the talent, we can’t close the deal.”

Workforce credentials, he adds, are “a big deal now.”

Millennials and homeownership

One day Shonté Holcomb would like to run her own day care center. But for now the 28-year-old preschool teacher would settle for being able to afford to move out of her parents’ house in Hanover County.

“There’s no way on the salary I make that I could move out and live on my own,” says Holcomb, who makes about $20,000 a year without benefits as a full-time lead teacher at Tuckaway Childhood Development and Early Education Center in Henrico County’s Varina area. She’s currently looking for a second, part-time job so she could eventually afford to rent her own house or apartment.

“I’ve tried roommates in the past, and it just didn’t work out,” says Holcomb, a high school graduate who has taken some college courses but struggles to afford those, too. She’s thought about looking for a higher-paying full-time job, but she enjoys her work and co-workers at Tuckaway. “I would rather have a full-time job that I really love to do … [along with] a part-time job that I could not like but is giving me money,” she says.

Holcomb is hardly unique. Despite an improved job market over the last five years, millennials between ages 18 and 34 are more likely to be living with their parents. In 2014, this was the living arrangement for nearly a third of them, according to a report released in May by the Pew Research Center.

Another report from Zillow released in June, showed that 21 percent of millennials across the U.S., ages 23 to 34, were living at home with parents.
Zillow, a real estate and rental research firm, found that more millennials live alone in Richmond — 15 percent of the 23 to 34-year-old group — than any other U. S. metro. Zillow attributed the distinction to the region’s strong labor market and median income of $49,500 for millennials living alone.

No matter how one slices the data, though, more young people are living at home. Experts point to varying trends, from people waiting longer to get married to economic woes ranging from a higher cost of living to static wage growth and greater student debt burdens.

At the same time, the U.S. Department of Commerce reported that homeownership in America dipped to 63.5 percent in the first quarter of 2016, close to the 48-year low of 63.4 percent reached in 2015’s second quarter.

More barriers to home ownership
Paired with increased barriers to homeownership such as tighter lending restrictions following the 2008 subprime mortgage crisis, the trend begs the question: Is the American Dream of homeownership still a possibility for millennials? Are they even interested?

Despite the stereotype of young adult millennials as aloof, urban-dwelling, bicycle-riding hipsters who rent loft apartments and are obsessed with craft beer, millennials are actually a lot more like their older counterparts when it comes to wanting to own their own homes.

“National studies are showing that millennials do want to own their homes, but of course, as everybody says anecdotally, they’re waiting longer to do it,” says Mel Jones, a research associate at the Virginia Tech Center for Housing Research.

In fact, the older millennials get, the more likely they are to own a home, Jones says, noting that more than half of the oldest millennials own a home and 88 percent of that cohort own single-family detached homes. “Millennials have a strong preference for privacy,” she says, noting that census data and research show that millennials prefer detached homes and home ownership — if they can afford it.

Take Julia Lange, for example. At 29, she says, “I really want to be a homeowner, but I’m not at a point in my life where it makes sense.” A customer service representative for a pest control company, she and her boyfriend rent a small, detached two-story home in downtown Fredericksburg that they share every other weekend with her boyfriend’s son from a previous relationship. Their combined income is around $80,000 a year.

Lange, who holds a bachelor’s degree in sociology from Mary Washington University, feels like her professional, personal and financial lives need to be more stable before she’s ready to make the jump into home ownership. “I feel like all the factors would have to be in place for me to make that decision, but at the same time one of my best friends is a Realtor, and she has emphasized that I’m really just throwing my money away [on rent] and I’d be better off putting that toward a mortgage. … I’m not super young anymore. I need to really find a career and start to get that moving along. I would much rather be putting money toward a mortgage than a rental.”

Mary Dykstra, owner of Roanoke-based MKB Realtors and a past president of the Virginia Association of Realtors, blames the delay on “the life cycle. Unless they’re never planning on having a family, by the time you’re 31 or 32 you’re going to be thinking about kids,” she says, and that also means thinking about home ownership.

Dykstra teaches a real estate class at Virginia Tech and says her students typically tell her they want to own a home with amenities like a big backyard, good school systems and a two-car garage. “It almost made me laugh out loud, because their dream house is what they grew up in,” she says.

As far as barriers go, Dykstra and others say that increased college debt loads and greater lending restrictions are concerns. Still, there are plenty of options for first-time homebuyers such as FHA loans that require lower down payments, or none at all, such as VA loans for veterans or some USDA loans.

Millennial home shoppers also are more likely to spend more and seek perfectionism, rather than buying a starter home that needs a little TLC, Dykstra says. Since it’s more difficult for new homeowners to obtain home equity lines, they’re more likely to spend more on a home that’s polished and move-in-ready than one that requires renovations.

Tired of waiting for repairs
Software engineer Nick Weishaar, 28, purchased a three-bedroom, two-bathroom detached home in Richmond’s Museum District for $230,000 four years ago. Though the home was built in 1924, it came with central air and a detached garage for his motorcycle, features that were important to him. He doesn’t mind making improvements, such as replacing an old claw-foot bathtub. Mainly he was tired of arguing with his landlords about trying to get repairs made. “I wanted my own place so I could do what I wanted with it.”

Weishaar purchased his home with an FHA loan with 3.5 percent down. His down payment and closing costs came out to a little over $10,000. He was able to save up most of that amount while working in France for his business for several months when he was receiving a per diem for all his living expenses.

“I’m very good with my money. I don’t really spend it on a lot of random stuff,” he says. “I’ve never bought a new car or anything. I’ve [always] bought a used car.”

Another distinction among millennials is their willingness to move to a different state or city if they think it has better cultural or job opportunities.

As Richmond Association of Realtors CEO Laura Lafayette says, “Millennials are far more likely than my generation to be focused on ‘Where do you want to live, what are the amenities that we want in a community, what kind of quality of life do we want? … And then I’ll worry about a job and whether I’m going to own or rent.’”

“They’re chasing jobs and making lifestyle choices in a way that wasn’t done before,” agrees Dykstra, “and they don’t want to be tied to a house that will keep them from moving for job opportunities.” Some also may be hesitant about owning due to what they witnessed during the 2008 crash, she allows, noting that most millennials probably know someone who suffered through a foreclosure or a short sale or saw their home values go underwater.

Flexibility is definitely important to Bryan and Nicole Tucker. Bryan, a 30-year-old contractor, and Nicole, a 28-year-old teacher at Henrico County’s Varina High School, have been living with Bryan’s grandmother and saving money for the last six months while waiting to close on their first house. Priced at less than $100,000, the one-story, two-bedroom, one-bath house in Sandston is in good condition but needs work, like central air and upgrades to the kitchen and bathroom. Their plan is to make the renovations and either flip the house or rent it out within the next two years.

In the meantime, they’ve also purchased a tiny house for $8,000 and are spending about $4,000 in renovations to it. It’s sitting on Bryan’s grandmother’s property, and they’re thinking they might buy a piece of property somewhere for the tiny house that could eventually become a site to build a permanent home or just a vacation spot.

As it is, they’ll be paying about the price of a low car payment for the house in Sandston.

Most of their friends who own are maxing out their home loans, but the Tuckers don’t want to have to compromise their quality of life or worry about how they might make ends meet if they have an unexpected pregnancy. After all, they’re not even sure where they want to end up.

Nicole’s uncle lives in Daytona Beach, Fla., and they’ve thought about moving there because they like it so much. “And we’ve looked at other places, too, like Warsaw [on the Northern Neck],” Bryan says. “We love going to this church out there. If we found a place in the town of Tappahannock for the right price right now, I’d probably buy that, too.”

“We don’t know how long we’re going to live somewhere necessarily,” Nicole says, “so we didn’t want to spend a ton of money to be stuck in one spot and get there and be like, ‘Man, we really don’t like this [commute] or, man, we really don’t like this neighborhood.’ It’s nicer to buy something more in our financial range so we don’t have to worry about the permanence so much.”

The STEM effect

After Vanessa Dyce graduated in May with a degree in computer science from the University of Virginia’s School of Engineering & Applied Science, she started a job as a software engineer for Microsoft in Seattle.

As a child, Dyce was good at math and science but says she didn’t really have a clear idea of what engineering was all about until she attended the Introduction to Engineering summer camp, an outreach program of U.Va.’s Center for Diversity in Engineering aimed at reaching minority high school students like Dyce, who is African-American.

Dyce later attended the center’s BRIDGE summer camp, which eases the transition from high school for incoming U.Va. freshman engineering students. In both programs, Dyce, a Loudoun County native, got a taste of what college work is like, as well as engaging in hands-on projects ranging from chemistry labs and computer coding to flight simulations and 3-D printing.

“I came out of that [first] camp realizing that engineering isn’t just one word that means one thing. … It’s very expansive, and you can do a lot with it,” says Dyce.

With a growing national emphasis on interesting high school students in pursuing STEM careers, enrollment in university engineering schools has been on the rise during the past several years.

“We can’t train them fast enough,” says Barbara D. Boyan, dean of the Virginia Commonwealth University School of Engineering, whose undergraduate enrollment has grown 24 percent in the past four years. “There are way more jobs than there are students that we are graduating. … All of the engineering schools are ramping up for this. It’s been an amazing explosion; we all feel the excitement of it but we also feel the pressure of it.”

Engineering schools would like to have more students like Dyce. Despite the explosion in enrollment at engineering schools, recruitment of African-American and female students remains a challenge in Virginia and across the country. Nonetheless, several Virginia schools have fared well in national rankings examining engineering education diversity.

Outreach efforts
Like the outreach programs Dyce participated in, there are dozens of initiatives to interest Virginia elementary, middle and high school students in engineering.

In May U.Va.’s School of Engineering & Applied Science conducted its first internal survey of such initiatives and found that the school has more than 40 K-12 outreach programs, ranging from individual faculty efforts to national programs such as the FIRST Robotics Competition.

“I don’t think anyone at U.Va. Engineering knew that we had as many programs as we actually have until we did the assessment,” says John Fitzgerald Gates, the school’s associate dean and chief officer for diversity and inclusion. “Our impact is just over 2,000 students a year. We have 2,662 students in our undergrad programs in engineering. … We’re reaching almost as many students in outreach [annually] as we educate here on the Grounds.”

What U.Va. can’t say, though, is how many of those students go on to pursue STEM or engineering degrees at University of Virginia or any other college because that data isn’t being tracked. And the story’s the same at Virginia Tech and VCU.

Nevertheless, Gates and others say that engagement efforts are clearly working, pointing to rising enrollment numbers. “Although we don’t have hard data on it, the anecdotal data is that … the [K-12] students’ exposure to engineering is increasing their interest in all STEM fields,” Gates says. “So, whether they wind up thinking about engineering or not, they are deeply interested in STEM vocations and that really meets a need for the nation.”

Rising numbers
Nationally, the number of undergraduates earning bachelor’s degrees in engineering increased by 26 percent between 2005 and 2014, according to the American Society for Engineering Education (ASEE). Between 2006 and 2016, enrollment in U.Va.’s School of Engineering increased by more than 30 percent, from 2,036 students to 2,662 students.

While overall enrollment in university engineering programs is growing, the percentage of female and African-American students is showing little change nationwide. Female students accounted for 19.9 percent of graduating engineering undergrads nationally in 2014, up from 17.8 percent in 2009. Just 3.5 percent of U.S. engineering students earning bachelor’s degrees in 2014 were African-American, down from 4.3 percent in 2013. ASEE says it is “committed to increasing the participation, inclusion and empowerment of historically under-represented segments of society” in all aspects of engineering.

Of the 7,802 undergraduate engineering students enrolled at Virginia Tech in fall 2015, 1,669 students (or 21.4 percent) were women and 224 (or 2.9 percent) were African-American. At U.Va.’s School of Engineering, women make up about 32 percent of undergraduates and African-American enrollment is about 3 percent. At VCU’s School of Engineering, the school’s 492 female undergrads represent 28.7 percent of the school’s 1,714 undergrads and the 188 African-Americans account for 11 percent of the school’s enrollment.

In tracking diversity, ASEE ranks Virginia Tech No. 11 among schools awarding bachelor’s degrees to women in the 2014-15 academic year with 278. Virginia was 19th with 205 degrees.

VCU ranked 13th nationally in terms of percentage of master’s degrees awarded to women (32.1 percent).

George Mason University meanwhile, ranked 18th among schools awarding bachelor’s degrees to Asian-Americans, with 171.

Ladies in the Lab
One effort to increase female engineering enrollment is U.Va.’s Ladies in the Lab, a one-day annual event started last year by U.Va. engineering students Trisha Hajela and Grace Wusk, who both graduated this May. Through Ladies in the Lab, female undergrad engineering students volunteer to give high school girls demonstrations in everything from 3-D printing to DNA extraction and project management fundamentals.

“I think engineering is seen as a boys’ club … that it may not be cool to do engineering if you’re a girl … and I think that’s a huge issue,” says Hajela, adding that K-12 schools and teachers need to do more to encourage girls to pursue STEM studies and combat social stigmas by increasing awareness of female role models in engineering and other STEM fields.

Dyce agrees and says that schools should also consider hiring more female and minority science teachers. “My math and science teachers were primarily male. A lot of the engineers I knew of were primarily male. I guess as far as looking for role models, that was definitely lacking,” she says. “Even in our classes … you might be the only girl. … In a class you might be five out of 50. It’s very common.”

As for increasing African-American enrollment, universities are “having a hard time recruiting students,” says Bevlee Watford, associate dean for academic affairs at Virginia Tech’s College of Engineering. Some of that difficulty may be due to the rapidly changing demographics of the United States, she says. The number of students who self-identify as multicultural or belonging to two or more racial identities is growing. And college marketing strategies may not be changing fast enough to keep up, she says.

“While there might be things that appeal to a black student or help you recruit an African-American or Hispanic student, those same things might not help you recruit a multicultural student,” Watford says.
Gates, who oversees diversity and inclusion programs at U.Va.’s School of Engineering, believes part of the answer for improving the enrollment numbers of underrepresented students could be found in adding more merit-based scholarships.

Early outreach
Another issue is early outreach. Last year, the Virginia Tech College of Engineering hired Kim Lester as its coordinator of pre-college programs. Lester has instituted a pilot program in Montgomery County Public Schools using volunteer Tech engineering undergrad students to conduct lessons with fifth-graders at Auburn Elementary School in an effort to interest them in STEM studies.

“Ideally what we’re looking for is a pipeline from the youngest to the oldest,” Lester says. “It’s getting to the point now that [academic] decisions students make in middle school are going to affect their possibilities later on. If they don’t have the math prerequisites, it may narrow their possibilities they have later on in terms of colleges.”

Dyce, the recent U.Va. grad, also thinks colleges need to do a better job of reaching out to younger students — and casting a wider net. “By high school … students have already decided if they’re turned off by math and science,” she says, and the outreach programs that do exist tend to focus on either high-performing students or those naturally inclined to like STEM courses. “If we were able to catch them earlier, they would perhaps give math and science a better eye.”

Like almost every other state, Virginia has no high school curriculum for engineering. And advanced placement engineering tests for high school tests are still being piloted on the national level.

One possible model for increasing engineering studies in Virginia public schools is Project Lead the Way, a nonprofit founded in 1997 that offers curriculums in engineering, computer science and biomedical engineering to more than 8,000 schools in all 50 states. Many universities, such as the University of Maryland, offer preferential admission policies for students who complete Project Lead the Way programs. However, it’s a fairly new concept in Virginia, clustered mainly in Northern Virginia, and no Virginia university offers preferential admission for its participants yet.

Another testbed for engineering education in public schools is U.Va’s Laboratory School for Advanced Manufacturing Technologies. A joint K-12 education initiative involving U.Va.’s School of Engineering and Curry School of Education with local school systems, it offers students at some middle schools and high schools in Charlottesville and Albemarle County a contextual process for learning about engineering.

“Some of these new technologies like 3-D printers give kids the opportunity to be more engaged. … Almost everything has a micro-controller in it now. You can make things that do things in the world,” says Glen L. Bull, a U.Va. education professor. “In many cases, if you do it the right way, this is more interesting than sitting in your chair with your hands neatly folded, listening to a lecture.”

The first students to enter the program will graduate from high school in two years, and U.Va. has guaranteed them third-year enrollment in U.Va.’s School of Engineering if they maintain a minimum 3.2 GPA in a dual-enrollment associate degree program.

“Nationally, the workforce and even colleges don’t look like a snapshot of America” in terms of demographics, Bull notes. That’s why it’s crucial to give all children encouragement and exposure to STEM disciplines, he says, not just the high performers.

U.Va’s Laboratory School for Advanced Manufacturing “is not a magnet school. It’s not a charter school. It’s just an ordinary school and every kid gets a shot at this. Some will be interested and some, will not, but we’re trying to level the playing field,” Bull says. “You have to start when all of the kids can have a shot at finding out if this is interesting to them.”

Calling all bidders

“Let’s start at a million! One million dollars! One bidder, one bidder, one …”

“400!” “We have $400,000! Now five!”

On a warm March day, auctioneer Tim Dudley’s rapid-fire patter rings out over a loudspeaker to a small crowd of about 50 people gathered on a grassy meadow in front of a clapboard 19th-century farmhouse.

At one time, the house was a pristine white. Now, after years of disrepair, large swaths of bare, weathered gray wood peek through the home’s peeling paint.

Still, 25 people have registered to bid on this sprawling, 288-acre historic farm in Gordonsville that has fallen into bankruptcy. It’s being sold at auction by Richmond-based Motleys Asset Group on behalf of the loan holder, Colonial Farm Credit of Mechanicsville. A private buyer originally purchased the farm estate for $900,000 in 2006 but couldn’t keep up the payments so Colonial Farm foreclosed on the property, necessitating the auction. (The property owner in the foreclosure must consent to holding the auction on the property site, otherwise the auction is held at the local courthouse.)

After six minutes of steady, incremental bidding, the auction slows to a stop. Dudley exclaims, “It’s been sold for $755,000!”

The winning bidder is cattle and hog farmer Charles S. Rosson, who bought the property with his son, Charles A. Rosson. He has been eyeing the property for years. “I’ve got cattle across the road here,” he says. “We just need extra land for livestock.”

Like other registered bidders, the Rossons had to bring a $25,000 certified check as an initial deposit to qualify for the bidding. A 10 percent deposit is due within 10 days after the auction, and the deal must close within 30 days. In addition to the Rossons’ bid of $755,000, they also must pay a mandatory 10 percent buyer’s fee of $75,500 to Motleys. As the trustee selling the property, Colonial Farm Credit had already paid all delinquent taxes on the farm prior to the auction.

“You have 25 registered bidders looking to buy a farm that’s [valued] almost at a million dollars. That’s good for all of us,” says Dudley, vice president of SVN Motleys, the commercial real estate brokerage division of Motleys. “That’s letting people know that the economy is starting to turn back again.”

Increasingly, auctions are being used to sell not only residential properties in Virginia but also commercial and agricultural real estate and high-end historic properties.

“We’ve seen a big increase [in commercial sales] over the last, I’d say, 10 years,” says Motleys CEO Mark Motley. In his industry, he adds, the preferred term for auctions is “accelerated sales.”

Though real estate auctions are a popular and accepted sales tool in nations such as Australia and New Zealand, people in the U.S. have long attached a stigma to auctions — largely a holdover from foreclosure auctions in the Great Depression. In the past, buyers might think an auction signaled that a property was distressed or damaged. Now buyers and sellers are becoming more educated about the auction process and are more willing to participate, Motley says.

Marketing and advertising
For sellers, full-service real estate marketing and auction firms such as Motleys offer more than just auctioneering; they conduct targeted marketing campaigns, create slick advertising and actively seek out buyers they believe would make a good match for the property.

For instance, when Motleys sold Meadow Event Park, the Caroline County home of the State Fair of Virginia, in 2012, it found a winning bidder in Memphis, Tenn.-based fairground management company Universal Fairs. Two weeks after buying the park and the rights to the State Fair for $5.45 million, Universal Fairs turned around and sold Meadow Farm Event Park and the State Fair to its current owner, the Virginia Farm Bureau Federation.

Last year when Motleys oversaw the foreclosure auctions of Salem-based Old Virginia Brick, it sold the company’s corporate headquarters site to a Roanoke attorney and shopping center developer for $1.7 million; a competing brick manufacturer purchased the defunct Old Virginia Brick’s Madison Heights manufacturing facility for $687,500.

“The actual auction is a very small portion of what we do,” says John S. Nicholls, president-elect of the National Auctioneers Association and CEO of Fredericksburg-based Nicholls Auction Marketing Group. “We consider ourselves an accelerated marketing firm. Everything culminates in the auction event. … Marketing is everything. The auction only takes 10 minutes on these deals but it takes 90 days of meetings planning the event.”

In February, Nicholls’s firm facilitated the $1.7 million auction of two historic buildings that were previously the home of the Fredericksburg Area Museum and Cultural Center. Conducted in cooperation with Cushman & Wakefield, and Thalhimer, the auction attracted a crowd of 120 people and 10 registered bidders. No plans have been announced by the winning bidder, LaPlata, Md.-based Battle Creek Construction, but Nicholls says he’s heard that the buildings may be developed as a mixed-use property combining office space, residential units and dining.

“This project screamed that it needed a guerilla marketing campaign,” Nicholls says. “It screamed that it needed to be an event, and that’s what we brought to the table. We did a huge guerilla marketing campaign and targeted marketing, and that culminated with 120 people at the auction. … How long this could have languished on the market with a traditional [real estate listing], who knows? There’s really no impetus to act on a static listing. We give them an impetus to act, knowing that an event is taking place. The looking and waiting is over.”

Jon Gollinger, CEO of Accelerated Marketing Partners in Boston, says, “It’s a very powerful tool if you can bring the market to a property. … If you have 10 bidders on something, you can be pretty confident you’re going to achieve fair market value.”

Offering a “once-in-a-lifetime opportunity” to get a better than usual deal on a property “creates a very strong incentive for individuals within the marketplace to bid,” he says. “If we can get three to four bidders per property … then we feel comfortable that the market is going to deliver a fair market value. Now we may not like that value, but we can be sure we’ve delivered market value by creating that kind of competitive market.”

Accelerating sales
Gollinger’s firm auctioned off 29 condominiums at the riverfront community of Rocketts Landing in 45 minutes in 2014, bringing in $7.3 million. “We were very happy,” says Rocketts Landing developer Jason Vickers-Smith, CEO of the WVS Cos. “We were able to sell out all our remaining inventory we had at Rocketts Landing.”

Not long after development began at Rocketts Landing in eastern Henrico County, the market went into recession, recalls Vickers-Smith, and his company was faced with carrying costs such as property taxes, maintenance, construction loan interest and homeowners’ association fees on unsold units while waiting for the market to improve. “By doing the auction, we were able to really accelerate the sales,” he says. “In all likelihood it would have taken us two to three years to get the same numbers by conventional methods.”

An auction isn’t a good match for every property. Yet it’s a good vehicle to induce sales when the market is slow or you’re selling a unique property without comparable properties in the market, such as a historic mansion or farm, Gollinger says.

In some cases, like with GOP frontrunner Donald Trump, a bidder can pick up properties at auction for a steal. In 2012, Trump bought Albemarle House, the former home of John and Patricia Kluge, for $6.5 million. The 45-room, Neo-Georgian mansion, built by the late John Kluge — a billionaire media mogul —originally was listed at $100 million.

Trump swooped in after the creditor for the property repossessed the home just outside Charlottesville and filed a foreclosure lawsuit after Patricia Kluge, who acquired the house in a divorce, defaulted on millions in loans. (Trump’s big bargain may have less to do with the art of the deal and more to do with the fact that he bought up all the surrounding property, including the mansion’s front yard, virtually ensuring no one else would bid on the house.) The property, now operated as a boutique bed-and-breakfast, is part of the Trump Hotel Collection.

Before buying Albemarle House, Trump purchased Patricia Kluge’s winery, also on the property, for $6 million at a foreclosure auction. It includes hundreds of acres in a private setting with spectacular scenery.

For large, high-dollar commercial properties, though, an auction usually isn’t the best way to go. In March a foreclosure auction of the $185 million James Center office complex in Richmond was canceled at the eleventh hour.

“This sale in Richmond would have been the largest foreclosure I have ever done in 35 years,” says attorney William H. Casterline Jr. of Blankingship & Keith PC in Fairfax, who represented the James Center’s mortgage holder.

He can’t speak to the specifics of the James Center other than to say registered bidders would have had to bring a $5 million deposit to the sale. In most cases, however, Casterline says, the lender will form a special entity to purchase a high-dollar property like an office park from itself and then market the property through traditional commercial real estate channels.

“You rarely find purchasers willing to buy a multimillion-dollar property at a foreclosure [auction] and that’s because foreclosures are distressed sales. They occur very quickly and all the normal sorts of due diligence you do in commercial real estate are reduced,” he says. “The field of potential buyers is fairly small and their opportunity to do due diligence is just so restricted that we don’t see too many third-party sales at this level.”

Manna from heaven

In 2011 wealthy Richmond civic leaders Jim Ukrop, Bob Mooney and Ted Chandler launched an angel investment group, New Richmond Ventures, with $10 million to encourage promising startups to locate and grow in the Richmond region.

Four years later, the group, now rebranded as NRV, has invested more than $35 million in startup companies in the Richmond area (and one in Charlottesville) and has attracted about $56 million in outside investments. (One of its star investments, Richmond-based electric car charger manufacturer Evatran, now is seeking capital in China with NRV’s help.) And NRV itself is making corporate changes to more closely resemble a venture capital fund rather than a partnership of angel investors. As part of the change, it also will widen its investment focus to startups statewide.

“We’re working hard, pouring more capital into Virginia because we see so many good deals,” says NRV Managing Director Scott Tolleson. “The market has matured. … Five years ago, certainly 10 years ago, there wasn’t a whole lot of deal activity [in Virginia], and now there’s a lot. I think it really started with the universities starting their entrepreneurship programs and … [entrepreneurship] is just becoming more of our culture.”

While the national media has obsessed over unicorns and billion-dollar valuations such as Uber and Airbnb, Virginia’s venture capital landscape has been quietly evolving in significant ways with the rise of regionally focused and civic-minded angel investor groups such as NRV, 757 Angels in Hampton Roads and CAV Angels in Charlottesville. Some of these groups are now providing critical early-stage capital to startups. That type of investment once was the purview of larger, institutional venture capital firms funded by clients such as pension funds.

“The big story [in venture capital] is what’s called the democratization of venture capital — the explosive growth of incubators and accelerators and early-stage funds,” says Thomas R. Salley with Washington, D.C.-based Cooley LLP, one of the nation’s top law firms specializing in venture capital and entrepreneurial companies. Its clients include NRV.

“There are lots of successful investors and entrepreneurs who are banding together to start funds,” he continues. “There’s an explosion of early-stage investor money of a non-institutional variety, and you see that in the plethora of angel investment clubs and founders’ clubs … That’s good for the more traditional venture funds because those angel groups are like a farm team identifying prospects and bringing them up.”

An expanding base of angel investors creates a stronger economic climate, Salley adds. Venture-backed companies hire more employees and as their companies grow, they bring more cash into the local economy. “Frequently the successful entrepreneurs come back and [start new businesses] … or they become angel investors themselves. It creates a virtuous circle.”

Angel groups, he explains, are very loosely organized and aren’t formally incorporated as limited partnerships or LLCs: “They’re usually a collection of like-minded people who want to see young businesses grow.”

‘Full-contact investing’
On the other hand, institutional venture capital firms have detailed partnership agreements that spell out expectations over the lifespan of the fund, usually 10 years. VC firms are run by professional managers, and their investment capital comes from their clients, which typically include corporate retirement funds, pension funds and high net-worth individuals.

While venture capital groups inject more money into growing companies, independent investor groups account for a much higher number of deals. Nationally, institutional venture capital funds invested $49.5 billion in companies in 2014, compared with $24.1 billion invested by the angel market, according to Jeffrey Sohl, professor and director of the Center for Venture Research at the University of New Hampshire. Angels tend to invest about $350,000 per deal on average, compared with $8 million to $9 million by venture firms.

Sohl notes, however, venture capital firms make about 4,000 deals per year compared with as many as 70,000 by the angels. They far outnumber venture capital firms and provide the lion’s share of startup capital for businesses as opposed to the latter-stage investments made by venture capital firms.

The majority of the time, Sohl says, angel investing “is full-contact investing. This isn’t passive stuff. You need to be close by to work with the companies, to go to the board meetings.”

Angel groups across the nation also have begun adopting institutional venture capital fund practices similar to the Silicon Valley-based startup fund Y Combinator, says Salley, the Cooley attorney.

Like NRV, these angel groups are growing to the point that they’re morphing into something more akin to traditional venture capital funds, says Sohl. He describes them as “boutique venture capital firms. … They have an executive director … [but] instead of the money coming from pension funds and endowments, it’s coming from rich individuals.”

Bigger deals
Meanwhile in Northern Virginia and the Washington, D.C., area, where the majority of Virginia’s venture capital resides, there are far fewer large institutional venture capital firms than in the tech-boom days of the late 1990s. The survivors, however, are making bigger deals than ever, as evidenced by the recent activity of top regional players such as Alexandria-based Columbia Capital, Washington, D.C.-based Revolution LLC and New Enterprise Associates (NEA) of Chevy Chase, Md.

The world’s largest venture capital firm, NEA, founded in 1977, manages more than $18 billion in assets across 15 funds. In Virginia, NEA invested $136 million in McLean-based Cvent, an online event management firm, in 2011. And last December NEA co-invested $16.5 million in Charlottesville-based PsiKick, which makes self-powering wireless sensors for “Internet of Things” applications. (Charlottesville was recognized by the National Venture Capital Association as the fastest-growing region in Virginia for venture capital dollars last year, largely based on the PsiKick investment.)

Founded in 1989 by Mark Warner, now Virginia’s senior U.S. senator, Columbia Capital manages $3 billion in capital. Revolution LLC is led by Steve Case, the co-founder and former CEO of AOL Inc. A private venture capital investment fund with more than $2 billion in assets under management, it has invested in companies such as Washington, D.C.-based LivingSocial, Boston-based Zipcar and Fairfax-based CustomInk.

“At one point there were over 100 venture funds in Northern Virginia in the late ’90s. Now if you look at the truly active ones, there are probably under 10,” says Bobby Ocampo, a partner with Revolution. The mature, high-dollar venture capital funds have performed well over the long haul, but many of the midsize firms have gone by the wayside, particularly after the 2008 recession.

“I think we’re starting to see significant stratification in the venture industry,” observes Ocampo. “The top-tier venture firms are raising larger and larger funds, and new upstarts are coming into the market with smaller funds and differentiated investment models. I think more money will be available to startups that are clear winners with real businesses and startups that fit into the strategies of new upstart funds (geographic, sector focus, etc.).

“It also helps that the cost of starting a startup has drastically decreased in the last couple decades,” adds Ocampo, “which bodes well for entrepreneurs looking to start their companies, especially in regions outside of Silicon Valley, which is now part of Revolution’s investment thesis.”

Filling the void
Typically, startup companies first raise money from friends and family and then get a small investment, around $50,000 to $100,000, from an individual angel investor. Then companies begin to raise funding in formal venture capital rounds, beginning with what is known as the Series A (or first institutional) round.

Whereas in past years institutional venture capital firms almost exclusively funded these Series A seed rounds, which usually raise from $2 million to $15 million, angel groups such as NRV are starting to take on more of this responsibility now.

“A lot of funding sources are filling the void,” says Carl Grant III, executive vice president of business development in Cooley’s Reston office. “The angel community is much more vibrant than it was [in the 1990s]. There were a handful of angels, and they weren’t organized in any real meaningful way. Now there are real solid angel groups coming together who are putting meaningful amounts of money into companies.”

Revolution’s Ocampo notes that it has more than $1 billion under management, so to make a profit, Revolution has to make larger investments in less risky, more stable companies. “When you look at it, a $1 million investment doesn’t move the needle. When you have to write a bigger check, it tends to be [investing in] companies that are more mature that know what to do with that money.”

In comparing Virginia’s venture capital industry with the rest of the U.S., “the good news is we’re on the map, but the bad news is the D.C. region makes up about 5 percent of the VC dollars,” says John Backus, co-founder and managing partner of Reston-based NAV.VC, a venture capital fund that makes early-stage investments in technology businesses. “Five percent is tiny compared to the population of our region and the power base of being the nation’s capital. We should aspire to have more than our fair share and not just our fair share. We’re in the top 10, but we’re way behind Silicon Valley … New York, Southern California … and Boston.”

Virginia’s venture capital industry comes in around sixth to eighth in the nation based on total venture capital invested, depending on the study, says Backus, who also serves as a board member and secretary of the National Venture Capital Association.

As far as startups and investment opportunities go, however, Virginia “is one of the more robust non-Silicon Valley markets in the country,” Ocampo says.

757 Angels
Regional investment groups like 757 Angels hope that remains true. Begun in February 2015, “our mission is to definitely inject capital into the Hampton Roads ecosystem and to really catalyze the economy,” says Monique Adams, the group’s executive director. The group grew out of recommendations by a regional task force looking for ways to spur economic development and broaden the area’s business base after federal budget cuts.

Unlike NRV or traditional venture capital firms, 757 Angels operates like a club and doesn’t provide formal mentoring or operational support. The group’s executive director and board of directors vet applicants through a “Shark Tank”-like process, winnowing the pool to a group of local firms that will then make their pitches before a dinner meeting of the group’s 100 members. Interested members fill out cards and make their investments directly with the companies. To date, 43 members have invested a total of $2.2 million in four companies. They’ve also helped bring in an additional $1.1 million in outside investments.

Regional firms “are more like investment clubs who aren’t beholden to the retirees of the DuPonts or Lockheed Martins or Xeroxes. They can restrict their focus to a region or to a city and have their investors be perfectly happy with that because their motives are not purely monetary profit,” says James B. Murray Jr., a general partner at Court Square Ventures, a Charlottesville-based institutional venture capital firm with $120 million in assets under management.

“We may be based in Virginia,” Murray says, “but it is our job on behalf of our investors to find the best deals … regardless of where they are.” In addition to backing companies in Virginia and on the East Coast, Court Square Ventures has invested in companies across the nation, including Boston, New York and Seattle.

Murray allows, however, that his firm does have a “bias toward the mid-Atlantic region because it’s easier to oversee the investments, and that is an important aspect of how well you manage your capital.”

And that bias is even more evident in angels: More than 90 percent of angel investments are made within a half-day of travel time from the angel investor’s primary residence, says the University of New Hampshire’s Sohl.

Close to home
When NRV is looking to invest in a company, “we’re thinking about our ability to help run the company on a personal level. The ones we tend to invest in tend to be close to home. We like to spend an awful lot of time on our portfolio, helping them with everything we can,” explains NRV’s Tolleson. “We are the kind of guys who would take a business and grow it.”

This approach is relatively new to East Coast investors, who in the past tended to treat capital investments more like stock purchases, he says. “It takes an awful lot of the risk out of our investment that we do this level of operational support for our investments. When I started my first company, my first investor handed me a $2 million check, and I didn’t see him for three months until the first board meeting, and I thought that was pretty scary. NRV is almost like a graduate accelerator program.”

PsiKick CEO Brendan Richardson, a U.Va. grad who spent 12 years working in the venture capital business on the West Coast before returning to Charlottesville, already had excellent contacts in the VC world. PsiKick had significant angel investments before landing its $16.5 million investment deal from NEA last year. But for startups without his connections, regional angel investor groups can be a great solution, he says: “If you’re not well-networked, or you don’t travel in those circles, then the angel groups are a really effective starting point to at least go talk to them and find out what they would go look for to select a company to present to their group.”

And “it’s no harder to get angel investments into startups in Virginia than anywhere else. In fact, it’s relatively easier than most places,” says Richardson, who also worked for Investure LLC, a Charlottesville-based investment management firm for endowments and foundations. Charlottesville in particular, he notes, has a wealthy base of angel investors as well as a variety of excellent investment opportunities provided by the University of Virginia’s research projects.

Overall, despite the possibility of a few minor bumps, the venture capital market appears fairly stable for the immediate future, say the University of New Hampshire’s Sohl and others. However, more could be done to strengthen Virginia’s presence in the national VC market. For Murray, that means a more concentrated focus on entrepreneurship and commercializing research and spinning off more businesses from state universities such as Virginia Tech and the University of Virginia.

After all, at its heart, “the venture capital market is not about venture capital firms,” observes NRV’s Tolleson. “It’s about entrepreneurs and the quality of those businesses. And we see more and better stuff every year.”

The right price point

Folks say a dollar doesn’t buy what it used to, but it still does at Chesapeake-based Dollar Tree stores.

“As long as there’s a dollar in someone’s wallet, we can sell something for a dollar,” says Bob Sasser, Dollar Tree’s CEO. “And we really work hard to exceed our customers’ expectations as to what a dollar is worth.”

The company, which opened its first dollar stores 30 years ago, is bigger than ever, having recently completed its $9.1 billion acquisition of discount retail chain Family Dollar.

Fighting off a competing offer for Family Dollar from rival Dollar General, Dollar Tree now is arguably the market leader among dollar stores, operating more than 7,800 Family Dollar stores and 5,800 Dollar Tree stores across the continental United States and Canada. The Federal Trade Commission approved the merger after Dollar Tree agreed to sell 330 Family Dollar stores in 35 states to a private equity firm.

With the addition of Family Dollar, Dollar Tree’s annual revenue is expected to climb from $8.6 billion to $19 billion.

Family Dollar “is a great addition and combination” to Dollar Tree, Sasser says. “Our two businesses are very complementary to each other. Family Dollar’s business is over 50 years old, and it’s a very well-known brand.” Family Dollar serves mostly urban, lower-income markets, he adds, whereas Dollar Tree is aimed at suburban, middle-income customers.

Dollar Tree plans to continue running the companies as separate brands. However, behind the scenes, Sasser says, “this was a great opportunity to deliver synergies by combining these two large companies into even a larger company with more buying power.” That buying power lowers costs in buying merchandise for resale and in purchasing supplies and services.

Family Dollar CEO Howard R. Levine stepped down from his post in mid-January. Dollar Tree said he had stayed to help integrate the companies after the acquisition, which was completed last July.

Family Dollar now is led by Gary M. Philbin, its president and chief operating officer since July. He previously was president of Dollar Tree.

Dollar Tree traces its history back to 1986, when co-founders Macon Brock, Doug Perry and Ray Compton created a discount retail chain, Only $1.00, which had stores located mostly in suburban malls.

The dollar stores built on a retail legacy begun in 1953 when Perry’s father, K.R. Perry, opened a Ben Franklin variety store in downtown Norfolk, which later was named K&K 5&10.

In 1970, Brock and the Perrys started a chain of toy stores in Norfolk called K&K Toys, which eventually grew to 130 stores. The 5&10 continued to exist and served as the foundation for Dollar Tree. In 1991, the toy store chain was sold to KB Toys, with the money being used to expand the dollar stores.

The chain changed its name to Dollar Tree in 1993 and went public on NASDAQ two years later, selling at $15 a share. In the past year, the stock has sold at $60 to $84 a share.

Brock, former Dollar Tree CEO, has been chairman of the board since 2001.

The dollar store is “a concept that customers like; everything’s a dollar — it’s disarming,” says Sasser, who has been Dollar Tree’s CEO since 2004 and served as its chief operating officer from 1999 to 2004. “Customers can come into the store and bring their kids in, and they can give their kids a buck, and they can have anything in the store. It’s a great shopping experience.”

Explaining the company’s rapid growth during and after the Great Recession, he says, “We serve a real purpose for our customers as they look for ways to make ends meet. … Many customers in Middle America in recent times with all the issues with the economy and people either out of work or afraid they would be out of work, are looking for ways to stretch their budget. They look to Dollar Tree more and more.”

And that may explain why dollar stores represent such a competitive space. Retail giant Wal-Mart has been building neighborhood markets that are much smaller than its superstores in an effort to provide customers more of the quick access and convenience they associate with dollar stores. Suburban competitors such as upstart Five Below also have entered the discount retail fray.

Nevertheless, Sasser insists that Dollar Tree’s primary competition is itself, and its mission remains staying focused on its business model. “Certainly we’re not comparing ourselves to the Wal-Mart Super Centers with 200,000-plus square feet, selling everything. … We deliver great stores and a great shopping experience and exceed our customers’ expectations for what you can buy for a dollar. … We’re the only national retailer that everything’s a dollar, and it’s been the same price for 30 years. No one else can say that.”
Times may change, but the price of Dollar Tree’s merchandise won’t, says Sasser, proudly pointing out that some sale items, such as greeting cards, are priced for even less than $1.

“The dollar is the price point,” Sasser says. “It’s on the front of the store. It has been for 30 years.”

Fewer branches, more apps

It’s been more than eight years since Apple debuted the iPhone. Since then, smartphone adoption rates have exploded: Two-thirds of Americans now own a smartphone, and the numbers aren’t slowing down.

This revolution in technology has not only transformed American society but business as well, and its impact can be seen perhaps most directly with the banking industry, which has reduced its overall number of branches in reaction to consumers seeking faster, on-demand technological solutions to their financial needs outside of regular banking hours.

“Banks in Virginia are acutely aware of the way technology is changing the banking model, just like banks all over the country,” says Bruce Whitehurst, president and CEO of the Virginia Bankers Association. “You see wide adoption of online banking and mobile banking. There are a lot of changes going on in branches in terms of both the way a branch is staffed and the size of the branch because clearly branch traffic continues to decline.”

Technology also is changing credit unions. At Virginia Credit Union, Chris Saneda, chief information officer and executive vice president of data and digital innovation, says:“We strongly believe that the mobile device is going to be the gateway to all other services. It might be a phone, it might be a wearable, who knows? We have a mobile-first posture to make sure we have a strong consideration among mobile enthusiasts. All ages are getting online and going mobile because of the convenience. It’s not limited to just millennials.”

More than technology, “what’s really changing is the needs and priorities of our customers, and because of that … we’re making our entire organization much more accessible to the customer base,” says Leesburg-based Anthony Tremonte, a financial center sales and Merrill Edge regional executive for Bank of America.

For instance, Bank of America, SunTrust and other financial institutions are beginning to implement live video chats with tellers at ATMs. Video tellers can perform any services that an in-person teller can, except that they offer extended weekday and weekend banking hours compared with branches, Tremonte says.

Nevertheless, mobile still is the driving force behind banking technology at present. About 32 million of Bank of America’s 48 million national customers are using online or mobile banking, with 18 million alone using mobile devices, he says.

“We’re doing 222,000 mobile check deposits every day. The total number was 20 million for the third quarter, worth about $17 billion in assets. That’s a big number to capture through a mobile app, and I think that showcases how important our customers think this is,” Tremonte adds.

Features such as mobile check scanning, making bill payments and transferring money are commonplace on many apps now. Virginia Credit Union offers loan applications via mobile banking, and Bank of America customers can use their smartphones to schedule a same-day, in-person appointment with a bank representative, similar to making an appointment at the Apple Store’s Genius Bar.

In many cases, mobile phones are beginning to supplant debit cards, via digital wallet services such as Apple Pay, Android Pay and Samsung Pay, which allow consumers to pay for purchases by scanning their smartphones. A number of banks and credit unions, including Bank of America and Virginia Credit Union, already offer these services.

“We believe that the physical act of swiping a card will likely not exist in 15 years,” Saneda says.

And even if the card does still exist then, the magnetic stripe on the back may not, Whitehurst says, noting that it’s gradually being phased out in favor of an embedded microchip that’s more difficult to counterfeit. You may already have a card with the microchip. Major retailers such as Target are using it.

Apple Pay utilizes fingerprint authentication as a security protection for financial transactions, and bankers say biometrics such as retina scanning at ATMs are likely on the horizon in the next decade. This year Virginia Credit Union plans to implement voice authentication for customers using its automated phone services.

As the Internet of Things grows, there also will be more devices enabled to make payments, from clothing and wearable devices to automobiles.

“It’s really about the experience. Payment will be an afterthought,” says Saneda, noting that there are a staggering number of tech entrepreneurs and retailers developing new payment methods and apps. Deciding which technologies and applications make for good strategic partnerships and added convenience for customers is a consideration banks and credit unions will be making more and more.

Not everyone is on board with new tech, however.

“We’re always being sensitive about folks who are not comfortable with technologies yet,” Saneda says. “You don’t have to do biometrics — there are other vehicles and paths still available,” including in-person tellers, ATMs and phone services.

Many branches are integrating technology such as iPads into their day-to-day business practices and even working to educate customers on how to use it.

At Cardinal Bank’s University Mall branch in Fairfax, customers can get demos of how to do banking services on devices including the Apple Watch and Samsung smartphones.

“We did a total redesign [of the branch] and placed less emphasis on the teller line. It’s not even visible to the client. We really want it to be more about the relationships. … We focus on explaining our products,” says Bernard H. Clineburg, executive chairman of the Tysons Corner-based bank. “The design is more modern, more open, and it’s funny, we find that … it’s becoming a place for a couple of the older ladies to come and enjoy a coffee and make deposits. It’s kind of fun.”

Whitehurst notes that “it used to be that you had to go into the branch for your banking. Then we had ATMs, then telephones, then online banking, then we had mobile. The addition of [new] delivery channels doesn’t mean banks have eliminated the prior channels.

“You can bank 24/7 now, no question about it, but you still have all these options,” he says. “There have been significant changes, all driven by technology, that have made the ability to do your financial transactions how you want to do it and when you want to do it as good as it’s ever been.”

High-tech real estate

When brokers at Cushman & Wakefield|Thalhimer wanted to show potential clients what the view from the proposed Reynolds South Plant office tower on the James River would look like, they didn’t bother with conceptual drawings — they hired a drone.

“We had the drone go up to the height of 15 floors and spin around so people could see the views you’d have from that height of the river and downtown,” says Brad McGetrick, director of brokerage services for the Henrico County-based firm.

Like other industries, real estate has been transformed in recent years by the supersonic momentum of technological advances. From drones to smartphones, tablets, apps and online databases, real estate professionals and their clients have access to more information about properties than ever before — and it’s available almost instantaneously from practically anywhere.

“The speed at which we communicate now is just phenomenal,” says Jay Mitchell, vice president of the Virginia Association of Realtors and managing broker with Berkshire Hathaway Home Services Towne Realty in Virginia Beach. “Sometimes we’re negotiating contracts all by text. … I’ve known agents who have done deals, and they’ve never even spoken to the other agent involved — they’ve texted, they’ve emailed and they’ve maybe never even met [in person]. I’m not saying that’s great – I’m just saying it’s how some of it is happening now.”

So is less human interaction a good thing? Do residential agents and commercial brokers fear their jobs are becoming obsolete?

While technology has changed their jobs considerably, these real estate pros say they remain an integral part of the process. That’s because real estate is, at its heart, about relationships and insider knowledge.

Technology enhances the profession, says Deborah K. Stearns, senior vice president in JLL’s Hampton Roads office. Yet, “data alone does not answer questions or allow a user or tenant to make quality judgmental decisions about the property,” she adds.

Commercial brokers know their communities and can give clients information on such things as “whether there’s a new road coming up, whether there’s demographics that complement or don’t complement their business [and] any sort of zoning issues,” says Stearns. Then there’s the fine print of leasing and sales contracts, not to mention tenant build-outs, where clients need professional advice.

Many brokers also are knowledgeable about local schools, neighborhoods and politics — quality-of-life issues that can make or break a deal.

Mitchell likes to think that’s where Realtors earn their keep. “By really knowing the market, knowing the people and being able to guide their clients to properties they can’t possibly find electronically. I’ve been in Rotary for over 20 years. … I hear things from my Rotary friends. I know X house may be coming on the market. … That’s the kind of stuff you are never, ever going to get on somebody’s app. … That has to be relationship driven.”

Keeping a relationship focus while staying up to speed on technology is the new balancing act for real estate pros.

It’s not unusual for residential and commercial brokers to carry tablet computers that allow them to check property listings and emails, show clients videos and photos and get electronic signatures on contracts.

Smartphones are invaluable not only for texting but also for sending and taking property photos. Some professionals upload their own smartphone photos to real estate databases when they’re in a rush to get a property listed. Others tell stories about using Skype or FaceTime video calls to discuss real estate listings with faraway clients.

As for drones, they’re still viewed as experimental in the industry, but they’re also in wide use.

Richmond-based aerial photographer Richard MacDonald has been working for commercial real estate clients for 20 years and explains that drones have opened up new vistas. A photographer on a cherry picker or ladder can shoot at a height of about 30 feet. A helicopter flies at about 400 to 500 feet. Drones are filling the gap between the two with dynamic, high-definition aerial videos and photos that were previously impossible to get.

“Everyone’s excited about it. There’s no question about that,” says MacDonald, president and director of photography for Henrico County-based New Media Systems Inc. Renting a professional aerial camera and helicopter for the day can cost a client as much as $25,000, he says, while hiring a drone is a far more affordable option, with some operators charging $500 to $1,000 per commercial property.

MacDonald says he counsels clients to use drone footage and photos as one piece of the overall marketing package, including it in video and photo packages with ground-level photos and traditional aerial photos when necessary.

Drones provide images and data in real time. In addition to a photo of a property, footage from drones shows local infrastructure, roadways and a property’s proximity to competitors. Some also are used to take indoor aerial footage within large warehouse spaces.

These days one popular technological tool for commercial brokers is the online subscription service CoStar. It is a one-stop, Web-based subscription service that allows brokers to market and research properties as well as to obtain detailed market analytics. The data includes comparable sales, multifamily leasing rates, marketplace trends, demographic data and maps.

CoStar Group Inc., based in Washington, D.C., also owns LoopNet, a commercial real estate listing service that offers a more limited number of features that the public can search for free.

“It’s essential. They’re a monopoly,” says Stearns, noting that CoStar is both indispensable and very expensive. “They require all the agents [in a firm] to be licensed, and if you’ve got a big shop, that’s a lot of money.”

Property search begins online
On the residential side, perhaps the biggest change wrought by technology is how much data are available to the public. Websites such as Zillow and Trulia, which Zillow recently acquired, provide real estate listings, property estimates and neighborhood information.

Five to 10 years ago, it wasn’t uncomon for Realtors to perform all the detective work to assemble listings of available homes that met buyers’ needs. Now, “90 percent of the consumers have been online before they call a Realtor, which helps us. They have done a lot of researching prior to that,” says Bill White, president of the Virginia Association of Realtors, a statewide trade organization, and president/owner of Richmond-based Joyner Fine Properties. “Most people have been to at least two or sometimes three national [real estate listing] websites before they call us.”

In a recent report from the National Association of Realtors, 42 percent of a group of recent homebuyers said the first step they took in the home-buying process was to search online for properties while 14 percent contacted a real estate agent.

The upshot of all this research can be a speedier, better transaction. “Where in the past a Realtor may have spent an entire day driving all around town to see 10 properties, and a buyer really doesn’t like eight of them, they can go through them online, see the things they don’t like and spend less time on the road with fewer headaches,” says Rachael Joyner, director of relocation and e-marketing at Joyner Fine Properties.

Social media also plays a growing role in marketing properties. Clients often are engaged in marketing their real estate listings on social networks, using tools such as virtual tours, professional photos and Web pages provided by Realtors, Joyner says.

Consequently, the role of residential real estate agents has evolved more from research and marketing to analysis and advocacy. They still help people navigate through the complicated process of making what is typically one of their largest purchases. “We kind of moved to the role of lifestyle analysis as well as the brick and mortar analysis,” says White. “We probably ask more [quality of life] questions than we used to do … and do more counseling than we do selling.”

As for commercial brokers, they say their process is streamlined by technology as well, especially by CoStar. “Rather than spend a half a day driving around looking at office buildings and calling [phone numbers] off the signs, this is a ballpark way of seeing what’s available quickly,” says Matt Anderson, senior vice president with CBRE|Richmond. “It’s a very good starting point. From an efficiency standpoint, it saves a lot of time.”

The next generation

In September the Internet quietly reached a major turning point. With billions more users and devices than it was ever built to handle, it ran out of IP addresses. Outside of the tech world, however, no one even noticed.

The average Web surfer might be surprised to learn there are actually two Internets — or two Internet protocols to be precise. The Internet protocol is the major framework upon which the entire Internet is built — it’s the primary communications protocol for relaying and routing data between networked computers. Currently the Internet runs on an outdated protocol known as IPv4, and the tech industry has known since at least the mid-1990s that it would eventually run out of IP addresses, the unique numeric identifiers assigned to every device connected to the Internet. IPv4 address depletion occurred in the United States in September.

Similar to the way cellular networks migrated from 3G to faster, more secure 4G LTE networks, the Internet itself is in the process of migrating from IPv4 to the improved IPv6 protocol (also known as IPng for next generation).

“IPv4 was not designed to number a global commercial Internet — certainly not an Internet of Things — and IPv6 was,” says Richard Jimmerson, chief information officer of the Chantilly-based American Registry for Internet Numbers (ARIN). One of five worldwide regional Internet registries, the nonprofit ARIN is the industry association responsible for allocating and registering IP addresses in the United States, Canada and the Caribbean.

IPv4 uses 32-bit IP addresses, which look like this: 172.16.254.1. The term 32-bit refers to the number of binary digits encoded in each address and there are roughly 4.2 billion permutations of the 32-bit addresses. However IPv6 uses 128-bit addresses. A sample IPv6 address looks like this: 2001:0db8:85a3:0000:0000:8a2e:0370:7334. This creates so many possible unique address combinations that it’s measured in a number that most people haven’t even heard of: 340 undecillion. That’s 340 with 36 zeros behind it.

“The future of the Internet is IPv6 simply because that protocol was designed with a global, commercial Internet and billions of billions of devices in mind, and IPv4 was not,” says Jimmerson. “IPv6 has enough numbers in it — enough unique identifiers in it — to number all the devices we need for all of the people on the planet going forward.”

Joe Klein, founder and CEO of Leesburg-based cybersecurity firm Disrupt6, is a member of an international task force that’s been working on implementing IPv6 since shortly after its creation in 1999. He likens the transition to that of the growth of telephone networks: Initially phone numbers were four digits. As the network of users grew, phone numbers grew and also included area codes and international codes.

Tech professionals knew that IPv4 was facing a limited life span as far back as 1994, which prompted the development of IPv6, but many companies were hesitant to adopt the new protocol. And network engineers and IT professionals were more comfortable working in IPv4, which was a known commodity.

Fast-forward to now: With the exponential growth of smartphones, tablet computers and a host of other Internet-connected devices, “there are approximately 16 billion to 17 billion devices on the Internet today, all fighting over only 4 billion IP addresses. We have a lot of operators in between, which costs time, effort, money and power,” Klein says.

Currently, Internet service providers and network administrators get around the IPv4 address depletion by using a process called network address translation (NAT), essentially a way of directing traffic so that one IP address can be assigned to handle the traffic of many devices.

In the wake of the IPv4 depletion, a trading market has arisen, with brokers negotiating the sale of previously used IP addresses between Internet service providers, Jimmerson says.
IPv6 solves these problems. But migrating to the new protocol offers more advantages than just avoiding IP address and Internet traffic hassles and decreasing IT and networking costs.
Verizon Wireless moved its entire data network to the IPv6 protocol during the past few years, and it’s resulted in as much as 20 percent longer battery life for some mobile users, Klein says.

And if your Internet service provider is utilizing IPv6, and you visit a website that’s hosted on an IPv6 server, that website will load “10 to 20 percent faster than a competitor’s site right now that doesn’t support IPv6,” Klein says. “That’s a big deal.”

IPv6 also is much more secure, with features designed to virtually eliminate phishing and spam and to protect networks from hackers. “In the IPv4 world, you can falsify your identity pretty easily,” Klein says, but IPv6’s device-to-device communication is so secure that it’s being used as the industry standard for new technologies designed for the Internet of Things and vehicle-to-vehicle communication in smart cars, as well as railroads, ships and airplanes.

“People just think it’s about a bigger [IP] number, but there’s a lot of potential good that comes out of this as we move toward an IPv6-only environment,” Klein says.

Globally only about 7 percent of the Internet has switched to IPv6 so far. In the United States, about 22 percent of users are on IPv6 networks, most without any idea they’re using it.
Major Internet providers such as Comcast, Time Warner, Verizon Wireless and T-Mobile have already migrated to IPv6 or are in the process of doing so. Large content providers — such as Google, Facebook and Yahoo! — now are running their content on both IPv6 and IPv4 servers. Operating systems such as Windows, iOS and Linux have incorporated IPv6 support for years, as have most modern routers and hardware.

“Our customers would agree that the way we’ve done it is seamless to them. Most of them haven’t noticed, and that’s been by design,” says David McGuire, senior director of technology communications with Comcast, which has upgraded its network to IPv6 during the past several years. “Most of them don’t care how v4 or v6 works. There’s no reason for them to care about IP in general.”

Like most other providers who have made the jump, Comcast is using what’s called a “dual-stack” approach so that users surfing on its IPv6 network still are able to view IPv4 content. Nonetheless, the ultimate goal, Jimmerson says, is for the old IPv4 Internet to wind down, with service providers eventually eliminating support for it. That could happen by 2030 or sooner, some say.

So what do companies need to do to be ready for IPv6?

For starters, Klein and Jimmerson suggest, find out whether your website host and your Internet provider are utilizing IPv6. Sites such as whatismyipv6.com or test-ipv6.com can tell you if your Internet provider is using IPv6 or IPv4. Other sites such as ipv6-test.com/validate.php can tell you if your company website is running in an IPv6 hosting environment.

If you are using an IPv6 host or provider, then it might be time for a technology review, Klein advises, to ensure that your hardware, applications and website code are optimized for IPv6. It’s also critical that your IT staff understands IPv6 to be able to utilize it fully and be protected from potential threats.

“Tech entrepreneurs in the U.S. don’t even know about this,” Klein says. “In some cases it will require rewriting their software or making other business decisions as to which cloud provider to use.”

Companies should be sure to include IPv6 in their decision-making when procuring cloud services, applications, security software and servers going forward, he recommends.
But for now, IPv6 still is largely an inside-baseball topic for techies, as evidenced by this anecdote Klein tells with a laugh: “I called a specific vendor’s help desk to find out if they supported IPv6, and they thought it was a television channel and told me they had no plans to support that television channel.”

Cracking the code?

In a world increasingly driven by technology, corporate and government leaders across America continually bemoan the lack of digitally fluent and STEM-educated workers.

In Virginia, major health-care systems have 2,000 job openings statewide “and half of those openings are for [computer] coders, and they’re having a hard time filling them,” says Maurice Jones, Virginia’s secretary of commerce and trade.

In many industries there is an urgent need for digitally fluent workers with skills ranging from cybersecurity to computer programming to data management and more.

Toward that end, Jones says, the administration of Gov. Terry McAuliffe has set a goal of adding 500,000 employees with STEM-H (science, technology, engineering, math and health care) certifications to the Virginia workforce by 2018.

“We have to make sure Virginia establishes a brand of having the most prepared workforce for 21st-century jobs,” Jones says. “What Virginia has to do is make sure it has the talent and that we market the talent. Jobs will go where the talent is.”

McAuliffe sounded the same themes at a recent digital fluency forum at Capital One Digital Labs in Vienna. “We must respond to the demands of the changing global economy by providing employers with a steady stream of talented workers who can succeed in the digital era,” he said.

Corporations and nonprofits across the commonwealth are working with state and local governments to meet the challenge.

For instance, McLean-based Capital One announced at the June forum that it’s investing $150 million in Future Edge, a new nationwide initiative to promote greater digital literacy. Highlights in Virginia include Coders, an app-development workshop for middle school students that teaches basic principles of software development. Students learn how to create simple apps with the help of the App Inventor coding platform, created by Google in cooperation with the Massachusetts Institute of Technology.

The financial services giant also is funding groups such as Richmond-based CodeVA and San Francisco-based Black Girls Code, both of which are involved in training children in computer coding skills. Capital One also has developed a free online curriculum with Grovo, a New York learning technology company, to teach digital skills to low- to moderate-income workers.

“We are thrilled to be partnering with Governor McAuliffe,” says Carolyn Berkowitz, managing vice president of community affairs at Capital One.

As part of Future Edge, developed by Berkowitz, Capital One commissioned a research study from Boston-based labor market analytics firm Burning Glass Technologies, which looked into the digital skills gap among workers in Virginia and Washington, D.C. Among its findings, Burning Glass determined that more than 80 percent of Virginia’s middle-skills jobs (those paying above the national living wage but needing less education than a four-year degree) require digital skills. Furthermore, those middle-skills jobs that require digital skills pay 46 percent more than other middle-skills jobs.

Not every worker needs a four-year degree, notes Jones. “Fifty to sixty percent of the new jobs over the next 10 to 15 years will not require a college degree, but they’ll definitely need post-secondary education and training. We have to keep our emphasis on graduating B.A.’s and M.A.’s and Ph.D.’s but balance that with the fact that there are also other, equally viable paths. … You can get some coding certifications in months or a year. This is a great path with great wages and great mobility.”

Capital One has focused the bulk of its Future Edge efforts on middle-skills jobs because that is where the opportunity is greatest for increasing earning power, Berkowitz says.

As for other companies, last year alone Fairfax County-based Northrop Grumman Corp. invested $15.9 million on STEM education initiatives worldwide. Since 2010 it has been the primary sponsor and funder for the Air Force Association’s CyberPatriot education initiative, aimed at increasing digital literacy skills among K-12 students across America.

“For us it really is a global imperative. We feel that because we are such a large provider of global solutions that it really is incumbent upon us to help develop the next generation of cyber professionals,” says Diane Miller, director of InfoSec Operations and Cyber Initiatives for Northrop Grumman. She also serves on the education and workforce development group of the Virginia Cyber Security Commission.

“We’ve been in the cyber business for a very, very long time — long before it was called cyber — and we were sensitive early on to the fact that there is a shortage of qualified talent in this space,” Miller says. “And as we’re creating new technologies and new solutions for our customers, we’re out looking for the best and brightest professionals in this space — and frankly so is everyone else — and so years ago we decided we would become part of the solution.”

Another important step in achieving digital fluency is filling gaps in the education system, says Chris Dovi, co-founder of nonprofit CodeVA, which promotes computer literacy in schools.

“Right now in the state of Virginia, computer science is taught almost nowhere in public schools, and, when it is taught, it’s very ad hoc,” he says, adding that it’s pretty much the same everywhere else in the nation. Some Virginia school systems may include a unit on app development or coding in an IT fundamentals course, Dovi says, “but there’s no set curriculum for any of those things. It’s something a teacher would decide to do on their own, and they typically know less than students.”

CodeVA, which has received funding from donors such as the Robins Foundation, Capital One and Dominion, was founded in 2013 and is the only organization providing certification training for Virginia public school teachers to teach computer science courses. More than 180 teachers have received training from CodeVA in the last two years. Their school systems commit to having them teach a computer course in the schools as part of participation in the program, which amounts to about 100 hours of ongoing instruction for high school teachers.

CodeVA also offers weeklong summer camps to teach computer coding skills to elementary- and middle-school students. They range in cost from $180 to $220, with early-bird enrollees getting the lowest price. Scholarships are available for students from at-risk backgrounds. Yet, summer camps and after-school programs aren’t a substitute for a school curriculum course, says Dovi.

While the need for cybersecurity professionals in the workforce tends to attract headlines, he notes that companies have a wide-ranging need for digitally fluent employees. Tech companies commonly hire foreign tech workers for open positions, Dovi adds, because there aren’t enough U.S. workers with skills in coding, software design and cloud-based infrastructure.

“There’s no question that there are more opportunities if we have more people who are digitally fluent,” says Jones, the commerce and trade secretary. “We’re getting more demand to have more young workers who are digitally fluent so there’s more work to be done.”

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byline: Richard Foster