Seeing the sites

Despite boasting a world-class port, a highly skilled workforce and easily accessible transportation infrastructures, Hampton Roads perennially comes away empty-handed in attracting large-scale industrial developments.

Chalk it up to the region’s lack of shovel-ready sites, a situation that state and local economic development and political leaders are fervently working to change. Last year, the Virginia Economic Development Partnership’s Virginia Business Ready Sites Program awarded $90 million in matching grants to 21 sites statewide with at least 100 contiguous, developable acres (or at least 50 acres in western Virginia). Three Hampton Roads sites made the list: Chesapeake’s Coastal Virginia Commerce Park, Fairwinds Landing in Norfolk and Hazelwood Farms in James City County.

VEDP President and CEO Jason El Koubi acknowledges that the state has only recently begun to significantly invest in site development, in contrast with other Southeastern states that have sunk billions into producing shovel-ready sites. In its 2022-24 budget, the state allocated $159 million to the Ready Sites Program, up from $5.5 million in 2021 — itself a bump up from about $1 million previously allocated annually by the state. In 2023, the General Assembly added an additional $200 million to the biennial state budget for the program, and in the 2024-26 budget, Gov. Glenn Youngkin has proposed $150 million in fiscal 2025 and $50 million in 2026.

With so little funding allocated for industrial site development in previous years, Virginia lost out on more than 55,000 direct jobs, 110,000-plus estimated indirect jobs and more than $124 billion in capital investment since 2016, El Koubi says. There are fewer than 10 sites larger than 250 acres ready for development across the state — and Virginia has won only one industrial megaproject in recent years: the $1 billion Lego Group toy factory, currently under construction in Chesterfield County.

Despite more site preparation funding under Youngkin’s administration, Hampton Roads still has challenges, with fewer available land tracts for development compared with other regions. But, with some tweaks, El Koubi believes, the region can become a competitor in the industrial sweepstakes.

“There are multiple exciting site development opportunities in Hampton Roads. It’s a place where you find virtually every strength a location needs,” he says. “But because Hampton Roads has a very diverse economy with a long history and a lot of development already, most sites that are easy to be developed have already been developed, so we want to make sure we’ve very strategic about where we invest. It’s important that the region work together to invest and strategize to maximize opportunities in a way that everybody wins.”

Pooling resources

Building a successful industrial strategy is where the Eastern Virginia Regional Industrial Facility Authority (EVRIFA) comes into play. As the only entity of its type in the eastern part of the state and one of 11 in Virginia, the authority is a mechanism for multiple localities to pool regional resources into site development opportunities that benefit all of Hampton Roads.

Currently, the counties of Gloucester, James City, York and Isle of Wight and the cities of Hampton, Newport News, Poquoson, Williamsburg, Franklin and Chesapeake are members of EVRIFA, with Virginia Beach City Council voting in November 2023 to join the group in January.

Member localities invest in project sites, sharing costs and tax revenues. Municipalities with populations of less than 50,000 pay $2,000 per year for EVRIFA membership, while those with more than 50,000 residents join for $4,000 annually. Each locality has two primary and two alternate members represented on the authority’s board.

“Some communities are land-rich and cash-poor,” notes Doug Smith, president and CEO of the Hampton Roads Alliance. The region’s economic development arm, the alliance has managed EVRIFA since fall 2022. “Some have revenues but don’t have developable land. They can now team up.”

Localities are not obligated to fund site projects, with members deciding to join or pass on each proposed venture, Smith adds. “Each project is a distinct opportunity, and participation in revenues is based on the share of investment each community puts in.”

City and county officials on the Peninsula proposed establishing the authority back in 2018, with the idea that Southern Virginia localities could join later. “We’ve had conversations to get all of them in the authority,” Smith says. “We’re hopeful that all of them will by June 2024.”

Hampton, Newport News, Poquoson, Williamsburg and York and Isle of Wight counties are backing EVRIFA’s first project, Kings Creek Commerce Center in York County. The authority acquired the 432-acre parcel in 2022 from the state for $1.35 million, ultimately leasing it to Dominion Energy for a solar energy farm and is marketing the remaining 109 acres for light industrial development. “We’re showing the site to prospects and expect to see some results in the next year,” says Hampton Roads Alliance Chief Operating Officer Steve Harrison. “It’s been very well-received.”

Along with shovel-ready properties, developers want a skilled workforce, good transportation infrastructure, adequate energy supply and access to the port. “Ultimately, decisions are made on how quickly they can get a facility up and running,” Harrison adds. “That’s a driving factor. If they can’t get a site up and running quickly, they will go to a community where they can.”

Typically, sites in the region can become shovel-ready in six to 12 months. From there, the facility would open within 18 to 24 months of the contract being signed. Those time spans are significantly shorter than they were a decade ago, yet another consequence of the pandemic. “COVID impacted supply chains,” notes Smith. “You see a lot of reshoring, and folks need to move quickly to get businesses open and products moving.”

New and emerging industries such as battery storage, chip manufacturing and electric vehicle projects have bypassed Hampton Roads and Virginia for more competitive areas. “Without preparing sites and developing EVRIFA into a robust organization, we’re not going to be able to land those projects — period,” Smith says. “Everything is a cost of getting into the game.”

Hampton Roads leaders are eager for the region to become a player in the industrial site sweepstakes. Smith says whenever a large economic development project is announced in another state, he can expect a telephone call from a local political or business leader asking why Hampton Roads didn’t get the project. And “the answer,” he says, “is always that we didn’t have 1,500 or 500 acres prepared to meet their development criteria.”

Smith anticipates fewer of those calls in the future as the region and the state invest more funding into developing large sites. “Now, they’ll be calling wanting to come to the ribbon cutting.”

Moving forward

A ribbon cutting could soon take place at Hampton Roads’ lone industrial megasite, the Coastal Virginia Commerce Park in Chesapeake. Situated near the North Carolina border, the park has been touted as a good fit for computer and electrical products manufacturing, semiconductor microchip manufacturing or general advanced manufacturing. The City of Chesapeake and VEDP have received multiple applications, and Deputy City Manager Brian Solis anticipates a contract could be signed by mid-2024, although he declined to give further details. Industries interested in the park include companies involved in advanced manufacturing, sustainable energy and emerging sectors such as energy storage and battery manufacturing. Tracts will be a minimum of 250 acres.

“We’re preparing the site to get it to shovel-ready with all utilities in place,” Solis says. “It has substantial large tracts ready to be built on. The entire site was farmed with a sophisticated drainage infrastructure. It’s ready to go from a development standpoint.”

The city received a $750,000 grant in 2023 from the Virginia Business Ready Sites Program for surveying and environmental assessment work on the 1,420-acre site, which was rezoned from farmland to industrial in 2022. The Chesapeake Economic Development Authority entered a contract in 2022 to purchase the land for $37 million from Virginia Beach farmer Frank T. Williams and has an option to buy 2,600 adjacent acres for $54 million. The sale will be finalized once site studies are completed.

According to Solis, market analyses of comparable megasites along the East Coast give the Coastal Virginia Commerce Park high marks for its proximity to the Port of Virginia and the region’s skilled workforce, as well as the convergence of four interstates in Chesapeake, allowing for multiple shipping and transportation options. “Chesapeake is unique in Hampton Roads because it is in the central part of the region from a transportation standpoint and is a direct 15-minute drive to the port.”

Although Chesapeake has struggled with the tension between preserving rural, agricultural land and developing industrial centers, Solis says, the megasite has been relatively well-received as a future employment center. “We’re very conscious of industry’s proximity to residential areas and put it in the furthest proximity to our population as possible,” he says. “It’s a positive difference-maker in that you always look for opportunities to provide more employment opportunities to our Hampton Roads residents.”

Industrial tenants also alleviate the tax burden on residents, Solis adds. “We want to have a healthy balance of nonresidential and residential tax base. For every tax dollar the business pays, that helps contribute to the quality of life for our residents.”

Neighboring Suffolk, the state’s largest city in land area, is promoting 6 million square feet of industrial development on more than 500 acres at the Port 460 Logistics Center. Maryland developer Matan is working with Rockefeller Group to construct the 10-building warehouse project which is zoned for heavy industrial, logistics, advanced manufacturing, life sciences and warehouse uses. The initial phase encompassing five buildings with about 2.4 million square feet is expected to be under construction in the summer of 2024.

“Things are going full steam ahead,” says Suffolk Economic Development Director Nic Langford. “With any development, we’re open to all possibilities as long as it makes sense for our investments. This will be a very big addition and nice new industrial development for the city.”

Langford says Port 460 would be a good fit for a large manufacturer such as Mercedes-Benz or Volvo. “We would love to get big manufacturers here,” he adds. “We chase those projects all the time. It seems they don’t land in Hampton Roads.”

Along with available land, Langford believes a lack of housing curbs large manufacturers’ interest in the region. “To attract large manufacturers, you need all range of housing. Suffolk is one of the few municipalities that’s building new housing.”

The city is revisiting its 2045 comprehensive development plan as it determines how to meet demand for all types of growth. “Suffolk has quite a bit of land,” Langford notes. “We’re next on the agenda in Hampton Roads for development, but we have to strike a balance between the pressures of the private market and smart growth. We have an obligation to our taxpayers to ensure we don’t expand too rapidly.”

Suffolk has not joined EVRIFA, but Langford says city officials have been talking to authority leaders to determine future participation. “There’s some value in municipal and economic development authorities purchasing land. When they do that, the ultimate decision-maker is the city or the economic development authority, and they can be more picky about who comes in and what happens.”

Smith says the authority is “in conversations” with the cities of Norfolk and Portsmouth and other localities, and he is hopeful all Hampton Roads municipalities will become members in 2024.

Benefits of cooperation

Joining the regional authority positions Virginia Beach to be a leader in regionalism, long cited by Hampton Roads business leaders as a necessity for economic advancement, says Chuck Rigney, the city’s interim director of economic development. “EVRIFA allows the region to make a better case to land large, significant projects and moves the needle to position Hampton Roads as a leading metro area.”

Virginia Beach’s lack of large tracts suitable for industrial development strengthens its rationale for joining EVRIFA, Rigney adds. “Virginia Beach has matured to the point of looking at strategic redevelopment and realignment of existing assets to be sure they are for the highest and best use. By supporting this partnership, we hope to grow the wealth of Hampton Roads.”

However, lack of suitable acreage will continue to prevent the region from securing large-scale industrial investments, says commercial real estate broker Lang Williams, an executive vice president with Colliers International Virginia. “So much of our land has been developed for other uses or is wetlands and not suitable for development.”

However, Williams notes that companies are investing in Hampton Roads, just not on as grand a scale compared to areas like Savannah, Georgia. He points to logistics service provider Katoen Natie’s November 2023 announcement that it will invest $59.9 million to expand its Norfolk facility with a 450,000-square-foot warehouse and rail yard, adding an expected 76 jobs. “We have a diverse set of smaller projects in the tens of millions of dollars as opposed to billions of dollars, but they are a strong indication of companies tracking to the region.”

Hampton Roads also can expect to benefit from Lego’s impending Chesterfield County facility, which is expected to open for production in 2025, adding 1,760 jobs over a decade. “Suppliers will look down here for warehousing in other space,” Williams says. “Lego was a huge win for Virginia.”

It’s a win that VEDP’s El Koubi believes can be replicated. “Virginia is steadily closing the gap with other states in site development,” he says. “We’ll see the impact accelerate over the next couple of years and see Virginia have one of the top site development programs in the nation.” 

Hampton Roads at a glance

Virginia’s second most populous region, Hampton Roads is comprised of 17 localities, including the cities of Virginia Beach, Norfolk, Chesapeake, Newport News, Hampton, Portsmouth, Suffolk, Williamsburg, Franklin and Poquoson, and the counties of Gloucester, James City, Isle of Wight, Mathews, Southampton and York.

Bordering the Atlantic Ocean and the Chesapeake Bay, Hampton Roads is home to the Port of Virginia and the largest naval complex in the world, Naval Station Norfolk, as well as Naval Air Station Oceana. Colleges and universities in the region include William &
Mary, Hampton University, Old Dominion University, Norfolk State University, Virginia Wesleyan University and Regent University.

Population

1.79 million (2020)

Top employers

Huntington Ingalls Industries (Newport News)

Smithfield Foods (Isle of Wight)

Bon Secours Maryview Medical Center (Portsmouth)

Science Applications International Corp. (Suffolk)

Children’s Hospital of The King’s Daughters (Norfolk)

Major attractions

Hampton Roads offers an abundance of natural, historic and cultural attractions, including the Virginia Beach Oceanfront, Colonial Williamsburg, Historic Jamestowne, the Virginia Aquarium & Marine Science Center, Chrysler Museum of Art, Busch Gardens, Ocean Breeze Waterpark, the Virginia Air & Space Center and Nauticus.

A sampling of hotels

The Cavalier Resort (including Embassy Suites by Hilton, The Historic Cavalier Hotel and Marriott Resort Virginia Beach Oceanfront)

547 guest rooms,
70,875 square feet
of event space

Hilton Norfolk The Main

300 guest rooms,
71,500 square feet
of event space

Embassy Suites by Hilton Hampton Convention Center

295 guest rooms,
161,974 square feet
of event space (including
connected convention center)

The Founders Inn and Spa

240 rooms,
40,125 square feet
of event space

Glass Light Hotel and Gallery

113 rooms,
1,625 square feet
of meeting space

Notable restaurants

Varia (Norfolk)
Italian, varianorfolk.com

Byrd & Baldwin Bros. Steakhouse (Norfolk)
American steakhouse, byrdbaldwin.com

Cantina Laredo (Virginia Beach)
Mexican, cantinalaredo.com

Freemason Abbey (Norfolk)
American and seafood, freemasonabbey.com