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An overview of Hampton Roads

With a population of 1.79 million people in 17 localities, is the second most populated region of Virginia, just behind Northern Virginia. , with approximately 457,000 residents, is the commonwealth’s biggest city by population, and neighboring Norfolk has the highest density in the region, with 4,467 people per square mile, according to 2020 data.

The region also is a major economic driver, as the home of the Port of Virginia; Naval Station Norfolk, the world’s largest Navy base; Naval Air Station Oceana, the Navy’s East Coast master jet base; Huntington Ingalls Industries, including its division; and the $9.8 billion offshore wind farm being built 27 miles off the coast of Virginia Beach. Also underway is the $3.8 billion expansion of the Hampton Roads Bridge-Tunnel, the state’s largest-ever highway project.

As for , the region’s institutions include Christopher Newport University, Regent University, Virginia Wesleyan University, William & Mary, , Hampton University, Norfolk State University, three community colleges and ECPI University, which is headquartered in Virginia Beach.

A rising tide

The Port of Virginia continues to drive activity in as shipping and logistics companies seek footholds. The region’s office vacancy rate rose this year — from 8.1% at the end of the first quarter to 8.4% at the end of the second quarter — but is “relatively healthy compared to similar-sized markets,” according to Cushman & Wakefield | Thalhimer’s MarketBeat office market reports.

That’s largely because of a lack of new inventory, which is also driving rents up. But although the region’s office market reflects a lack of supply, its real estate market is booming from new demand for warehouse space, driven by proximity to the port.

At the end of the second quarter, industrial leasing prices were up 25.3% year-over-year and have risen 9% since the start of 2023, with a 2.3% vacancy rate, Thalhimer reports.

Although the first quarter saw a slight slowdown in activity because of rising interest rates, demand for warehouses of 200,000 square feet increased as summer ended and interest rates stabilized, says Geoff Poston, a senior vice president with Thalhimer. 

For local users such as HVAC suppliers, the market for warehouses of 20,000 to 50,000 square feet has stayed competitive, mainly because new development is focused on bigger warehouses.

“Our market [is] really a tale of two different worlds,” Poston says, now that shifting trade patterns have put the port — and Hampton Roads — on the national stage. 

  

Space race

Leaders of a regional engineering firm figured finding office space in the Town Center of would be a breeze. Newspapers were reporting that demand for was down nationally.

But that isn’t the case in the area, where the office vacancy rate was 8.1% for the first quarter of 2023, according to a report by Cushman & Wakefield | Thalhimer. That’s about half the national average of 16.1%, and in some markets, the vacancy rate has hovered around 30%.

“It’s not that there’s not available inventory, it’s that what they want has already been snapped up because everyone wants the same kind of space,” says Rob Wright, a senior vice president at Cushman & Wakefield | Thalhimer in Virginia Beach who’s helping the firm — whose name he’s keeping private — find a location.

The pandemic upended employees’ expectations of working 9 to 5 in an office, and executives have found they need to provide the right incentives and environment so their staff sees a reason to come to the office, he says. They want them to be collaborative, see the benefits of teamwork and then be able to walk someplace nearby for lunch or an afterwork drink.

“Dollar Tree did that at the Summit Pointe project when they merged with Dollar General,” says Wright. “Their CEO basically said, ‘If we’re going to stay in Chesapeake, Virginia, we’re going to build a city within a city. We’re going to build perks for our employees. We’ve got to have space for them to have multifamily apartments right there on our campus. We want to have the best restaurants on our campus, the best entertainment venues and breweries.”

That decision has paid off — Summit Pointe’s two high-rise office buildings, one of which is Dollar Tree’s headquarters, are filled, and tenants are paying some of the highest rents in the Hampton Roads area, Wright says. A third office building is planned.

Guesswork on leasing

Reflecting nationwide patterns, Class A office space in newer commercial developments like Town Center in Virginia Beach and City Center at Oyster Point in is in high demand across Hampton Roads. But older buildings with Class B or C office space? Not so much. Besides retail and restaurants, office workers also want free, easy-to-find parking, Wright notes.

“I think what we’re seeing in this modified, nontraditional, not-9-to-5 world is that when people have to pay for parking, there is less motivation to go into the office,” Wright says. “There’s just some sticking point of not wanting to go and formally pay for parking versus when you have free parking. Maybe you feel better about popping in for a short workday.”

Downtown Norfolk, along with Hampton, are the softest submarkets in the Hampton Roads area. Besides parking challenges, a major factor is “large blocks of functionally obsolete build-outs” that are unappealing, according to Cushman & Wakefield | Thalhimer’s report.

Wright says it’s difficult right now for executives who have to make long-term decisions about leasing office space without a crystal ball to predict what their needs may be a decade from now.

“I don’t think we’re seeing dramatic reductions in overall square footage requirements,” he says. “What I have noticed is national companies with offices around the country have changed their requirements more than regional and local companies have.”

Some national companies have left the area, while others, such as Norfolk-based Sentara Health, have expanded, Wright says. “Whenever we’ve had these bigger blocks of square footage come up, there has been backfill occupiers grabbing them up, so that’s a good sign for the overall market.”

Lowe’s is expected to open its 1.5 million-square-foot regional distribution center in Suffolk’s Virginia Port Logistics Park in the third quarter, says Lang Williams with Colliers. Photo by Mark Rhodes

Port-driven

As for the industrial market in Hampton Roads, it’s remained healthy thanks to the Port of Virginia, an economic driver for the entire state. Amid heavy demand for imports during the pandemic and delays at other U.S. ports over the past two years, many retailers located logistics presences in Norfolk and surrounding localities, says Geoff Poston, senior vice president of Cushman & Wakefield | Thalhimer’s industrial group.

For the first quarter of 2023, industrial real estate had a 2% vacancy rate. “When all the ports across the country were backed up, we were the most efficient port,” Poston says. “Retailers were like, we can’t get into L.A. or Long Beach, we can’t get into New York. Let’s go to Norfolk. They don’t have any issues.”

In 2022, the Port of Virginia processed more than 3.7 million 20-foot equivalent units (TEUs) at its terminals, setting a record. Cargo movement and handling has resulted in higher demand for industrial space near the port’s terminals from distributors and third-party logistics companies.

Amazon.com, for example, built a 3.8 million-square-foot robotic fulfillment center in Suffolk and a 650,000-square-foot processing center in Chesapeake. In June, two industrial warehouses in Chesapeake sold for $24 million, and they’re fully leased to tenants that include Fortune 500 government contractor CACI International and third-party logistics firm Kalman & Co. Since July 2020, 79 companies have announced plans to establish manufacturing and distribution presences in Virginia, investing nearly $4 billion, according to an April 2023 study conducted by William & Mary.

TradePort Logistics, for example, fully leased and moved into Northbridge’s new 334,800-square-foot Chesapeake Logistics Center in May, says Lang Williams, a
Norfolk-based senior vice president with Colliers. TradePort has plans to construct a purpose-built transload facility near the Port of Virginia in the coming months.

Two other projects expected to open in Suffolk in the third quarter of this year are Lowe’s 1.5 million-square-foot regional distribution center in the Virginia Port Logistics Park and the 227,000-square-foot distribution facility that Los Angeles-based Industrial Realty Group (IRG), one of the largest real estate developers in the nation, is building on 40 acres in Suffolk. It will be fully leased to RoadOne IntermodaLogistics, a national intermodal, warehouse and logistics services company.

IRG is also working on two build-to-suit facilities in Suffolk and Portsmouth, totaling 1 million square feet, for Unis, a third-party fulfillment and company.

Companies are willing to locate near the port — and even a bit further away from the terminals — because it’s a fairly sure bet, given the port’s investment of about $1.4 billion to expand its overall capacity and cargo handling capabilities. This includes dredging the harbor to 55 feet so it can accommodate two ships at a time, “which is a game changer,” Poston says.

Demand is so high, Williams adds, that developers are starting to look to places along Interstate 64 like New Kent County, where AutoZone has broken ground for an 800,000-square-foot facility, and James City County, where Green Mount Logistics Center is expected to have a 373,536-square-foot Class A spec distribution facility ready in the fourth quarter of this year.

“So, we’re excited,” Williams says, “because we’re going to have more options for these companies to lease, which will be good.” 

Youngkin’s 2024 tightrope walk depends on Va. elections

The individual with the most to gain from this fall’s isn’t even on the ballot.

Gov. is nearly midway through his term-limited governorship, and pretty much from day one, politicos have speculated he’s after a bigger prize: the U.S. presidency. The governor hasn’t entered the 2024 , but he’s sent signals he’s interested, and billionaires like Ronald Lauder and Rupert Murdoch have privately encouraged him to run.

November’s elections for all 140 seats in the state’s legislature will likely have a lot of bearing on whether Youngkin jumps into the national race. If backed by his Spirit of Virginia political action committee seize control of the state Senate and the House of Delegates, he would be in a good position to take his chances in the 2024 Republican primary field.

It would still be a steep climb to overcome former President Donald Trump, who led a CNN poll in September by 34 points over his closest rival, Florida Gov. Ron DeSantis.

But for those who dislike the four-times-indicted Trump or Disney-baiting DeSantis, Youngkin is an attractive alternative — even though consider him a MAGA wolf in red fleece.

Youngkin’s PAC raised $12 million between Jan. 1 and Aug. 31, including $3.3 million in August alone. The PAC has been pouring money into state Republican primaries and general campaigns.

In response, President Joe Biden approved the release of $1.2 million from the Democratic National Committee for Virginia campaigns in September.

A.J. Nolte, an assistant professor at Regent University’s Robertson School of Government, views the General Assembly elections as a bellwether for Youngkin. “This is an acid test of the governor’s political brand,” Nolte says. “Is he strong enough to overcome the headwinds of Virginia being a blue-leaning state that’s heavily anti-Trump? There’s a lot of pro-choice suburban voters in some of the Northern Virginia suburbs, and even some of the Richmond suburbs. Youngkin is invested heavily in infrastructure, in candidate recruitment [and] in trying to rebuild the Republican Party to get these legislative majorities.”

Earlier in the year, Youngkin endorsed 10 Republicans in contested primaries, all of whom won their races.

Now, with the primaries in the rearview mirror, the governor can support the ‘s general election nominees while adjusting his political message to entice suburban voters. In September, the Spirit of Virginia launched a bus tour to encourage Republicans to vote early — a change in messaging from Trump and his followers. And flanked by newly rolled out “Parents Matter” banners, the governor has refined his earlier messages about schools — smoothing away culture wars topics like critical race theory and transgender students’ bathroom usage — but still amplifying parenting issues like children’s mental health and social media use. Democrats, meanwhile, are largely campaigning against the likelihood a GOP legislative majority would bring a 15-week limit on abortions in Virginia.

“For the governor, the stakes couldn’t be higher,” says Stephen Farnsworth, a University of Mary Washington political scientist. “His ability to make the case for his political future is going to depend on what he can do in the next two years. If Democrats end up with either of the two chambers, the final years of Youngkin’s term will be just as frustrating as the first two.” 

RELATED STORY: Battlefield Virginia — Abortion, party control at stake in legislative races

Executive insights

Virginia Business asked six leaders to discuss how their organizations are contributing to the region’s success and meeting challenges such as workforce recruitment and inflation.

President and chief experience officer, Corporate Services Group, TowneBank, Suffolk

How are your customers responding to inflation and higher interest rates? 

After many years of historically low interest rates, we are all facing increases in the cost of financing for any loan tied to a variable interest rate and any new loan applications. With mortgage rates doubling in the last year, some are putting off plans to buy a home or refinance.

Households and businesses are squeezed as the cost of living rises for everything from housing and construction to goods and services. Remember that your banker is a ready resource to provide insight during these uncertain times. There may be opportunities you have not explored in your relationship that can reduce your overall expenses. In any economic climate, we can develop strategies for growth and a path to achieving all of your financial goals. 

What is on TowneBank’s plate for 2024?

TowneBank will continue our focus on the health of local businesses and the support of organizations that provide vital services to our community. We also are fortunate to be celebrating our 25th anniversary next year. It is a reflective time as we look back on 25 years of serving others and enriching lives, with the help of our Hampton Roads community that has grown along with us. We also look ahead to a bright future, imagining the economic prosperity and innovation that we will work hard to support in each market we serve over the next quarter century and beyond.

 

Market president, Bon Secours Mercy Health, Hampton Roads, Suffolk

Bon Secours is building a new hospital in Suffolk — how is construction going?

Construction continues on Harbour View Hospital, which is scheduled to open in 2025.

The approximately $80 million, 98,000-square-foot hospital will adjoin the existing Bon Secours Health Center at Harbour View campus, creating the new hospital. This new, surgically focused hospital will include 18 medical/surgical beds and up to four operating rooms, serving as an extension of the services currently offered on the campus.

Currently, the Health Center at Harbour View includes an emergency department, outpatient imaging, outpatient lab services, an ambulatory surgery center and physician practices. These services are being expanded to include a hospital with inpatient beds and operating rooms.

While most surgeries performed here will be scheduled ahead of time, the benefit of expanding our existing facility is that patients presenting in the emergency department will have access to hospital services on-site, including surgery, when appropriate. Residents will be able to receive hospital and surgical care in the community in which they live, without the need to travel to another city.

Health care staffing was challenging even before the pandemic. How are you tackling the problem in Hampton Roads? 

We are committed to rewarding and recognizing our talented clinical teams through investments in our compensation and benefits offerings, to attract and retain the best health care workforce in the region.

We have vacancies, as do many other hospitals and health systems, as the health care industry as a whole continues to face staffing shortages, but [we are making] steady progress in our recruitment efforts. Specialty physicians that practice in niche or unique settings can tend to be more difficult to recruit … due to the high demand for them in areas like neurology, vascular and cardiology. In the last year, we’ve reduced registered nurse turnover by almost 30%.

 

 

REAR ADM. WES McCALL

Commander, , Norfolk

How is the Navy Region Mid-Atlantic doing in terms of recruiting and retaining civilian employees?

We are continuously looking for new talent to welcome into our workforce, and our opportunities are vast. From positions as a first responder in our police and fire programs to morale and welfare opportunities in child care and counseling, we have career opportunities for just about anyone.

More than anything, we are really focused on being an employer of choice for our workforce by offering competitive pay and development opportunities that allow for professional growth.

Can you give us an update on land you expect to lease commercially in the Hampton Roads area, including 400 acres at Oceana?

NAS Oceana continues to seek partnership opportunities for leasing several of its underutilized parcels of land to help meet infrastructure and mission requirement challenges throughout the installation.

We are reviewing the requirements for the 113-acre lot known as the Former Horse Stables. If requirements determine a new request for proposal should be issued for that parcel, it will be posted on the government’s System for Award Management. In addition, NAS Oceana is considering releasing several requests for interest for other underutilized parcels at the installation.

What regional community institutions do you hope the Navy can partner with more closely in coming years? 

The Port of Virginia is literally one of our next-door neighbors in Hampton Roads, and we are exploring opportunities with them for some shared wins. The local colleges and universities in the area provide us great opportunity to partner more with them as they graduate talent looking for long-term employment, particularly with law enforcement, child care, dispatchers and a host of other great employment opportunities within the Department of Navy.

 

President, Old Dominion University, Norfolk

How do you expect the integration of Eastern Virginia Medical College into ODU to change the health care landscape in Hampton Roads, and is the merger on track?

Old Dominion University is deeply committed to addressing the health disparities that are facing our region and its people. With that goal in mind, in December 2021, ODU entered into a partnership with Eastern Virginia Medical School, as well as Sentara Health, to enhance health care, strengthen educational programs, bolster the workforce pipeline and expand research capabilities. Since that time, we have made significant progress in establishing an academic health sciences center.

Legislation that passed during the 2023 session calls for the integration to occur on Jan. 1, 2024. 

How is ODU’s $500 million capital going, and what are the challenges of fundraising amid high inflation?

Last October, we boldly and proudly launched a campaign to change the trajectory of Old Dominion, especially the opportunities for our students. To date, we have secured more than $300 million in funding. We are on track to complete this important effort in record time.

What is the biggest challenge in making accessible and relevant to students, and how is ODU meeting those goals? 

Old Dominion University adopted a new strategic plan earlier this year. In the plan, we have intentionally and thoughtfully outlined the innovative steps that we will take to ensure that we are meeting the needs of students now and well into the future. ODU has a reputation for access and opportunity; however, we are equally committed to achievement and excellence. For example, we have pledged to be flexible by pursuing scalable and stackable offerings and remain affordable by exploring alternate tuition models. 

 

TOI HUNTER

Vice president, business retention and expansion, Hampton Roads Alliance, Norfolk

You joined Hampton Roads Alliance in 2020. What has changed since then in how you are assisting businesses to remain and grow in the region?

In 2020, when COVID was at its height, manufacturers were concerned with sourcing labor and shoring up their supply chains, while the business services industry pivoted to remote work, and wage arbitrage played a significant role in the cost of human capital. Industrial warehouse space reached historic demands, and local governments have shouldered the impacts to permitting and managing public concerns. Now, I am listening for how business intelligence data may play a role in analyzing consumer behaviors and optimizing operations for the companies I assist. In addition, I keep in mind that companies need help with developing the business case for remote work by balancing lease rates for likely renovated office space occupied two to three days a week, along with quality-of-life attributes to attract or retain a workforce.

Which external factors have the most influence on business retention?

There are several factors that can impact business and employee retention. Often internal corporate strategy sets the stage for how the company chooses to operate (or not) in their existing location — whether that be a decision to automate operations or reduce their footprint in implementing a remote work strategy.

Access to affordable child care options, training programs and workforce housing are major factors in ensuring that the workforce has the support systems in place to create a competitive regional labor market.

I would encourage human resources managers and operations leaders to connect with their economic and workforce development partners. There are programs designed to lower the costs for hiring new employees and training incumbent workers. For gaps in the available programming, a meeting between businesses and economic development is an effective approach to shaping policies related to those external factors impacting business growth.

 

CEO, Hampton Roads Realtors Association, Chesapeake

The residential market has seen higher prices and interest rates this year. What do you anticipate for 2024? 

I have learned from many Realtors and from observing the industry as a Realtor association CEO that the market is cyclical and often in 15- to 20-year cycles. I think the key point for sellers and buyers is perspective. The National Association of Realtors’ chief economist, Dr. Lawrence Yun, is predicting that mortgage rates will fall to 6% or under in 2024, and new home sales will increase.

For , what factors are most affecting industrial, office and retail markets in Hampton Roads?

One only needs to drive around to see all the new construction happening. The need for multifamily housing has only increased with a tight residential market. Industrial markets are very much impacted by all forms of local and state legislation, but overall this market is very strong in Hampton Roads. Demand is high, but supply can become an issue.

Retail appears stable. However, like everywhere else in the nation, office is still lagging; many people and companies have seen the benefits of working from home. However, compared to the national average office vacancy rate, Hampton Roads is doing incredibly well. We are not that far off from pre-pandemic rates.

Which external factors have the most influence on local real estate?

I believe the huge naval complex here in Hampton Roads most likely has the largest impact on the housing market. I have worked in another market with a large military base, Tinker Air Force [Base, outside] Oklahoma City … and the sheer volume of ancillary and primary jobs these bases bring to an area benefits its citizens and the housing market.

Gazing into the future

The waterways and shorelines that make up harbor a historic reputation as ideal hosts for commerce, trade, shipbuilding, installations and government research. Its beaches and historical sites attract millions of visitors, and the region is home to farms, businesses and universities.

We know the past and present, but what about the future of Hampton Roads? We asked several regional leaders to give us their view for what the future has in store for the area 20 years from now. They offered predictions about the region’s workforce, business opportunities, , federal defense spending and other economic influences.

Home to more than 1.7 million people, Hampton Roads includes 10 cities and six counties in southeastern Virginia and nearly 3,000 square miles of diverse landscape, as noted in the 2022-2027 Comprehensive Strategy (CEDS) for Hampton Roads. “It is well-known that in Hampton Roads, the three pillars of the regional economy are the port, the military and tourism,” it reads. 

In the short term, posits ODU economist Robert McNab, the region is likely to see increases in defense spending. Photo by Mark Rhodes

Developed by the Hampton Roads Planning District Commission in partnership with the and Old Dominion University, the report was approved by the U.S. Economic Development Administration in 2022. Authored primarily by planning district commission members Greg Grootendorst, Katherine Rainone and Katie Cullipher, it also contains valuable insights from Robert McNab and Tim Komarek of ODU’s Dragas Center for Economic Analysis and Policy, along with other members of its strategy committee.

Essentially, this report provides a glimpse into what Hampton Roads was, is and hopes to be. Among the region’s strengths are its demographic diversity, institutions, competitive business costs and a strong federal workforce — but its weaknesses include dependence on federal spending, a lack of private-sector job growth, not enough affordable housing and regional fragmentation, according to the CEDS report.

“If you look at Hampton Roads,” explains McNab, “it is a distinctive place in terms of its role in the national security of the United States. It has had this distinctive role for over two centuries. That is a blessing, but some might call it a curse. 

“It is a blessing because, for over 200 years, Hampton Roads has been one of the focal points of the United States Navy and the Armed Forces on a broader scale, and the federal government,” he says. “This distinctive role is unlikely to diminish significantly in the near term, especially with advances in technology, specifically unmanned systems, artificial intelligence and the revolution in military affairs that now we’re seeing another iteration of in Ukraine with regards to the performance of large-scale, very expensive weapon systems relative to inexpensive, unmanned drones.”

In the short term, McNab adds, “the prospects for defense spending and federal government spending in the region are quite favorable. One might argue that we’ll continue to see increases in defense spending over the next three to five years nationally and within the region.”

Hampton Roads Workforce Council President and CEO Shawn Avery says he believes that Hampton Roads’ short-term economic future looks promising for myriad reasons, including the expansion of the  Hampton Roads Bridge-Tunnel (HRBT), the largest highway construction project in the Virginia Department of Transportation’s history.

The $3.9 billion bridge and tunnel expansion will add twin tunnels and will double the number of lanes to eight along 10 miles of Interstate 64. Its original deadline was the end of 2025, but workers are about a year behind schedule, so that deadline’s likely to change.

Aside from easing local traffic gridlock, “the HRBT expansion will open more economic collaboration and growth with the RVA corridor,” says Avery. “The region’s continued expansion into autonomous systems will situate us as one of the only regions in the nation able to develop and test related technology for land, sea, air and space.

“And our maritime industry will continue to expand as we become the offshore wind hub for the East Coast and pursue the Navy’s mission to build and repair the most advanced ships and submarines in the world.”

On the tourism front, “the Hampton Roads region [and] Williamsburg will be an area of national focus in 2026, for our country’s 250th anniversary, leading up to July 4, 2026,” points out Nancy L. Grden, Hampton Roads Executive Roundtable president and CEO. “What a great opportunity to celebrate and communicate our region’s unique brand, and to create ‘new history.’ By that time, we will have exciting growth and expansion initiatives coming to fruition for the future — and unlike any other region in the country.” 

Emerging industries like offshore wind energy, advanced manufacturing and information technology are primed to become region-shaping economic forces, says Hampton Roads Workforce Council President and CEO Shawn Avery. Photo by Mark Rhodes

Special attributes

Looking beyond the immediate future, experts laud the region’s noteworthy qualities that make it stand out both in Virginia and nationally.

“Amongst large metropolitan areas with more than 1 million people, we have the largest proportion of our economy that is derived from federal government spending and specifically defense spending, apart from the Washington, D.C., metro area,” McNab notes.

“The challenge really … over the next five to 20 years remains the challenge that has been present in front of the region over the last two or three decades,” he adds. “That is, how do you diversify the economic base of Hampton Roads, such that we continue to occupy the distinctive role of national security of the United States but have other pillars of the regional economy that generate well-paying jobs and economic activity that are not dependent upon decisions in Washington, D.C.?”

Options vary, but Douglas L. Smith, president and CEO of the Hampton Roads Alliance, sees promise in the air — literally.

“Hampton Roads is quickly becoming a center of excellence for air mobility and unmanned systems,” Smith says. He anticipates that, through the research and development underway at NASA Langley and at various military installations, Hampton Roads will pioneer cutting-edge aerial transportation powered by carbon-free alternative fuels, pushing the boundaries of what’s possible in the skies. 

“We believe there is room to grow the defense sector in Hampton Roads by leveraging assets needed by businesses that directly support military installations and major defense contractors in the region,” Smith adds. “The world is increasingly looking at Hampton Roads because of our competencies in these sectors and the natural competitive advantages of our business environment. Virginia is a global brand as a perennial ‘best state to do business.’”

McNab says that transportation expansion is also key to the region’s economic health.

“The state and federal government need to agree to punch through I-87 into North Carolina to create a more robust transportation system to the southwest,” he notes. “If you look at Hampton Roads, it’s often colloquially referred to as the world’s largest cul-de-sac because we don’t have real significant transportation outlets to the south and the west. Getting that interstate highway down to Raleigh and connecting into Charlotte will create a corridor where not only manufactured goods can come out of the port and go to other areas, but an area where we can re-manufacture goods and re-export them — and that’s where real value is.”

Avery points out that the years ahead will also present some challenges and opportunities for Hampton Roads, particularly given its large military footprint and its risk from sea-level rise.

“Coastal resiliency will continue to be key concerns for Joint Base Langley-Eustis, as well as Naval Station Norfolk,” he predicts. “The continuing need to upgrade the Navy’s aging fleet and the increase in demand for newer vessels will be a priority for our national security. , Norfolk Naval Shipyard and the membership of the Virginia Ship Repair Association will be critical role players in this effort.”

Paul Robinson, executive director of RISE, a Norfolk-based nonprofit that helps resilience-focused businesses grow, points out that coastal communities nationwide face the accelerated impacts of climate change, and nearly half of the U.S. population reside in these vulnerable areas. Flooding related to sea-level rise and other factors place homes, businesses and even military installations at risk.

“These hazards pose a significant risk to approximately $1 trillion worth of real estate and infrastructure along U.S. shores, and the global cost of coastal flooding events could reach $14.2 trillion by the end of the century,” Robinson says. “The Norfolk- metropolitan area alone currently ranks 10th in the world in the value of assets exposed to an increase in flooding from sea-level rise.

“Adapting to these challenges is crucial to reduce damage and enhance long-term sustainability,” Robinson adds. “Climate adaptation requires a holistic, long-term perspective that involves investing in infrastructure that can protect vulnerabilities well into the future, along with innovative and affordable solutions to reduce risks now.”

Workforce predictions

While global warming and sea-level rise are of major concern in the Hampton Roads region, experts note that there are also microcosmic influences that can affect the future.

The work being done now to build an entrepreneurial ecosystem in Hampton Roads will help scale up industry clusters in the future, says Hampton Roads Executive Roundtable President and CEO . Photo by Mark Rhodes

Looking at the workplace, McNab predicts, “Growth in Hampton Roads will probably occur in small to midsize firms. And if we create an environment where entrepreneurship and innovation are supported and successful by investments in our infrastructure, including broadband and transportation, then we are creating jobs that also retain talent.

“If we look 5, 10, 15 years down the road, we also need to recognize that, if we have a workforce that is increasingly suffering from health or mental health issues, we could do everything right and there just won’t be enough workers to fill the jobs out there. This will be a longer-term challenge, not only for Hampton Roads but for Virginia and the United States as well,” McNab adds.

Emerging industries that will shape the region over the next two decades, Avery says, will include offshore wind, advanced manufacturing and IT.

“More than a dozen offshore wind projects are in advanced stages of planning on the East Coast of the United States,” he notes. “The federal government has set a national goal to produce 30,000 megawatts of energy by 2030. With development of ‘s Coastal Virginia Offshore Wind project and Avangrid Renewables’ Kitty Hawk Offshore Wind project, Hampton Roads is now on a trajectory to lead offshore wind development in the U.S.”

Also, Avery says, “the Hampton Roads region is ripe for the advanced manufacturing industry, based on the region’s multimodal network, the workforce, innovative technology, and its location for rapid distribution from the Port of Virginia. In addition, information technology, specifically fiber optics, is an emerging industry in our region.”

International investment, too, will factor into the region’s future prosperity, Smith adds. “Global competition for foreign direct investment is increasing at a record pace. Within the commonwealth, the Global Business Alliance estimates that 6.3% of Virginia jobs are tied to foreign direct investment, and employees at international firms earn roughly 10% more than the national average wage.”

And at an even more nitty-gritty level, Hampton Roads has a notable startup community that has grown significantly over the past five years, Grden says. “The past five years have laid a foundation,” with players in the local entrepreneurial ecosystem including the innovation centers at ODU and Norfolk State University, 757 Collab and Black BRAND.

“The region will be able to create bridges between this entrepreneurial ecosystem and our economic development partners to scale up more companies in key industry clusters relevant to our region,” she says. “It is also fortunate to have major federal facilities and sources of innovation, such as Jefferson Lab, NASA Langley Research Center and others, which should result in intellectual property converting into commercialization and new company/talent attraction.”

VTCSOM seeks to create neurosurgery department

Administrators at the Carilion School of are working toward establishing a department of , a step up from its smaller program.

The State Council of for Virginia (SCHEV) received the school’s proposal for creating the new department in early August and could vote on it as soon as Oct. 24, according to Joseph DeFilippo, director of academic affairs for the state’s coordinating body for higher education.

In June, the Virginia Tech board of visitors approved the plan to seek SCHEV’s approval for the creation of the neurosurgery department, a move that would see Tech’s joining the University of Virginia and Virginia Commonwealth University in teaching the discipline.

The department wouldn’t start from scratch; Tech’s current neurosurgery program is housed under the surgery department. A larger neurosurgery department also would benefit from the recent expansion of ‘s neurosurgery department, which will provide faculty members skilled in current technology. And students would work with researchers at the Fralin Biomedical Research Institute and the Virginia Tech School of Neuroscience.

Carilion Clinic elevated its neurosurgery program, which was launched in 2003, to a department in June when Dr. John Jane Jr. joined Carilion Clinic as the health system’s first chair of neurosurgery. “Most neurosurgery groups are departments within hospitals,” Jane explains. The new department also aligns with greater demand for neurosurgeons. 

As the U.S. population ages, more neurosurgeons will be needed, according to Dr. Nicholas Marko, director of neurosurgery at LewisGale Regional Health System in Salem. Elderly patients are subject to conditions like subdural hematomas treated by neurosurgeons.

Only a few weeks after Marko’s 2019 arrival at LewisGale, his office was “booking patients faster than we could possibly see them,” he says. 

Jane currently serves as a professor of surgery at but would become chair of neurosurgery there if the new department is approved by SCHEV, according to a Carilion Clinic spokesperson.

During the 2021-22 school year, the VTC School of Medicine received a total of 245 applications for one post-medical school residency in neurosurgery, according to a background document provided to Virginia Tech’s board. Establishing a neurosurgery department, the document explained, will allow the medical school to offer additional neurosurgery residency slots.

“We certainly have the need and the volume to increase our residency training program,” Jane says.

Making bank

Suffolk-based continued to lead with the largest market share in fiscal 2022, 25.67%, according to the Federal Deposit Insurance Corp.’s June 30, 2022, report. However, that figure declined from fiscal 2021, when the bank held a 27.49% market share. Meanwhile, Charlotte, North Carolina-based Truist Bank is threatening to close in on that lead, jumping from 19.94% of market share in fiscal 2021 to 24.34% in fiscal 2022. Wells Fargo’s share dropped from 19.94% to 18.93% but still maintained its solid third place. In January, TowneBank closed on its $53 million acquisition of Windsor-based Farmers Bankshares, the parent company of Farmers Bank, creating a bank with about $17.5 billion in combined assets. Farmers reported 1.46% of market share, down from 1.59% from the previous period. Also of note, -based Langley Federal Credit Union’s assets increased from more than $4.8 billion in fiscal 2021 to more than $5.1 billion in fiscal 2022; the credit union also added more than 22,000 members. 

Propelling forward

A massive building is rising on the northernmost point of Newport News on the James River, physical evidence of the shipyard’s ambitious plan to build the Navy’s next generation of Virginia-class submarines as well as components for a dozen Columbia-class boats.

Not as visible, but just as important as the new Multi-Class Submarine Production Facility, is the regional effort to ensure that the shipbuilder, the state’s largest employer and a division of Huntington Ingalls Industries, has the manpower it needs to meet the Navy’s aggressive timeline to build two Virginia-class boats annually, as well as manufacture six modular components for every Columbia-class submarine.

It’s a daunting task, given delays that occurred during the COVID-19 pandemic, when no Virginia-class submarines were delivered to the Navy. Record low unemployment across the state has contributed to the challenge to staff production lines.

“We’re laser-focused,” says Xavier Beale, ‘s vice president of human resources. “We’re committed to delivering on that backlog [of work] to our customers.”

With Shipbuilding responsible for building two submarines in the current block of the Virginia class and up to eight of the next iteration, while also constructing components for the Columbia class, as well as ongoing construction of two Gerald R. Ford-class aircraft carriers and supporting refurbishment of the carrier USS John C. Stennis, the company has ramped up recruitment and training efforts. It’s working with the Navy, the Workforce Council, local high schools and community and state colleges to grow its workforce.

Newport News Shipbuilding plans to expand its workforce to 28,000 — up from 25,000 — during the next decade, but with a rash of retirements expected in coming years, as well as normal attrition, the shipyard believes it must hire about 21,000 workers in the next decade, shipyard spokesperson Todd Corillo says. That will include 19,000 skilled trades workers like welders, pipe fitters, electricians and machinists, plus a few thousand professionals, such as program managers, engineers, recruiters and human resources experts.

The goal is to train a new generation of shipyard workers, taking a “holistic” approach to ensure that the company doesn’t remove workers from one project to meet the needs of another, Beale says.

Pandemic delays

Shipbuilding and repair generated an estimated $6.4 billion economic impact in Hampton Roads in 2022, plus $4.3 billion in employee earnings and benefits, according to the Virginia Ship Repair Association, which represents more than 300 area businesses.

With the region’s unemployment rate at 3.1% and other planned regional projects underway, including ‘s $9.8 billion Coastal Virginia Offshore Wind project, the competition for recruiting and hiring workers is formidable.

Newport News Shipbuilding and ‘ Connecticut-based Electric Boat have a construction-sharing agreement to build much of the Virginia class and have alternated construction of the submarines. As of June 2022, the two shipyards have delivered 21 of the boats to the Navy, with its next submarine, the USS Hyman G. Rickover, expected to be commissioned Oct. 14. That’s fewer than expected, with the pandemic and related workforce and supply chain issues delaying Newport News Shipbuilding’s construction and delivery of the future USS New Jersey and slowing the average delivery schedule to
1.2 boats annually during the past five years.

In June, the Government Accountability Office noted that the builders would be hard-pressed to meet the two-boat-a-year timeline, given a 25% staffing shortage in September 2022 and a new design for the next-generation Block V boats that could prolong construction time by more than two years.

But HII officials said in February that its current Virginia-class and Columbia-class production lines were fully staffed, with a plan to deliver seven of 10 Block IV boats before moving on to the new version, Block V, which will be 83 feet longer than its predecessor and more advanced.

To meet demand, Newport News Shipbuilding fast-tracked construction of its Multi-Class Submarine Production Facility, breaking ground in February, with expected completion in 2024. Two more submarine construction support facilities will be built nearby, with completion expected in 2025. The facilities are part of a nine-year, $1.9 billion infrastructure investment at the shipyard that will improve working conditions for those constructing submarine components.

“These covered facilities improve the work environment for our employees and also help us with construction as far as the technologies that we’re using within them,” Beale says.

‘Great careers’

With $11 million in grants from the Biden administration’s American Rescue Plan Act, along with $2.5 million in state grants, the Hampton Roads Workforce Council is spearheading a regional effort to hire recruiters to attract talent and establish skilled-trades training programs to increase the shipbuilding workforce, says Shawn Avery, the organization’s president and CEO. Among the programs set for development or expansion is Tidewater Community College’s skilled training program, which will grow to increase its class size and offerings, and Paul D. Camp Community College, which plans to build a Workforce Trades and Innovation Center in Suffolk to house the school’s maritime and skilled-trades training programs.

In May, 20 graduates from a welding program at Hampton’s New Horizons Regional Education Center, a public vocational and tech high school with nine locations throughout the state, accepted full-time jobs at Newport News Shipbuilding and another dozen signed on to attend The Apprentice School, the company’s vocational school.

The Workforce Council has helped identify specific needs for specialized tradespeople over the next five years and is working with local community colleges as well as the New Horizons program to ensure that training spots are available, Avery says.

Recruiters from the Workforce Council and the shipyard also are fanning out to under-resourced and underserved communities to talk about job opportunities at the shipyard. Beale returned to his high school in Surry County to talk with students and parents about the advantages of working for Newport News Shipbuilding, including hands-on training, better-than-average starting wages, on-site and signing and relocation bonuses.

“We talk about building ships here, but I really want to focus on the fact that we build more than great ships,” Beale says. “We build great careers. We build great citizens of our community here.” 

Battlefield Virginia

It’s a nerve-wracking time this fall for a small group of campaign managers, with the balance of power in the General Assembly coming down to a handful of close political races.

In House District 97, freshman Republican Del. Karen Greenhalgh is defending her -centered seat against Michael Feggans, a Democrat who grew up in the city and served in the Air Force.

It’s a key, front-line in the high-stakes battle for control of Virginia’s state legislature, with all 140 seats in the Senate and House of Delegates up for election this fall. (Early voting began Sept. 22 for the Nov. 7 general election.) Following extensive and an exodus of retiring legislators, politicos say it’s a tough call how the elections will shake out, but the outcome could determine the Assembly’s balance of political power for years to come. Races for both chambers will be closely fought, with the future of abortion access, tax laws, budget priorities and labor issues all in question.

According to the Virginia Public Access Project, District 97 is one of the state’s most competitive races this cycle. The district went 2.2 points for Republicans in 2021 and 5.2 points for in 2022. As of the Aug. 31 campaign reporting deadline, Feggans has raised $890,000 and Greenhalgh $852,955.

Greenhalgh founded Heritage Woodworks, a cabinet-manufacturing company she later sold, and Cyber Tygr, a business that addresses cybersecurity issues in health care. She also works as a manager for local crisis pregnancy centers, clinics that provide care — but not abortion services — to pregnant women. Four of 17 bills on which Greenhalgh was chief sponsor or chief co-sponsor passed last session. She was chief sponsor of legislation that would have expanded the parameters of written consent by people seeking abortions; the bill was killed in committee by the Democratic-held Virginia State Senate.

She also supports a 15-week ban on abortions favored by Gov. Glenn and other Republicans, while Feggans has voiced his support for current state law, which allows abortions through the second trimester and requires approval from three doctors before a third-trimester procedure.

The candidates themselves say they’re running for office for less-complicated reasons.

“I have people in my district who are just like me, who live paycheck to paycheck,” Greenhalgh says. “As far as it being a swing district, no matter which party you tend to vote for, we want the same things: We want safe neighborhoods. We want good schools for our kids. We want good jobs to support families. Those are the dreams that everyone in my district has for their families and their children. I look for ways to make sure we don’t lose those opportunities in Virginia.”

Meanwhile, Feggans, who worked in health services management and started a cybersecurity company, touts his Air Force service and local and political ties. He previously interned in U.S. Sen. Mark Warner’s Norfolk office and for the state secretary of technology and earned his master’s degree in cybersecurity from Norfolk State University.

“I took all the experiences invested in me for 20 years to give back to the community that nurtured me,” Feggans says. “We know we have a pathway to victory. Virginia Beach is a town. Not only my service record in the military, but my service to the community reflects who Virginia Beach is. I’m a product of Virginia Beach Public Schools and a product of Virginia colleges. I know I have a lot to offer to the city that raised me.”

On the verge

However homespun the candidates sound, politicos acknowledge that Virginia’s blueish reputation and recent legislative gridlock could change radically next year if the wins a few tight races. Should Republicans attain majorities in both chambers, they have a chance to reframe Virginia politics. Corporate tax cuts and restrictions on abortion would be almost certainties.

“Democrats have been on the surge, but there’s a real possibility Republicans hold the House and take the Senate,” says political analyst A.J. Nolte, an assistant professor at Regent University’s Robertson School of Government. “They might have a trifecta for the first time in the state in a long time. That’s potentially an earthquake. People have gotten used to the idea Virginia is a more blue state, but let’s not forget [that] Republicans held both chambers as recently as 2018. Unified Democratic control is more recent.”

After a Republican ticket led by Gov. Bob McDonnell swept the 2009 races, Democrats won every subsequent statewide office — including both U.S. senatorial seats, governor, lieutenant governor and attorney general — until the GOP slate led by Gov. won in 2021.

For his part, Youngkin has been active in raising money for Republican candidates in the June primaries and November’s general elections. In a very real sense, his political reputation and potential presidential aspirations are also on the line this fall. (See related story.)

Republicans are being propelled by Youngkin, who endorsed 10 successful candidates in key Republican primaries, and his Spirit of Virginia political action committee, which raised $5.9 million as of June 30.

“The governor made it a priority to recruit and endorse candidates in those races to make sure we had the strongest possible candidates going into the election cycle,” says David Rexrode, an adviser to the governor and chairman of Youngkin’s PAC.

This election, Rexrode says, “The No. 1, No. 2 and No. 3 issues are — order varies by district — jobs and economy, education and public safety. That’s what our candidates are talking about because that’s what our voters care about.”

‘Gutter politics’

Meanwhile, Democrats largely are training their attacks on former President Donald Trump’s continuing influence in the Republican Party, and the U.S. Supreme Court’s 2022 Dobbs v. Jackson Women’s Health Organization ruling, which overturned the federal right to abortion, ceding authority to states.

“Frankly, the stakes couldn’t be higher for Virginians, especially Virginia women,” says Liam Watson, press secretary for the Democratic Party of Virginia. “We all know what’s at stake this year is abortion rights — not just for Virginians but across the South. Virginia is the last Southern state without a post-Dobbs abortion ban. The GOP in Virginia right now at all levels is pushing for a ban on abortion. We know what Republicans are about; it’s not a mystery what they’d do if we give them full control of our government here in Richmond.”

Speaking about abortion access, Democratic Virginia House Minority Leader Don Scott of Portsmouth says, “The only people trying to pretend it’s not on the ballot are MAGA Republicans.”

Nolte says the Democratic caucus has been slowly transforming for years, but with mass retirements and primaries, moderates have largely given way to younger, more progressive candidates. Meanwhile, he adds, Youngkin’s money and influence largely overcame national trends and defeated “MAGA, flame-throwing folks” in GOP primaries, such as Del. Marie March and Sen. Amanda Chase, who lost battles against more moderate Republican challengers.

Youngkin’s Virginia organization “is heavily focused on training, heavily focused on [building] disciplined, technically proficient campaigns,” Nolte says, but is “not as much focused on big-ticket messaging.”

In response to Youngkin’s PAC largesse, President Joe Biden in September directed the Democratic National Committee to add $1.2 million in contributions to Democrats running for Virginia legislative seats, bringing the DNC’s total to $1.5 million.

“When we had the majority, the biggest thing we did was make sure this economy works for everybody,” Scott says. “Virginia was named the No. 1 state for business in the country twice during that time. The governor now, who is supposed to be a business guy, hasn’t been able to accomplish that.”

Although many of the November candidates prefer to focus on local, less hot-button issues than abortion, it’s clear that the ‘s more collegial, compromise-friendly tenor will change next year because of the number of retired legislators and lame-duck incumbents leaving office in January.

Lawmakers with a combined 649 years of legislative experience will not return to the General Assembly in 2024, according to former Republican Del. Chris Saxman, executive director of Virginia FREE, a nonpartisan, business-focused political organization.

The 2021 statewide redistricting placed a significant number of incumbents in the same district, leading to retirements and hard-bitten primaries. Many who made it through the June primaries now have a clear path to election in November due to the makeup of their districts, except in a handful of toss-up districts that will determine political control.

With both parties eager to motivate voters, competitive races are hinging largely on negative campaigning, says political analyst Stephen Farnsworth, a political science professor at the University of Mary Washington and a longtime observer of the legislature.

“The key thing is getting your base out,” Farnsworth says. “The demonization of the other side is a tried-and-true strategy for getting your voters to actually turn out, and the way that’s done is to create sort of funhouse mirror images of the opposing party.”

One notable example is the battleground 57th District race for an open seat in Henrico and Goochland counties. In September, a Republican operative informed The Washington Post that Democratic candidate Susanna Gibson, a nurse practitioner, had performed sex acts with her attorney husband for tips on a streaming porn website, leading to a slew of spicy national headlines. The operative has denied any connection with Gibson’s GOP opponent, David Owen, former co-owner of Goochland-based Boone Homes. Gibson has framed the incident as “gutter politics” and an attempt to intimidate, silence and humiliate her. Her attorney has argued that the leaked content violates the state’s revenge porn laws, however Gibson knowingly appeared live on a porn website that didn’t require a password for access.

Democratic state Del. Schuyler VanValkenburg is running for state Senate in Henrico against an incumbent who he says is “drastically out of touch” with constituents on abortion access. Photo courtesy of Del. Schuyler VanValkenburg

Negative campaigning only exacerbates a concurrent shift that mirrors national politics — a growing number of elected officials are less likely to cross party lines in support of bipartisan, moderate policies.

“When elections are conducted in this fashion, you find very few moderates elected and find very little opportunity for compromise,” Farnsworth says, “because, after all, you basically spent the general election making the argument the other side is in thrall to the things your voters hate. Increasingly, Virginia is looking a lot like Capitol Hill when it comes to partisan gridlock and hot-button issues.”

The new lines could end up favoring Democrats because the new districts skew the balance of power to suburbs, whether in Northern Virginia, Hampton Roads or the Richmond metro region, Farnsworth notes, so candidates on both sides are carefully tailoring their campaign messages to appeal to moderates.

Walking a fine line

Take Sen. Siobhan Dunnavant, a two-term Republican incumbent from western Henrico County. An OB/GYN, she was the only Republican to join Democrats in defeating Greenhalgh’s abortion information bill.

She won an open seat in 2015, then eked out a narrow re-election victory amid the Democratic wave of 2019. She’s now running in Senate District 16, which went for Democrats by 6 percentage points in 2021 and 10 percentage points in 2022, according to the Virginia Public Access Project.

Positioning herself as a common-sense moderate, incumbent Republican state Sen. Siobhan Dunnavant is running to keep her seat in a Henrico district she describes as “purple.” Photo courtesy Sen. Siobhan Dunnavant

Dunnavant, who pitches herself as a down-to-earth citizen legislator in pursuit of straightforward fixes to policy problems, is running against Democrat Del. Schuyler VanValkenburg, a Henrico County teacher who has served in the House since 2018. It’s a must-win for both parties as they seek control of the Democratic-held Senate.

“I am in one of those purple seats that is even more favorable for Democrats,” Dunnavant says, “and yet, I’ve won it before, and I’ll win it again because of the fact that I actually work hard on common-sense bills that make a difference in my constituents’ lives.”

Dunnavant has focused on bipartisan legislation she sponsored to standardize health care records and establish dual-enrollment credits among high schools, community colleges and public four-year universities. But she also generally backs Youngkin’s position to place restrictions on abortion after 15 weeks, with exceptions for rape, incest, life of the mother and severe birth defects, and to restrict the procedure altogether in the third trimester. VanValkenburg, who did not respond to interview requests, has said that Dunnavant’s position on abortion is “drastically out of touch.”

Through Aug. 31, Dunnavant raised $1.9 million, and VanValkenburg brought in $1.6 million.

On the Democratic side, Sen. Montgomery “Monty” Mason of Williamsburg has focused his campaign to retain the seat he’s held since 2017 on his business background, which includes his current job as a senior director for Visa and his previous stint as chairman of the Williamsburg Economic Development Authority board. Mason says he’s well-positioned to run in a seat that leaned 1.1 points toward Democrats in 2022, according to VPAP.

“I’m a good person to give a 50/50 district to,” Mason says. “I’m a moderate. I have a lot of veterans in my district. Of course, school safety and discussions about gun safety and how to protect children have been an enormous topic of conversation.”

Mason says a large contingent of military veterans in the district have expressed support for Republican-backed tax relief, while a significant number of voters are talking about safety and funding for schools.

As of Aug. 31, Mason raised $2 million, and his Republican challenger, Danny Diggs, raised $1.3 million.

Mason’s biggest funder so far this year is Dominion Energy, a polarizing campaign donor. Many Democrats have received money from the utility, but others have made a point of rejecting its donations. The latter have been supported by Clean Virginia, a PAC that supports candidates who spurn Dominion funding. In March, Clean Virginia said it expected to spend $2.5 million on Virginia elections this year.

Dominion has made significant contributions to Republicans and Democrats for years, but the Fortune 500 utility’s expansive influence has become a source of controversy, particularly among Democratic delegates in fierce primary battles. As of Aug. 31, Dominion had contributed $3.2 million to Democratic PACs and candidates in state races, and $2.6 million to Republicans, according to the Virginia Public Access Project.

With more legislators caught up in partisan or intraparty political battles than ever before, businesses and individuals who wish to stay in the good graces of whoever holds the power in Richmond face hard choices.

“In today’s Virginia politics, there will be a lot more lawmaking from a more decidedly liberal or decidedly conservative perspective,” Farnsworth says. “That means that elections have higher stakes in terms of the outcome, but they also are more risky for business. If you back the wrong party, that’s bad for you.” 

RELATED STORY: Youngkin’s 2024 tightrope walk depends on Va. elections