Please ensure Javascript is enabled for purposes of website accessibility

Recovery time

More than a year into the pandemic, the commercial real estate market in Hampton Roads isn’t hurting.

“The pandemic wasn’t as bad as we feared it might be for commercial real estate,” says Larry Colorito Jr., chair of the board of directors and a senior managing director for national appraisal firm Valbridge Property Advisors.

Geoff Poston, who heads up Cushman & Wakefield | Thalhimer’s industrial brokerage team in Hampton Roads, says the area’s industrial real estate market is “hotter than it’s ever been,” with a 1.5% vacancy rate, far below the historical average of 6% to 6.5%. (For the same time period, the region’s industrial vacancy rate was 3.1% in 2019 and 2.5% in 2020.)

In the hard-hit retail sector, shopping centers with grocery stores as anchors are performing well and other retail sectors are picking up steam. “Confident consumers are doing their part to help push the retail demand in the market,” according to second-quarter regional market reports from Cushman & Wakefield | Thalhimer. The retail vacancy rate in Hampton Roads was 5.2% for the second quarter, about the same as it was pre-pandemic.

Compared with how it was prior to the pandemic, the region’s office market has been “anemic,” Poston says, but it picked up some this spring and summer as more people became vaccinated against COVID-19. While the impact of hybrid and remote work schedules is still being determined, there hasn’t been an exodus of companies from office space, he adds. For the second quarter of 2021, the region’s office vacancy rate was 9.2%, compared with 8.1% for the same period in 2020 and 8.6% in 2019.

Upcoming construction projects that will be important in the region include the two casinos under development in Norfolk and Portsmouth and the redevelopment of Military Circle Mall in Norfolk. Construction on Norfolk’s casino, alongside Harbor Park, should be completed by 2023. The planned Rivers Casino Portsmouth could open as soon as late 2022. Norfolk is weighing three proposals to redevelop Military Circle Mall into a multi-use project including an entertainment arena and office space.

 

Back to the beach

After a strong summer comeback, the Hampton Roads tourism industry is facing uncertainty once again as the COVID-19 pandemic lingers.

This summer, Virginia Beach hotels saw slightly higher occupancy rates than in 2019 — a welcome return to normalcy. But an autumn and winter of hospitality industry revenue declines related to escalating COVID cases could be in the offing, adding more pain to an industry that has already endured heavy losses due to the pandemic. Virginia lost an estimated $14.5 billion in tourism spending between March 2020 and April 2021, according to the governor’s office.

Hotels in Virginia Beach suffered $81 million in losses from January 2020 through August 2020, according to data from the Virginia Beach Convention & Visitors Bureau. And even though Virginia Beach led the nation in hotel occupancies, with a 60% occupancy rate for 20 weeks in 2020, it was still far short of pre-COVID summer seasons.

Virginia Beach greatly benefits from being a market in driving distance for many on the East Coast, which especially appeals to travelers who fear flying during the pandemic, says John Zirkle Jr., president of the Virginia Beach Hotel Association and general manager of the DoubleTree by Hilton in Virginia Beach. This summer, the beach city’s hotels saw an average occupancy rate of 84.2%, a slight increase over 2019 pre-pandemic numbers.

Summer 2021 revenue rebounds have hotel owners feeling more upbeat heading into the traditionally slower fall season, says Zirkle.

“I’m always optimistic; I’m in the hospitality business,” Zirkle says. “We got kicked in the teeth again and again over the course of 2020 and basically the first half of 2021. We keep brushing ourselves off and doing what we need to do, and I think people do want to travel.”

But the uptick still isn’t nearly enough to cover revenue lost during the pandemic, analysts say. And hotels, restaurants and other tourist attractions are still facing worker shortages that severely impacted their ability to serve the onslaught of summer travelers.   

Many area restaurants closed for lunch due to low staffing volumes. And some Virginia Beach Hotel Association members reported that they couldn’t fill some available rooms despite demand, because they didn’t have enough housekeeping workers, Zirkle says.

Despite higher pay and hiring bonuses — including the Virginia Beach Workforce Council’s “Fund Your Fire” incentive program, which granted $1,000 bonuses to the first 250 people to fill vacant hospitality positions — many job openings remained unfilled in area hospitality businesses. Business owners and managers blamed low staffing on the lack of foreign students traveling on J-1 visas, expanded unemployment benefits and lingering worry over the coronavirus.

Businesses offered their own pay incentives to attract workers, including bonuses and other incentives for housekeeping staff to turn rooms over in a timely manner, and front desk staff to sell out vacant rooms, Zirkle says.

This fall is likely to be impacted by the highly infectious delta variant of COVID, which is leading to some cancellations and postponed events. In Hampton Roads, business travel and convention center events are important to autumn hospitality revenue, says Eric Terry, Virginia Restaurant Lodging & Travel Association’s president.

“Convention centers are a major driver of our hotel occupancies and they help fill businesses during off-peak times,” Terry says. “So, the lack of that is really going to hurt.”

Bookings have been slow for area convention centers, Terry says, noting that he doesn’t expect “to see full convention center recovery for another two to three years.”

To attract vendors, the Virginia Beach Convention and Visitors Bureau promotes technological improvements that could help limit viral spread, including touchless ticketing, filtration systems and extra sanitation measures, says Erin Goldmeier, a Virginia Beach CVB spokesperson.

Nevertheless, the region’s hospitality industry is facing a long journey to make up for its pandemic-caused revenue losses, Terry says.

“The most recent projections I’ve seen is that it’s probably going to be 2023 before we get a full rebound in terms of our hotel occupancies and restaurants,” he says. “And that will somewhat depend on labor.”  

All in

The Hampton Roads region will see two casinos completed in the next two years, after the General Assembly passed a bill allowing commercial casinos to be built in five economically disadvantaged cities. Here are the stats for the resorts coming to Norfolk and Portsmouth, where voters approved referendums in November 2020 greenlighting the casinos.

HeadWaters Resort & Casino | Norfolk

Operator: Pamunkey Indian Tribe

Headquarters: King William County

Investment: $500 million

Expected payout: $44 million in annual
tax revenue

Amenities: 300-room hotel, pools, spa, entertainment venue, sportsbook, slot machines and table games

Development partner: Jon Yarbrough, Tennessee billionaire founder of casino gaming company Video Gaming Technologies

Construction jobs: 2,000+

Permanent jobs: 2,500

Construction: Groundbreaking scheduled for end of 2021 or early 2022.
Expected to open in 2023.

Rivers Casino | Portsmouth

Operator: Rush Street Gaming

Headquarters: Chicago

Investment: $300 million

Expected payout: $16.3 million
in annual tax revenue

Amenities: Hotel, conference space, indoor and outdoor theaters, restaurants, retail and gaming floor with slots, table games, poker room and sportsbook

Other investors: None announced, but Rush says it is committed to pursuing investments in the project from local, private-sector minority businesspeople.

Construction jobs: 1,400

Permanent jobs: 1,300

Construction: Groundbreaking in October, with completion set in late 2022 or early 2023

Source: Casino operators

Larger shovel-ready sites key to success

Workers with Franklin County-based Bowman Excavating Inc. have hauled off 250,000 cubic yards of dirt since beginning work last November on Wood Haven Technology Park in Roanoke County, according to Devin Bowman, company vice president.

With 30 acres of trees cleared and load after load of dirt scooped away from the berm next to Interstate 81, the park is highly visible to drivers traveling along the highway near Exit 143.

By mid-September, construction was expected to be completed on a 20-acre graded pad, the first phase of the park’s development.

In 2016, the Western Virginia Regional Industrial Facility Authority (WVRIFA) acquired 106 acres on Wood Haven Road in Roanoke County for about $5.3 million to develop the park. Currently, the authority is going through the process of having the Virginia Economic Development Partnership designate the parcel as a Tier 5 site. That’s the highest level in VEDP’s Virginia Business Ready Sites Program’s tier system, which is used to indicate a property’s readiness for industrial development.

“It’s ready to go,” says John Hull, executive director of WVRIFA and the Roanoke Regional Partnership.

Local government and economic development leaders from the cities of Roanoke and Salem, the counties of Roanoke, Botetourt and Franklin and the town of Vinton formed WVRIFA in 2013 to share both expenses and tax revenues from big development projects.

They decided to create the authority after seeing a competitive need for offering prospective businesses shovel-ready sites spanning 100 or more contiguous acres.

“What we determined is that … our competitors all throughout the Southeast had much larger prepared sites,” Hull says, adding that larger projects on that scale “are more impactful from a jobs and investment standpoint.”

Leaders in Botetourt, Franklin and Vinton opted not to participate in the Wood Haven project. Roanoke city and Roanoke County each own 44.2% of the park, while Salem owns an 11.6% share.

Hull feels optimistic that WVRIFA’s investment will pay off. Since the localities began marketing the park in 2020, Hull says, they’ve seen a 300% increase in leads on prospective businesses searching for 50-acre or larger sites.

“There aren’t many sites like this on the Interstate 81 corridor,” Hull says. “I don’t know that there are really any that are available like this with this level of preparedness and this level of visibility.”  

Magical thinking

Listening can be difficult; that’s often an early lesson learned and hopefully one paid better attention to as life goes on. I’ll admit that’s been the case for me.

Listening is especially important in business. Customers, co-workers, suppliers and vendors all have points of view that are worthy of consideration. Listening is probably the most cost-effective form of research. Listening to family members is always helpful, too. That said, it’s surprising what you can hear.

Not long ago, a family member told me that COVID was like the flu — never mind that it has killed more than 4.6 million people globally in less than two years. The flu doesn’t even come close to that. Others will say they don’t want to get vaccinated because they don’t know what’s in the vaccine. Really? Do you know what’s in your fast food diet? Has everyone suddenly become a scientist or epidemiologist? More likely, they’re grasping for excuses to justify their behavior.

Beyond the vaccination problem, the magical thinking that what one chooses to believe makes it so can become even more extreme. Secret space lasers are causing wildfires? Bill Gates is using vaccines to implant the world’s population with computer chips? Who believes this stuff?

It seems as if there is now a global conspiracy theory for anyone willing to believe such things despite an overwhelming lack of any proof. Just because something can be found on the internet doesn’t make it true.

On Sept. 9, the Capital Region Business Forum, a joint effort of the Greater Washington Board of Trade, the Northern Virginia Chamber of Commerce and the Prince George’s Chamber of Commerce, featured a panel discussion with Virginia Gov. Ralph Northam, Maryland Gov. Larry Hogan and Washington, D.C., Mayor Muriel Bowser. When asked what the business community could do to help the economy get back to normal, these leaders were in broad agreement that vaccinations are a top priority. As Northam put it, “We are engaged in biological warfare and the enemy is COVID.”

The same day, President Joe Biden issued a new mandate for all companies with 100 or more employees to require vaccinations or proof of recent negative COVID tests.

Why is that a big deal? Some would say such mandates infringe upon individual liberties or that businesses should decide such matters for themselves.

Frankly, it is a relief for the business community to have the government taking a more proactive role in solving what has become a pandemic among the unvaccinated. Why should the business community have to take on the role of government? We already have our hands full trying to keep companies running under unusually difficult circumstances.

The individual liberties argument also falls flat. If you want to drive, the government requires a driver’s license. For safety reasons, there are posted speed limits. The Occupational Safety and Health Administration (OSHA), under which the vaccine mandate falls, has always set standards for workplace safety. Helmets, sturdy work gloves and steel-toed shoes have long been required for certain types of jobs. This is nothing new.

The U.S. just marked the 20th anniversary of the 9/11 attacks. Since that time, the Transportation Security Administration has required everyone entering the concourse of a U.S. airport to be ticketed, show proof of identity, pass through a metal detector and subject their baggage to searches.

Battling the virus is about the safety of our health. In that regard, the vaccine mandate is no different from any other workplace or transportation safety policy. It is a legitimate role for government to play. Public safety should not be an individual or business choice. It is just the right thing to do.

It is time to move beyond magical thinking. Private industry should not usurp the role of government. That’s the only way we will ever get back to business.  

‘Where the game is happening’

Touting one of North America’s largest ports, congestion-free shipping channels and the nation’s highest percentage of maritime workers, Hampton Roads is charting a course to become the East Coast supply chain hub for the offshore wind industry.

Those attributes, say local leaders, set the region apart in the race to build the nascent carbon-neutral energy sector. The U.S. Department of Energy estimates that offshore wind farms under development off the East Coast will support up to 86,000 jobs and provide up to $25 billion in economic output by 2030.

Currently, the projects rely on a European supply chain for their massive turbines, blades, generators and foundations, but shipping those mechanisms overseas to the United States is expensive, time-consuming and risky. That’s why East Coast states are eager to cut out the middleman by manufacturing the components in the U.S. and delivering them to offshore wind projects along the Atlantic seaboard.

Hampton Roads’ deep, wide harbor, free of air-draft restrictions posed by bridges and other overhead structures, combined with its abundance of terminal facilities and waterfront industrial sites, as well as a large workforce skilled in shipbuilding and ship repair, give the region strong selling points for enticing companies involved in manufacturing, installing and maintaining offshore wind components. Plus, the state offers pro-business incentives such as lower taxes and labor costs and fewer regulations. 

“Right now, the industry is being born in the U.S., and all states that have [offshore wind] projects have ambitions to gain economically,” says Matt Smith, director of offshore wind business development for the Hampton Roads Alliance. “We have a lot of advantages in Hampton Roads with the port structure and workforce, but we have to compete to have offshore wind become the fourth pillar of [the region’s] economy,” after the military, the Port of Virginia and tourism. 

According to an economic impact analysis by Glen Allen-based Mangum Economics, the East Coast offshore wind industry would support approximately 5,200 Virginia-based jobs — primarily in Hampton Roads — as businesses help develop one gigawatt of new offshore wind energy generation annually. Cultivating offshore wind at that pace would generate $270 million in pay and benefits, as well as $740 million in regional economic impact, including $21 million in local government revenue for Hampton Roads and $18 million in Virginia state tax revenue.

Center stage

Many of those benefits will be derived from Dominion Energy Inc.’s planned 2.6-gigawatt, $7.8 billion Coastal Virginia Offshore Wind project. Slated for completion in 2026, the offshore wind farm will include about 180 massive wind turbines erected in federal waters 27 miles off the Virginia Beach coast. About 900 jobs will be created during construction and 1,100 for operations and maintenance during the project’s approximately 30-year lifespan. That could lead to roughly $210 million in local economic impact.

In addition, Hampton Roads is poised to support development of Avangrid Renewables’ 2,500-megawatt project off the coast of Kitty Hawk, North Carolina. That project is expected to produce more than 800 jobs, with a $2 billion impact on Virginia and North Carolina economies over the next decade.

About 625 job titles exist in the offshore wind industry, with more than 120 unique to the field, says Shawn Avery, president and CEO of the Hampton Roads Workforce Council. “It’s all [skill] levels, from high school graduates to community college and four-year graduates. It really does run the gamut,” he says.

Engineers and scientists, along with skilled tradespeople like welders and electricians, will be needed to support offshore wind farms.

About 90% of the skills required in the offshore wind industry match those in other local maritime industries. “Hampton Roads is built on those skill sets,” Avery says. “We’ve got a lot of assets to make us the prime location for the offshore-wind supply chain hub.”

Earlier this year, the state launched the Mid-Atlantic Training Alliance at Virginia Beach’s Centura College, the Mid-Atlantic Maritime Academy and Martinsville’s New College Institute, all of which will provide wind-related training courses certified by the Global Wind Organisation. Community colleges and universities also offer similar training opportunities.

Last year, Virginia, North Carolina and Maryland formed a partnership to promote the Southeast and mid-Atlantic as the hub for offshore wind’s supply chain. “Each state plays on each other’s strengths and works together so companies see us as a group of states that provide a cross section of strengths,” Smith says. “That makes us more competitive as a whole.”

With a satellite office in Germany, the Hampton Roads Alliance markets Hampton Roads’ assets to European companies considering manufacturing wind turbines and blades in the U.S. “We have a very robust business attraction,” Smith says. “We make sure companies understand our strengths as a region and can position themselves to be part of the supply chain.”

Smith notes that a study prepared earlier this year for the North Carolina Department of Commerce gave high marks to Portsmouth Marine Terminal and Lambert’s Point Docks Inc. for their readiness to support offshore wind manufacturing. Denmark renewable energy company Ørsted is already leasing part of Portsmouth Marine Terminal from the Port of Virginia to stage materials and equipment for its offshore wind projects in six states. And in August, Dominion reached an agreement with the port to lease part of Portsmouth Marine Terminal as a staging and pre-assembly area for the turbines needed for its Coastal Virginia Offshore Wind project.

Wind trade

Hampton Roads is also looking to capitalize on homeporting Dominion’s $500 million, 472-foot wind component installation vessel, Charybdis. Currently under construction in Brownsville, Texas, the ship is expected to enter service in 2023, when it will transport materials to two offshore wind farms under construction in New England. Charybdis is the nation’s first offshore wind vessel in compliance with the Jones Act, which requires goods shipped between U.S. ports to be carried on American-built ships. “Being the homeport for the U.S.’s only wind turbine installation vessel is just one thing that can help us become the center of gravity for the industry,” Smith says.

With tremendous economic benefits on the line, the next three years are critical to attract companies and develop the region as a supply chain hub, says Robert Crum, executive director of the Hampton Roads Planning District Commission.

This summer, the HRPDC board approved a resolution encouraging the General Assembly to create a $30 million economic development fund to help companies offset expenses for worker training and certifications, new product development and equipment upgrades. “Sometimes the process for businesses to migrate to supporting the supply chain costs money and is time-consuming,” Crum notes. “We think this fund will help companies offset costs.”

Companies checking out Hampton Roads’ offshore wind industry have an entry point into the region through the Virginia Offshore Wind Landing, a workspace in downtown Norfolk for maritime and offshore wind companies interested in establishing a presence in Hampton Roads to collaborate and access resources. The space is a partnership between Virginia Energy (formerly the Virginia Department of Mines, Minerals, and Energy); the Hampton Roads Alliance; and Old Dominion University’s OpenSeas Technology Innovation Hub.

“It’s a very convenient setup,” says Nancy Grden, executive director of ODU’s Hampton Roads Maritime Collaborative for Growth & Innovation. “Interested companies can come together and learn about what’s available here.”

Jerry Cronin, executive director of the OpenSeas tech hub, agrees, saying, “If we do our job right, we will see the growth of new companies, and existing companies will create new lines of business and attract new companies.” Formed to address challenges and opportunities in the maritime industry, the hub will help firms commercialize offshore wind innovations.

“There are broader implications,” he adds. “Something done with offshore wind could be useful for the ports or the Navy. Hampton Roads is where the game is happening.” 

A developing picture

As Norfolk prepares for some sizable development projects, city officials don’t plan to forget the strong business base that positioned the area for such investments.

“We’re really focused on business expansion and our primary employers,” says Jared Chalk, Norfolk’s director of economic development. “That’s been our focus this year and it’s paid off really well for us.”

Chalk points to this year’s announcements of expansions and new businesses locating in Norfolk as proof that this plan is working. According to the Virginia Economic Development Partnership, Norfolk had eight economic development announcements representing nearly $140 million in new investments during the first half of 2021. Six of the projects were expansions of businesses currently in the city. The remaining two — Atlantic Wind Transfers and Breeze Airways — were new to the city.

“We’ve been doing really well with business expansion and retention projects,” Chalk says. Lyon Shipyard, for instance, announced in June that it’s undertaking a $24 million expansion that will increase the ship repair company’s capacity from 120 to 165 ships a year. Lyon also plans to add about 120 jobs. Likewise, international shipping company CMA CGM announced in February that it will invest $36 million to expand its Hampton Roads operations and its headquarters in Norfolk as well as establishing a business incubator in Arlington County. In total, CMA CGM is expected to add 415 jobs in the state.

Crossroads Partnership LLC proposes a “wellness development” and 15,000-seat arena. Renderings courtesy City of Norfolk Economic Development
Crossroads Partnership LLC proposes a “wellness development” and 15,000-seat arena. Renderings courtesy City of Norfolk Economic Development

While those announcements were widely lauded, the biggest buzz in the Mermaid City right now surrounds the proposals for redevelopment of Norfolk’s Military Circle Mall area. The Norfolk Economic Development Authority purchased the aging mall and an adjacent hotel, then selected development groups to submit proposals for revitalizing the area. In early August, the city released details and renderings from the three development groups that are in the running to oversee the project and asked for public input on the proposals.

“Probably the biggest thing on my plate… is the redevelopment of the Military Circle corridor,” Chalk says. The mall is located near Interstates 64 and 264, about four miles from Norfolk International Airport. It is 13 feet above sea level, which makes it the highest ground in Norfolk and raises its importance as a site for future growth.

Star power

NFL Hall of Famer Emmitt Smith and Grammy Award-winning music superstar Pharrell Williams, along with many well-known Hampton Roads developers, are in the mix of investors vying to be selected to recreate the area as a multiuse destination. Their proposals all call for some type of sports or entertainment venue in addition to housing, retail, lodging, offices and green space.

Wellness Circle LLC’s plan is backed by music superstar and Virginia Beach native Pharrell Williams. Renderings courtesy City of Norfolk Economic Development
Wellness Circle LLC’s plan is backed by music superstar and Virginia Beach native Pharrell Williams. Renderings courtesy City of Norfolk Economic Development

Crossroads Partnership LLC, a group led by Virginia Beach-based S.B. Ballard Construction Co. and Emmitt Smith’s real estate company, is proposing a “wellness development,” anchored by a 15,000-seat arena. Smith has ties to the area through his wife, Patricia, a Chesapeake native and former Miss Virginia. The Crossroads proposal includes a Sentara Healthcare office campus; a 128-room extended stay Hyatt House hotel; an indoor sports complex; nearly 1,000 market- and lower-priced residential units; retail shops; a park; and a walking path with exercise hubs encircling the area. Crossroads also plans to work with cultural and educational partners. Its three-phase development proposal would cost more than $900 million and be completed by late 2029.

Norfolk MC Associates LLC, a group that includes Virginia Beach hotel developer Bruce Thompson’s Gold Key | PHR hospitality company and another Virginia Beach developer, The Franklin Johnston Group, envision a project called “The Well,” which would have a 9-acre lake and more than 40 acres of park and open space as its centerpiece. The $663 million development would include an 8,000-seat outdoor amphitheater; a Sentara Wellness Village office campus; a 200-room hotel; 864 units of multifamily housing; and retail and entertainment space. The Norfolk MC proposal calls for an expansion of Norfolk State University with a business center focusing on startup companies and other interests, and it also incorporates the use of renewable energy.

The third proposal under consideration is from Wellness Circle LLC, a group that includes Virginia Beach native Williams and concert company Live Nation as well as Virginia Beach developers Armada Hoffler Properties and Venture Realty Group. The $1.1 billion Wellness Circle proposal includes an arena with at least 15,000 seats; a walking path and green space; 1 million square feet of office space including medical offices; a 200-room hotel; retail and restaurant spaces; and a variety of multifamily housing units, including low-income housing. It also would include at least one school from Williams’ Yellow nonprofit, which serves children from low-income families. The first of several planned Yellow schools, called Yellowhab, opened this fall in Norfolk’s Ghent neighborhood.

Chalk says the Military Circle proposals are all from strong development teams with exciting plans. “We’re hoping to make a final selection by the end of the year and move forward with one of them in the first quarter of 2022,” he says.

Norfolk MC Associates LLC’s “The Well” proposal comes from Virginia Beach developers Gold Key | PHR and The Franklin Johnston Group. Renderings courtesy City of Norfolk Economic Development
Norfolk MC Associates LLC’s “The Well” proposal comes from Virginia Beach developers Gold Key | PHR and The Franklin Johnston Group. Renderings courtesy City of Norfolk Economic Development

Doug Smith, president and CEO of the Hampton Roads Alliance, says that major projects like the redevelopment of Military Circle help Norfolk market its strength at placemaking — creating new neighborhoods where people want to live, work and play. “It becomes so important for a region,” Smith says.

Virginia breeze

Norfolk also is primed to benefit from the blossoming offshore wind industry taking off in the Hampton Roads area, spurred on by a massive $7.8 billion, 180-turbine offshore wind farm that Dominion Energy Inc. plans to build 27 miles off the Virginia Beach coast by 2026.

The Coastal Virginia Offshore Wind project will be the largest offshore wind farm in the United States and also one of the world’s largest wind farms. The 800-foot-tall offshore wind turbines will generate 2.64 gigawatts of power — enough to power 660,000 homes. The wind farm is a key part of Dominion’s plan to generate all of its energy from carbon-free sources by 2045, as mandated by the General Assembly. Dominion has already erected two pilot offshore wind turbines that generate enough electricity to power 3,000 homes.

“There’s a lot going on here, in terms of supply chaining, to assist in that emerging industry,” Chalk says. “We have a big project we’re going to announce soon related to offshore wind.”

In August, the Business Network for Offshore Wind’s International Partnering Forum (IPF) hosted its second annual conference in Richmond, sharing industry developments and one-on-one networking opportunities for North American companies involved in offshore wind.

Smith with the Hampton Roads Alliance invited conference participants to visit Hampton Roads and get a feel for what it offers. “We think Virginia, and Hampton Roads in particular, has some really unique advantages when it comes to offshore wind,” he says. There is open land, a marine workforce and unobstructed water access to the offshore turbines, he says, and Norfolk is poised to gain employers as this industry expands.

Another major economic growth opportunity for Norfolk is the $500 million HeadWaters Resort & Casino under development by the Pamunkey Indian Tribe alongside Harbor Park, overlooking the Elizabeth River.

Virginia’s Pamunkey Indian Tribe is developing the $500 million HeadWaters Resort & Casino alongside Harbor Park, overlooking the Elizabeth River. Rendering courtesy HeadWaters Resort & Casino
Virginia’s Pamunkey Indian Tribe is developing the $500 million HeadWaters Resort & Casino alongside Harbor Park, overlooking the Elizabeth River. Rendering courtesy HeadWaters Resort & Casino

“I’m confident that this project will exceed the expectations of everyone. It will be the destination of choice for gaming in Virginia,” Robert Gray, chief of the Pamunkey Indian Tribe, said in April, when the tribe unveiled updated renderings for the development, the first phase of which is expected to be completed by the end of 2023. “We are living up to every promise we made and are determined to make this a project of which Norfolk can be proud,” Gray says.

Jay Smith, a spokesman for the resort casino, says development will get underway as soon as the casino’s gaming operator’s license is approved by the Virginia Lottery.

“We are heavily immersed in the design phase right now,” Smith says, but “we can’t put shovels in the ground until we get that license.” The Norfolk casino is expected to draw about 6.2 million visitors to the city a year, he says.

Tourism has long been a substantial part of the Norfolk economy. City officials believe that draw will be strengthened by the developments to be completed in the next few years, and by expanding air travel options. The redevelopment of the Military Circle Mall area, the upcoming casino and the entrance of Breeze Airways into the market with seven nonstop flights to popular destinations all serve to bolster an already strong tourism base, Chalk says. 

“All of these things speak to diversifying the area in terms of tourism,” he says. During the pandemic, hotel occupancy in the Hampton Roads region was much stronger than in most parts of the country, Chalk says. “We led the nation in occupancy rate for many consecutive months.”

People weren’t traveling by air as much as they normally would, and therefore destinations that could be reached by car were popular. “They were coming down to this market from the Northeast,” Chalk says. The trend was encouraging at a time when many inland markets experienced devastating hotel occupancy rates.

Chalk adds, “We think Norfolk is a unique market for a two- or three-day trip.”   

This story has been corrected.

Measured steps

Although Hampton Roads health care systems conducted some significant business over the past year, the biggest news was a deal that didn’t happen.

Norfolk-based Sentara Healthcare’s plan to merge with North Carolina-based Cone Health, which was announced in August 2020 and would have created a 17-hospital system with a combined $11.5 billion in annual revenue, was called off in June.

“We realized that each of our communities and key stakeholders require support and commitments from our respective organizations that are better served by remaining independent,” Sentara and Cone Health said in a joint statement.

Health care systems are in better shape financially this year than in 2020, when Gov. Ralph Northam’s executive order prohibited nonemergency surgical procedures for several months. But at the same time, officials are fully aware of the possibility of future instability, even after COVID-19 vaccines have been broadly available.

This summer brought renewed concerns about increases in COVID hospitalizations as the highly contagious delta variant of the coronavirus spread primarily among unvaccinated people. Virginia’s COVID positivity rate jumped to 10% in late August, up from 1.5% in June.

“We are hopeful about the financial outlook for Sentara but understand that COVID-19 is with us for the long haul and has changed every aspect of the way we live, work and care for others,” former Sentara spokesperson Brittany Vajda said.  

Newport News-based Riverside Health System modeled its 2021 budget after its 2019 plan, says CEO Bill Downey, although revenue is still not back to pre-pandemic levels. Meanwhile, Riverside has seen treatments and services return to close to normal activity this year.

Partnerships among hospital systems and universities continued over the past
12 months. The Hampton Roads Biomedical Research Consortium, a collaboration among Sentara, Old Dominion University and Eastern Virginia Medical School, launched in late 2020. Sentara also pledged $4 million toward the establishment of Virginia’s first school of public health, a joint initiative between EVMS, ODU and Norfolk State University. The schools signed a memorandum of understanding in August, solidifying plans for the school.

Sentara is among a group of 14 health care systems nationwide that formed a new company, Truveta, which will offer data insights for patient care, the systems, including Bon Secours, announced in February. Truveta is creating a data platform using artificial intelligence and machine learning that will let health care systems learn from one another and provide larger study samples than each could accomplish individually.

In May, Sentara also became among the first health systems in Virginia to raise its minimum wage to $15 per hour, joining UVA Health, which implemented the $15 minimum wage in January. (The federally mandated minimum wage is $7.25; Virginia’s state-mandated minimum wage is scheduled to rise to $11 on Jan. 1, 2022.)

The wage increase impacted about 5,700 Hampton Roads-area workers, Sentara said last year. The health care system employs more than 28,000 people in Virginia and North Carolina.

“From a business perspective, one of the important things is that we have great talent in the commonwealth,” Becky Sawyer, executive vice president and chief people officer for Sentara Healthcare, told Virginia Business in May. “The recruiting process is very expensive. It is much more cost-effective to pay a person a reasonable salary.”  

Questioning the daily grind

Before last year’s pandemic shutdowns, 24-year-old Julia Swanson had been commuting from Newport News to her job as a civil engineer for the Virginia Beach office of Kimley-Horn, a national engineering firm headquartered in North Carolina.

It could take 35 minutes to an hour and a half traveling only one way, and Swanson says she often pulled up Google Maps to see what she could expect.

Sometimes she took the Hampton Roads Bridge-Tunnel, while other days she chose the Monitor-Merrimac Memorial Bridge-Tunnel.

The region’s average commute time in 2019 was just over 24 minutes one way, according to the U.S. Census Bureau, and it has remained fairly steady over the past decade.

While that doesn’t sound so bad, the Census also estimated that 12.4% of people living in the Virginia Beach-Norfolk-Newport News metro area have a regular round-trip commute of 45 minutes or longer. Nearly 2% of that group is on the road for 90 minutes or longer on workdays.

For four glorious months in 2020, Swanson’s commute was not an issue. Her gas costs dwindled to nothing, she walked everywhere, and she could still get all her work done. “It was really nice. I was able to work out, I was able to do stuff for my life, I was planning a wedding,” she says. 

But in July 2020, Kimley-Horn asked workers to return to the office. Because she was new, Swanson decided to go back full time, instead of taking advantage of a flex option to work occasionally from home.

Old Dominion University public affairs and media relations lecturer Brendan O’Hallarn lives in Williamsburg, his wife’s hometown, and puts in a 42-mile one-way daily commute to Norfolk that sometimes takes more than an hour.

It was brutal for his first eight years on the job, driving “into the teeth of rush hour,” O’Hallarn says, until 2017 when he was able to set his own teaching schedule. He learned that a 10-minute difference in departure time could determine what he would face on the road. “I felt like traffic was in control and that was just a byproduct of where I chose to live and where I chose to work.”

Like Swanson, the pandemic shutdown was an oasis of sorts for O’Hallarn. “The difference between a commute of 9 feet from my bedroom to our office and 42 miles is significant and something I’ve been thinking about,” he says.

Many people like Swanson and O’Hallarn are now pondering what it would be like with a more flexible work schedule — this time for good.   

“I think if you can do your job effectively and efficiently at home, there should be an option for every day to be [working] at home,” Swanson says. “If you can do your job effectively, completely at home, you eliminate the traffic.”

While O’Hallarn loves being on a college campus, he is less patient about traffic than he used to be and uses Zoom for meetings on days he doesn’t teach.

Although employers are deciding whether to require in-person work vs. a remote or hybrid approach, workers hope that more options will lessen their commuting headaches.

That could wind up affecting Hampton Roads’ traffic planning as well.

Road work, of course, is a near constant in the region.

Over the next 24 years, the Hampton Roads region expects to receive $30.7 billion from federal, state, regional and local sources to invest in the region’s transportation system. Of that, $17 billion is to maintain the existing system and $13.7 billion is to improve it. The majority of the funds for new and additional capacity construction, such as new interstate lanes, comes from the regional Hampton Roads Transportation Fund, which is funded with proceeds from regional surcharges on sales and use taxes and fuel taxes.

Among the region’s major road projects is the largest transportation infrastructure project in state history — the $3.8 billion expansion of the HRBT, which was started last October. Additionally, the Virginia Department of Transportation is widening Interstate 64 on the Peninsula and the southside, adding a two-lane tunnel to the Chesapeake Bay Bridge-Tunnel and making improvements to the I-64/I-264 interchange.

Projects such as these are guided by the Hampton Roads Long-Range Transportation Plan, the 20-year blueprint updated every five years to reflect changing conditions, such as population and employment growth, anticipated travel demand, new technology and environmental changes. The 2045 plan was just adopted this summer.

One change, says Dale Stith, a principal transportation planner for the Hampton Roads Transportation Planning Organization, was a shift toward incorporating plans for different scenarios, including sea-level rise and autonomous vehicles. But significant numbers of people working from home was not part of the group’s considerations, Stith notes.

If the Hampton Roads region sees a big change in the number of people working from home over a longer period, Stith says, traffic planners will take that into account in the future.

“So many different drivers can change how we get around and how we travel,” she notes. “This pandemic has highlighted another potential that changes travel behavior — working from home and not going to an office space.”