Page 780 – Virginia Business

All in the family

In the popular HBO TV series “Succession,” members of the Roy clan scheme, lie and backbite in an attempt to take over the family’s media empire once the patriarch steps down. The show, which reportedly filmed scenes in Richmond in May for its third season, is a satiric festival of twisted relationships and family dysfunction, and it makes for entertaining television. It’s hardly a stretch, either, to think that some of the unseemly shenanigans on the show were inspired by the ugly, public squabbling among members of such real-life family empires as Rupert Murdoch’s News Corp. and the late Sumner Redstone’s National Amusements Inc.

But for most family businesses, that kind of discord would spell doom. If a family business is to survive through multiple generations, its members usually need to find and agree upon a way to hand off the baton as smoothly as runners in a relay race. Statistically, though, that isn’t so easy.

Recent data from the Ohio-based Conway Center for Family Business says that just 19% of family enterprises make it to the second generation, 12% to the third and only 3% into the fourth generation and beyond. That sounds awfully dismal, but in an article earlier this year in the Harvard Business Review,
family business advisers Josh Baron and Rob Lachenauer argue that despite that seemingly high failure rate, family firms tend to outlive their public counterparts.

Because a single generation is generally considered to be 20 to 30 years, even family enterprises that go belly-up within one generation still last a lot longer than most publicly traded companies, which, on average, fold in a shocking 10 to 15 years, according to a Yale study. Even more stunning, the U.S. Census Bureau reports that 78.5% of all small businesses don’t even survive a year, usually because of inadequate management, insufficient financing, ineffective planning or marketing mistakes. And that’s not even taking into account the COVID-19 pandemic, which led to the direct closure of 200,000 establishments nationwide last year, according to an April report by the Federal Reserve.

Nevertheless, Baron and Lachenauer say that family businesses have remained optimistic about their futures: 68% of the 140 family-owned companies they surveyed last December believed they would be more efficient after the pandemic, more than half looked forward to new opportunities and 25% expected not only to survive but grow. That optimism and comparative staying power will be crucial to the nation’s economy, given that the Census Bureau says that family businesses account for about 90% of American enterprises, half of all employment in the country and half of the gross national product.

Katharine Ross, president of Ross Publishing in Chesterfield County, is part of the second generation leading the company. photo by Shandell Taylor

Heir raising

Family businesses can thank some built-in advantages for their relative (so to speak) resiliency. Patrick Soleymani, associate dean of undergraduate programs and an associate professor of management at George Mason University’s School of Business, says these businesses have “a certain level of trust of intent” in knowing that their relatives “will go above and beyond” for their companies, certainly not something that public companies can rely on with their workers.

Family businesses also don’t have to be beholden to stockholders demanding quick profits. They can look at the big picture and not make the mistake of overleveraging their assets to achieve rapid but often short-term gains. “No one is looking over their shoulder,” says Gary A. Ballinger, a professor of commerce at the University of Virginia’s McIntire School of Commerce.

Many family companies take immense pride in serving their communities and providing for their employees, he says, and “if they want to run their businesses in a public service fashion, they can do that, and they can tell everybody else to stick it.”

Still, those advantages can evaporate in the face of what is known as “the shirtsleeve curse,” which references industrialist Andrew Carnegie’s alleged observation that family businesses go from “shirtsleeves to shirtsleeves in three generations.” The reasons for that rags-to-riches-back-to-rags scenario can be many.

“Family companies are often started by someone with a passion, and the kids and grandkids might not share that passion,” says Paula Sorrell,

associate vice president of innovation
and economic development at GMU. Yet, even if the passion is there, the younger generation may not always be qualified to take over.

“A family business can be like a kingdom, with an heir, even if that heir is not qualified to be king,” says Soleymani.

The first generation sometimes can have a hard time letting go, too, or accepting advice from younger relatives who may be more attuned to the times. “Imagine as a child having to tell a parent that something is wrong,” Soleymani says — or having to take orders from your brother or sister. “Siblings may not listen,” he says, a truth that anyone who has a sibling would not dispute.

Even for nonfamily members of the business, the transfer of control between generations can be a fraught time, says Ballinger, and that can “disrupt the social networks at the firm.”

No single approach is guaranteed to bridge the generation gap or smooth such bumpy interpersonal dynamics, but a Harvard Business Review study published last year found that 94% of family firms surveyed had supervisory or advisory boards with about 31% family membership.

Outside advice

Katharine Ross, president of Ross Publishing Inc. in Chesterfield County, falls into that majority. Her magazine publishing house was founded in 1991 by John and Lori Ross, whose three sons, Brian, Craig and Katharine’s husband, Johnny, joined the business a few years later. She has worked in the firm for 20-plus years and was named president in 2018.

“Succession was not an overnight thing,” Ross says of her elevation to the company’s top job. “Authority, autonomy and trust grew over a long period.” Nevertheless, in 2010, she brought in nonfamily members to help explore new revenue streams.

“We live, eat and breathe what we do,” Ross says, reflecting the all-in attitude typical of family businesses, but “we needed a new perspective to pull from.” Her 28-employee company, which publishes Boomer magazine and Seniors Guide magazine, has since expanded into seven markets. It’s also boosted its online presence and has started a digital media agency subsidiary, Ross Media Solutions.

“Feedback is your friend,” Ross says, “even if it doesn’t always feel like that at the time.”

Keith M. Nichols, president of HandCraft Services in Richmond, which provides health care linens and uniforms for hospitals and other care facilities, also brought in advisers to give his business structure. He didn’t start out with Ross’s passion for the family enterprise, though.

“I had planned to be a cowboy,” he says, echoing Sorrell’s contention that not all members of families’ younger generations are eager to join the family fold. Nichols’ intention was to work in the business just long enough to make the money to buy a truck to take him out west, but then he met his future wife, and that was all she wrote. “It’s not a glamorous business,” he says, but “it isn’t boring,” either.

HandCraft Services President Keith Nichols originally wanted to be a cowboy, but he has stuck with the family business. Photo by Caroline Martin

HandCraft was founded by Keith’s father, John A. Nichols, in 1970 and was, at one time, the second-largest dry-cleaning business in Richmond. But after Keith Nichols and his brother, Jay, bought out their father in 1990, they began moving away from that sector of their business. “No one wears overcoats anymore,” Nichols says.

As they transitioned into the health care field, he and his brother divvied up responsibilities and made it a point not to second-guess one another, but in 2015, they brought in a consultant “to learn how to run a family business like a business, with clear-cut roles and accountability.”

Such advisers, Sorrell says, can help mediate honest but often uncomfortable conversations among family members. Soleymani calls it “family counseling: business edition.”

Imposing a formal structure on operations was the right thing to do for HandCraft. Nichols says his business “improved by leaps and bounds” and has grown to 500 employees. Today, the company only serves health care clients and, he says, it has an annual growth rate of 8% to 12%. The family’s third generation also has come on board. “They will be held accountable to perform at a high level,” says Nichols. “They have to understand what it takes to do the job.”

Home away from hom 0e

Other family-owned firms in Virginia have bucked the statistical need to bring in outsiders, yet have found success by keeping it all in the family.

Ramon W. Breeden Jr. founded The Breeden Co., a property development and management firm based in Virginia Beach, in 1961. While he remains the company’s chief executive and is active in every deal, his son, C. Torrey Breeden, joined the firm in 1998 after graduating from U.Va. with a business degree. He became the firm’s executive vice president about 15 years ago after working in all the company’s divisions to firm up his grasp on operations.

“There is no need to bring in outsiders/advisers,” Ramon Breeden says. “Our recipe of success is working, and there is no need to deviate.” That recipe includes refraining from dispensing advice to his son.

“Torrey, himself, is very skillful in his abilities,” his father says. “He may approach a deal differently than me, and that’s OK.” That formula seems to be working for the 400-employee company. In 2020, it did more than $350 million in business.

Richard “Den” Crallé III became the third Richard Crallé to run Farmville-based Green Front Furniture, taking over in 2018. Photo by Shandell Taylor

Richard “Den” Crallé III is of a similar mindset. He is the third Richard Crallé to run Green Front Furniture, and he knew exactly what he was getting into when he took over as president of the 120-employee Farmville-based retailer before he was even 30.

“I started off working summers, running up and down rug piles,” he says.

Like C. Torrey Breeden, Crallé hasn’t exactly been flying solo — his father, Richard Jr., and his mother, Terry, still work at the company. But the younger Crallé is the company’s president, and since assuming that role in 2018, he has added “new looks, new vendors and new lines,” modernized the store’s 1 million square feet of display space and installed a new point-of-sales system. His inaugural effort to sell rugs online “is going great,” he says.

Like a true millennial, Crallé is a believer in the power of social media, and he likes to appear personally in videos to promote Green Front products, a marketing tool that is unlikely to have occurred to people in his parents’ generation.

Not having to answer to a board has allowed him to be “more nimble” in responding to the changing market, Crallé says. “There’s not a lot of red tape.”

But of course, that freedom from outside oversight comes with a downside — almost no separation between work and home. “You never get a break,” Soleymani says. “You go on vacation with your business partner.”

The George Mason professor remembers how his own father, who started several family businesses, would run ideas past his captive audience in the car. It also has been said that family businesses are a classic case of capitalism at work and socialism at home, as family members are sometimes used as sources of free labor.

Tammi Ketterman is well aware of that dynamic. She and her husband, Dan, run Ketterman’s Jewelers in Leesburg. As children, all six of the Kettermans’ daughters appeared in ads for the family store, which was founded in 1988. Four of them, all grown up now, still work there. “They bring relevance,” Ketterman says. “I think we would have gone under without them.”

But she also remembers worrying that her girls would grow to resent the business, only seeing its demands and not its rewards. “If I have any regrets, it would be carrying unhappy experiences home to the dinner table,” she says. “That can be too much of a burden sometimes.”

It’s a burden that comes with the territory, though. However families choose to run their operations, the bottom line doesn’t really vary: Working in the family business will never be just a job, and leaving your work at the office is not going to be possible. Just look at the Roy clan of “Succession.”

FOR THE RECORD October 2021

EASTERN VIRGINIA

Newport News-based defense contractor Aery Aviation LLC will add 211 jobs with the $15.3 million expansion of its headquarters, Gov. Ralph Northam announced Sept. 14. The aviation company will build a 60,000 square-foot hangar with access to the Newport News/Williamsburg International Airport runway and an engineering technology center to provide maintenance and modification services. Virginia competed with Maryland, Ohio, South Carolina and West Virginia for the project. (VirginiaBusiness.com)

Amazon.com Inc. established a career center and two new delivery stations in Hampton Roads, the e-tailer announced in early September. The career center at 1989 S. Military Highway in Chesapeake will serve as a hiring and orientation hub for Amazon facilities in Chesapeake, Suffolk, Norfolk, Hampton and Virginia Beach. One delivery station opened in mid-June in Norfolk. Another opened in mid-August in Hampton. (VirginiaBusiness.com)

Dominion Energy Inc. and the Port of Virginia reached an agreement in late August allowing Dominion to lease 72 acres of the 287-acre Portsmouth Marine Terminal as a staging and pre-assembly area for the foundations and 800-foot wind turbines that will be installed for Dominion’s $7.8 billion planned offshore wind farm. Portsmouth Marine Terminal is one of the Port of Virginia’s two multiuse terminals in the Norfolk Harbor. The lease term is 10 years, valued at nearly $4.4 million annually, and has an option for two five-year renewals. (VirginiaBusiness.com)

Five Hampton Roads shipyards — Fincantieri Marine Systems North America of Chesapeake; Colonna’s Shipyard Inc. in Norfolk; East Coast Repair & Fabrication in Portsmouth; Epsilon Systems Solutions Inc., in Portsmouth; and Tecnico Corp. in Chesapeake — are on the short list for what could be billions of dollars in maintenance and repair work on the Navy’s eight littoral combat ships based out of Mayport, Florida. The award of contracts for a combined total of up to $2.255 billion means the yards, along with four others from out of state, will be able to bid for whatever dry-docking, emergency maintenance, preventive or planned maintenance, corrosion control or assessments the ships need over the next years. (Daily Press)

The presidents of Old Dominion University, Norfolk State University and Eastern Virginia Medical School signed a memorandum of understanding in August to establish Virginia’s first school of public health. The MOU solidifies the plan announced in January to develop a regional school of public health and address health inequities. The next step: applying for accreditation from the Council on Education for Public Health. Under the MOU, ODU will serve as the lead institution and house the school. An institutional operations committee and a curriculum committee will have representatives from each institution. (VirginiaBusiness.com)

PEOPLE

Francisco “Frank” Castellanos has been named the Hampton Roads region president for Bank of America. Castellanos will take over for Charlie Henderson, who is retiring from Bank of America in early 2022 after 42 years. Castellanos comes to Bank of America from Merill Lynch Wealth Management, where he was the market executive for greater Virginia and a market integration executive. (VirginiaBusiness.com)

Jean Yokum, the longtime president and CEO of Langley Federal Credit Union, died in August at age 90. Yokum served as the credit union’s president and CEO for 33 years, first joining as a teller in 1953 and working her way up. She served in the top spot from 1979 until her 2012 retirement. Under Yokum’s leadership, Langley’s assets grew to $1.6 billion. (VirginiaBusiness.com)

ROANOKE/NEW RIVER VALLEY

Cardinal Press, a new nonprofit digital news service covering Southwest and Southern Virginia, was expected to begin publishing stories in late September, with Dwayne Yancey, former editorial page editor for The Roanoke Times, as its founding editor. Nonprofit organization Cardinal Productions, incorporated in June, created Cardinal Press, which will publish original stories five days a week at cardinal.press. Cardinal was established by journalist Luanne Rife, president of Cardinal Productions; former Roanoke Times Publisher Debbie Meade; and Chris Turnbull, senior director for corporate communications for Carilion Clinic. (VirginiaBusiness.com)

Carilion Clinic plans to begin treating patients this fall at its new hub for children’s services at Tanglewood Mall. Carilion Children’s Tanglewood Center, which occupies 150,000 square feet in a former J.C. Penney, is expected to be fully operational by Oct. 4. The new Tanglewood facility creates a centralized space for Carilion Children’s that allows for more collaboration, establishes a sense of identity and offers high visibility, given its location just off U.S. 220. More than a dozen pediatric specialties will
be housed at the new center.
(The Roanoke Times)

Manifold Mining, a small company that sells cryptocurrency mining machines, plans to invest in a Craig County facility. The Craig County Economic Development Authority announced in August that Manifold would invest approximately $420,000 to establish a center of operations in New Castle at the Crown Building, formerly home to a furniture manufacturing plant. Manifold Mining is expected to create at least 15 jobs within five years. The company was founded in 2019 with a focus on software development but shifted into the mining equipment sales business during the last year. (The Roanoke Times)

In late August, the Roanoke Regional Partnership released its five-year strategic plan, Thrive 2027. The plan outlines strategies to support the region’s economic growth. Four priority areas were identified: economic growth and innovation; talent attraction and workforce development; commercial real estate and infrastructure; and place making and livability. While some of the tactics outlined in the plan, such as marketing efforts aimed at attracting young, skilled talent or promoting the outdoor recreation available, are familiar, others stem from new objectives or areas of attention. (The Roanoke Times)

In August, Virginia Tech announced it was naming its real estate program for the Blackwood family. Willis Blackwood, founder and president of Richmond-based Blackwood Development Co. Inc., his wife, Mary Nolen Blackwood, and their children, Morgan Blackwood Patel and Nolen Blackwood — all Tech alums — have committed $10 million in donations to the program since 2018. (VirginiaBusiness.com)

PEOPLE

Zachary Doerzaph was named executive director of the Virginia Tech Transportation Institute, the university’s largest research institute. The institute conducts more than 300 research projects in partnership with more than 100 public and private organizations. VTTI accounts for 12% to 15% of sponsored research at Virginia Tech and exceeded $50 million in externally sponsored awards for 2020. Doerzaph will also take on the role of president of VTT LLC, a nonprofit corporation of the Virginia Tech Foundation that operates the Global Center for Automotive Performance Simulation in Halifax County. (VirginiaBusiness.com)

Robert T. Sumichrast, the Richard E. Sorensen chair and dean of Virginia Tech’s Pamplin College of Business since 2013, announced in August that he will retire at the end of this academic year. Virginia Tech is conducting an international search for his successor. Sumichrast, who joined the university in 1984, launched the nation’s first executive Ph.D. program and created the school’s online MBA program. (VirginiaBusiness.com)

SHENANDOAH VALLEY

The Augusta County Board of Supervisors approved a 15-cent-per-pack cigarette tax on Sept. 8. The original motion of a 40-cent pack failed, and the board instead passed the reduced tax, noting that the amount could be changed in the future. Augusta County will join the Blue Ridge Cigarette Tax Board, a regional authority that combines the taxing efforts of different localities, to execute the tax. Augusta County had previously instated a meals and lodging tax, which the county increased from 4% to 6% on July 1. (News Leader)

Augusta Health is requiring its employees to be vaccinated against COVID-19 by Nov. 1. Announced Aug. 20, the policy applies to providers and credentialed medical staff, as well as volunteers, students, contract staff, consultants and vendors. A panel will review religious and medical exemptions. About 80% of the system’s staff was already vaccinated at the time of the announcement. (News Leader)

Washington, D.C.-based fast-casual Mediterranean restaurant chain CAVA will spend more than $30 million to establish a new processing and packaging facility in Augusta County, Gov. Ralph Northam announced Sept. 9. The project is expected to create 52 jobs. CAVA will build the 57,000-square-foot facility in Mill Place Commerce Park in Verona. Cava Group Inc., which owns CAVA and Zoës Kitchen, has more than 900 employees in Virginia. (VirginiaBusiness.com)

Going against the city planning commission’s recommendation, Harrisonburg City Council voted Sept. 14 to approve developer Skylar & Talli LLC’s request to change the first floor of the Apartments at Peach Grove, a planned six-story, 400-bed apartment block near James Madison University’s Sentara Park, from commercial use to residential space, which will add roughly 60 beds to the development off Port Republic Road. In May 2019, the council had approved the rezoning and three special-use permits for the development, but in August, the developer’s representative told the planning commission that buyers had backed out and that the development lacked interested businesses because of pandemic-related commercial vacancies. (Daily News-Record)

The Rockingham County Planning Commission voted on Sept. 7 to recommend denial of a request to rezone agricultural land for the proposed 155-home Peak Mountain development in McGaheysville. The Rockingham County Board of Supervisors will decide the project’s fate in October. The subdivision would sit on nearly 42 acres located off Power Dam Road, about 300 feet from McGaheysville Road.
(Daily News-Record)

Shenandoah Telecommunications Co. (Shentel) announced in late August that it’s expanding its Glo Fiber high-speed, fiber-optic broadband network into Frederick County. Shentel launched Glo Fiber in 2019. Winchester, Harrisonburg, Staunton, Front Royal, Salem, Roanoke and Lynchburg currently have Glo Fiber. The Frederick County network is under construction, and the first phase has an expected completion date in 2022. The announced expansion will provide service to about 14,000 more homes and businesses in the areas surrounding Winchester and the town of Stephens City. (The Northern Virginia Daily)

PEOPLE

Doug Parsons, executive director of the Front Royal-Warren County Economic Development Authority, will become Fauquier County’s economic development director on Oct. 4. Parsons, who formerly worked for the Virginia Economic Development Partnership, joined the Front Royal-Warren EDA in May 2019, following the resignation of his predecessor, Jennifer McDonald, in late 2018 amid an embezzlement scandal. On Aug. 31, a grand jury indicted McDonald on 34 federal counts. Her trial is scheduled for Nov. 3. (The Northern Virginia Daily, The Winchester Star)

Amazon.com Inc.’s 72,000-square-foot delivery station in Bristol opened for its first official day of operation on Sept. 8. The delivery station is expected to create from 100 to 150 full- and part-time associate jobs “in addition to hundreds of driver opportunities,” with wages of at least $15 per hour, according to the global e-tailer. Delivery stations are the last step in Amazon’s ordering process. Nearby Amazon fulfillment and sortation centers send packages to the stations, where parcels are loaded into vehicles to be delivered to customers. (VirginiaBusiness.com)

Italian manufacturer Ceccato S.p.A. will open a $1.75 million U.S. headquarters in Russell County, creating 50 jobs over the next three to five years, the Virginia Coalfield Economic Development Authority announced Sept. 8. Ceccato manufactures systems to wash vehicles, from cars to trains. The Lebanon facility will be used to assemble and sell car wash units, manufacture truck wash units, and source items needed to manufacture the units for American companies. Ceccato is projected to make its initial capital investment by early 2022, and parts for the facility are expected to arrive by late October or early November. (VirginiaBusiness.com)

Atlanta-based internet service provider EarthLink is spending $5.4 million to build a customer support center in Norton, a project expected to create 285 jobs, InvestSWVA and Gov. Ralph Northam announced Sept. 14. As part of moving its customer service operations from overseas, EarthLink will build a 30,000-square-foot facility on a site in the 200-acre Project Intersection development, owned by Lonesome Pine Regional Industrial Facilities Authority. (VirginiaBusiness.com)

Eupepsia, a 250-acre Ayurveda wellness retreat in Bland County, was named the top wellness hotel in the nation in September by USA Today readers, who chose the resort from 20 nominees selected by editors of USA Today’s 10Best rankings section. Eupepsia offers vegetarian cuisine; health and fitness-focused programs; a spa with flotation therapy; a salt chalet; and hydrotherapy services. The facility opened in 2018 and has 26 guest rooms. (VirginiaBusiness.com)

Woodgrain Inc. will invest $9 million to expand its operations in Smyth County and will invest $8 million more to purchase and expand the former Independence Lumber sawmill in Grayson County, producing 100 jobs, Gov. Ralph Northam announced Aug. 20. The two projects will retain 80 local jobs. An Idaho-based family-owned business, Woodgrain is one of the largest millwork companies in the world, with more than 3,500 workers. It manufactures wood molding and trim. Independence Lumber is Grayson County’s largest private employer, and when the sawmill upgrades are complete, it will become the primary supplier for Woodgrain’s Smyth County operation. It will also allow Woodgrain to source 90% of its new forest product needs from Virginia. (VirginiaBusiness.com)

PEOPLE

Tina McDaniel was hired as the first diversity, equity and inclusion coordinator for Bristol’s Promise, the nonprofit organization announced on Sept. 7. Bristol’s Promise works to help children and families in the Twin City be healthy, feel safe, develop marketable skills, have relationships with caring adults and give back to the community. McDaniel earned a master’s degree in organization leadership and a certificate of diversity and inclusion from Cornell University. She is a board member for the Diversity, Equity and Inclusion Alliance of Northeast Tennessee and Southwest Virginia. (Bristol Herald Courier)

CENTRAL VIRGINIA

Richmond-based Dominion Energy Inc. overcharged its Virginia customers $1.2 billion since 2015, according to testimony filed in early September by a utility expert in an ongoing review of the energy monopoly’s finances. Testimony from Heather Bailey, an Austin, Texas-based consultant and former utility executive and regulator, was filed at the State Corporation Commission by the environmental group Appalachian Voices. The commission can’t order any refund of excess profits Dominion earned in 2015 or 2016 because of a Dominion-backed 2018 law called the Grid Transformation and Security Act, said Will Cleveland, senior attorney with the Southern Environmental Law Center, which represents Appalachian Voices. (Richmond Times-Dispatch)

On Sept. 13, Henrico County-based Fortune 500 insurer Genworth Financial Inc. launched an initial public offering for its private mortgage insurance subsidiary, Raleigh, North Carolina-based Enact Holdings Inc. Enact is expected to trade on the Nasdaq Global Select Market under the ticker symbol “ACT.” (VirginiaBusiness.com)

In Richmond, workers removed Virginia’s biggest statue of Confederate Gen. Robert E. Lee from its towering stone base and cut it into two pieces in September, ending the monument’s 131-year reign embodying this city’s mythology as the former capital of the Confederacy. Lee’s surrender came so fast — after less than an hour of work — that hundreds of onlookers were caught by surprise. Gov. Ralph Northam and other state officials stood looking on. Northam announced on June 4, 2020, that he was ordering Lee removed from the state-owned property. A handful of local residents challenged the action in court and a judge temporarily blocked it. Though the residents lost their case, they appealed to the Supreme Court of Virginia, which unanimously ruled in Northam’s favor. The state plans to keep the statue in an undisclosed storage location until deciding what to do with it. (The Washington Post)

Prince George County-based aluminum extrusions manufacturer Service Center Metals will spend $101.7 million to build two more facilities in the county, projects expected to create 94 jobs,
Gov. Ralph Northam announced Sept. 14. Service Center Metals will build an aluminum extrusion plant and a compact remelt plant in Crosspoint Centre. Founded in 2002, Service Center Metals began operating in Prince George County in 2003. It has two plants on its 30-acre campus in SouthPoint Business Park. (VirginiaBusiness.com)

After close to 39 years, the Richmond-based alternative weekly newspaper Style Weekly shut down Sept. 8, three years after Norfolk-based Landmark Communications Inc. sold its Virginia newspapers — The Virginian-Pilot, Inside Business and Style Weekly — and their associated businesses for $34 million to Tribune Publishing Co. This May, Tribune Publishing was purchased by hedge fund Alden Global Capital in a $633 million deal that has led to the elimination of more than 250 full-time editorial positions through buyouts offered after the finalization of the deal, including at the Pilot and the Daily Press. (VirginiaBusiness.com)

PEOPLE

Michael Roussos will be the next president of Richmond’s VCU Medical Center, starting in December, VCU Health System announced on Sept. 8. Roussos was previously the lead administrator for University Hospital in San Antonio, where he led the hospital’s COVID-19 response. Roussos also aided in the hospital’s transition to Epic, an electronic medical records system that VCU Health System plans to implement later this year. Before joining University Hospital, Roussos worked at HCA Healthcare for 13 years, most recently serving as CEO of Mainland Medical Center in Texas. (VirginiaBusiness.com)

SOUTHERN VIRGINIA

The Sept. 9-12 Blue Ridge Rock Festival brought nearly 35,000 people to Pittsylvania County, making it the largest event in Pittsylvania’s history. Festivalgoers booked up hotel rooms throughout the region. The sold-out festival, with 180 bands slated to perform, brought traffic chaos and concerns about a surge in COVID cases. Nearly 4,000 fans aired their frustrations about the festival in a Facebook group. Thousands of attendees vowed not to return after issues with camping and parking. Festival organizers promised to improve the experience. (Danville Register & Bee, WSLS)

In early September, Bassett-based Carter Bank & Trust and West Virginia Gov. Jim Justice, a former billionaire coal magnate, settled their dispute out of court and will have their dueling suits dismissed. CB&T in May had filed suit in Martinsville Circuit Court regarding $58 million in loans that the bank maintained were personally guaranteed by Justice and his wife, Cathy. Justice responded with a lawsuit against the bank, seeking $421 million related to outstanding loans. The suit included court documents that described a longtime “gentleman’s agreement” between Justice and Worth Carter, the founder of CB&T. (Danville Register & Bee)

The Southside Planning District Commission has chosen EMPOWER Broadband Inc. to build a fiber optic network providing high-speed internet to homes and businesses in Halifax, Mecklenburg and Brunswick counties. The SSPDC issued a request-for-proposal for a regional fiber network that it estimates will cost some $150 million to build out in the three counties, which together comprise the SSPDC’s service area. EMPOWER is a subsidiary of Mecklenburg Electric Cooperative. To fund construction of the three-county network, the SSPDC will seek grant money from the Virginia Telecommunication Initiative (VATI), which has received an influx of cash through federal pandemic relief funding. (SoVaNow)

Kegerreis Digital Marketing will move its headquarters from Pennsylvania to downtown Danville, investing $1.7 million in the relocation and creating 62 jobs, Gov. Ralph Northam announced in September. The company, which will renovate a 7,000-square-foot former tobacco warehouse at 402 Cabell St., provides integrated marketing services, such as brand development, billboards, online efforts and analytics. It is a subsidiary of Chambersburg, Pennsylvania-based Kegerreis Outdoor Advertising, the 10th-largest billboard company in the country, with 2,500 billboards in seven states along the East Coast. Virginia competed with Pennsylvania and North Carolina for the project. (VirginiaBusiness.com)

Tyson Foods Inc. will open a 325,000-square-foot, $300 million manufacturing facility in the Cane Creek Centre industrial park, creating 376 jobs, Gov. Ralph Northam announced in late August. The new facility will primarily be used for the production of cooked foods such as Any’Tizer Snacks and chicken nuggets made by Tyson Foods. The poultry company will purchase 60 million pounds of Virginia-grown chicken for the facility over the next three years. Virginia competed with North Carolina for the project. Cane Creek Centre is jointly owned by the city of Danville and Pittsylvania County. (VirginiaBusiness.com)

PEOPLE

Alexis Ehrhardt, president and CEO of the Danville Pittsylvania County Chamber of Commerce, left in September for a job at the University of Virginia as the executive director for state government relations and special assistant to the president. Ehrhardt had been at the helm of the chamber since 2018 after leaving her previous position as executive director of the Center of Community Engagement and Career Competitiveness at Averett University. The chamber’s board immediately launched a search for Ehrhardt’s successor. (VirginiaBusiness.com)

NORTHERN VIRGINIA

Amazon.com Inc. has hired more than 3,000 employees for its multibillion-dollar HQ2 East Coast headquarters in Arlington, the e-tailer announced in September. In 2019, the Virginia General Assembly passed an incentive package that would pay Amazon up to $550 million in grants for hitting annual goals toward hiring 25,000 workers at specified average annual wages by 2030. The state will pay Amazon an additional $200 million if the company hires 12,850 more workers between 2030 and 2034. (VirginiaBusiness.com)

First lady Jill Biden resumed teaching in person in September at Northern Virginia Community College, where she has worked since 2009. She is the first first lady to leave the White House to log hours at a full-time job. After Joe Biden became vice president in 2009, she joined the faculty at NOVA and continued to teach English there after he left office and throughout his 2020 campaign, including teaching virtually after the pandemic hit. (Associated Press)

The Federal Trade Commission fined McLean-based Capital One Financial Corp. CEO Richard Fairbank a $637,950 civil penalty in September for violating antitrust laws in finalizing stock acquisitions. The settlement must be approved by the U.S. District Court for the District of Columbia. The FTC alleged that Fairbank violated federal law by purchasing Capital One stock. In 2018, Fairbank’s compensation package included more than 100,000 Capital One shares, which increased his holdings to $168 million. The complaint alleged that Fairbank failed to report the award to federal antitrust authorities and illegally finalized it before agencies could investigate. (VirginiaBusiness.com)

Arlington-based Politico, the national political news site, is expected to have a new owner by the end of the year. The German publishing giant Axel Springer agreed to buy Politico in a deal announced in late August. Springer will take control of Politico and its sister site, Politico Europe, as well as Politico’s tech news site, Protocol, a relatively new venture, the companies said. They did not publicly disclose financial terms, but the deal is valued at more than $1 billion, two people with knowledge of the matter said. The New York Times reported earlier that Politico’s owner, Robert Allbritton, was seeking $1 billion for the deal.
(The New York Times)

Chicago-based consumer credit reporting agency TransUnion has signed a definitive agreement to acquire Reston-based identity management tech company Neustar Inc.’s marketing, fraud and communications businesses for $3.1 billion in cash. The transaction is expected to close in the fourth quarter. The acquisition will help TransUnion diversify from credit solutions by adding complementary digital marketing and fraud mitigation capabilities. (VirginiaBusiness.com)

New Washington Football Team co-CEO Tanya Snyder, the wife of CEO Dan Snyder, gave her first interview since being named to the position, released in September on a podcast with ESPN’s Adam Schefter. The Snyder family owns 100% of the team after a buyout and retained control after a year-long investigation into allegations of sexual harassment at the team facility in Ashburn. Tanya Snyder, who stepped in as the team’s corporate leader in July after her husband temporarily removed himself from day-to-day operations, said on the podcast that the team’s C-suite has narrowed down the team’s new name to three options. (Richmond Times-Dispatch; NBC Sports)

It’s a seller’s world

Sandra Hood finally went on a much-needed vacation in mid-August.

Even so, Hood, the managing broker of Coldwell Banker Traditions in Newport News and president of the Virginia Peninsula Association of Realtors, took advantage of a rainy morning at the beach to open her laptop and get some work done.

“It’s the most difficult market that I have ever been in,” says Hood, who has been in the residential real estate industry for 15 years.

More than 18 months after the COVID-19 pandemic disrupted most industries, real estate agents across Hampton Roads say they are experiencing their busiest year ever, with some running a marathon at nearly a sprinter’s pace to keep up. Despite small signs that segments of the market are cooling, they say they expect the current seller’s market to continue through 2022.

Inventory across Hampton Roads remains tight, forcing an increase in median home sale prices across Hampton Roads to $300,000 — up from $290,000 just two months earlier — proof that demand is still outstripping supply, according to a market summary from Real Estate Information Network Inc. (REIN), the multiple listing service that covers Williamsburg east through Virginia Beach and south across the North Carolina border.

While active listings have increased month-over-month into this summer — 4,220 in June and 4,621 in July — they remain lower than last year, when there were 5,846 and 5,576 homes listed in June and July 2020, respectively. Residential homes spent an average 51 days on the market in June 2020. That dropped to 23 days in June and July 2021, according to REIN.

“This summer, the market has slowed a little bit, and I think most of us are OK with that, because we need the breathing room,” says Jeremy Caleb Johnson, an agent with Long & Foster/Christie’s International Real Estate in Virginia Beach.

Johnson, who serves as vice chair of finance for the Hampton Roads Realtors Association, attributed the cooling to families taking vacations and children heading back to school.

“If I had a really awesome listing, and I put it on the market in March this year, I would [have expected] it to be gone in about 24 to 48 hours,” Johnson notes. “In some instances, we’re seeing putting that same type of awesome, amazing listing on the market today and it’s maybe lasting a week to 10 days.”

Low inventory and high demand may also be fueling buyer fatigue. “I think a lot of buyers have written a lot of offers and didn’t get them, and now they’re like, ‘Maybe now is not the time for us. Let’s sit back and watch the market, see if it goes down at all,’” says Alan Thompson, a co-owner of Chesapeake-based Lucky Homes.

Real estate was deemed an essential industry in Virginia during the pandemic shutdown, which allowed business to keep going. Hood credits the region’s strong job market and military presence for keeping the local residential real estate market so busy. The combination of new people coming to the area and local sellers planning to remain in the area creates another problem.

“You have to be really skilled in making your offers and people could have six, 10 rejections before they finally find a home, and many people are giving up, staying where they are,” Hood says. “People that are moving to the area, they can’t give up. So, it’s a challenge.”

The residential market in Hampton Roads reflects what’s happening in metropolitan regions across the country as COVID-19 reshaped conditions. Sellers are getting offers over list price without having to concede to repairs or inspections, and some buyers are moving farther from offices now that they can work remotely.

Some homeowners took advantage of low interest rates and refinanced, Thompson says, while others who received low bids in previous years are finding luck.

“We’ve reached out to every one of those sellers and said, ‘Hey, if you ever want to sell, now’s the time,’ and they’re selling and selling well,” says Thompson, who also chairs the Hampton Roads Realtors Association’s Resale Council.

As for buyers, some are even purchasing homes sight unseen.

Thompson’s firm worked remotely with a military family last year who could not travel to tour homes because of the pandemic.

“We sold it to them solely by video, which is [nerve-racking] because, basically, we’re picking their house out for them,” he says. “We’ve never met these people at all, so that’s kind of scary.”

Cash also remains king. An Oceanfront home in Virginia Beach built in 2017 went on the market this summer for $5.4 million and sold for $5.8 million to an all-cash buyer, Johnson says. “In every city of Hampton Roads, we are seeing an inordinate number of cash buyers, and that is providing challenges for the stereotypical buyer that has their mortgage.”

While all the above factors are creating a challenging time for Realtors and customers, Thompson says there’s also been an influx of new real estate agents entering the field, lured perhaps by job cuts in other industries and the possibility of quick sales. But in today’s market, he adds, having an experienced agent and lender can make a difference in negotiating and getting to closing. “I think the good agents are doing better because they excel in difficult markets,” he says.

The frenzy and uncertainty of the market has taken a toll on buyers and sellers, and those working in the industry have absorbed some of that impact. Realtors say they’ve relied on supportive colleagues to pitch in when necessary and encourage others to do the same.

“We are constantly being affected by seasonal changes in real estate,” Hood says. “I think that coming into the fall, it’ll probably be a little bit of a slowdown. But I think that the overall state of the real estate economy is going to stay about the same.”

Executive insights

Barefoot

Buffy Barefoot
President – Virginia Beach, TowneBank, Virginia Beach

What is the most pressing issue facing the Hampton Roads region in terms of its economic health?

The ability to attract companies offering shiny employment opportunities for young professionals graduating from college. Having one child who just graduated from college and another one in college, it appears the millennials’ line of sight for employment is in the bigger cities where companies like Facebook, Amazon, Apple, Netflix, Google and Tesla have meaningful presences. [Gen Z and millennials] are looking for culture and cutting-edge technologies when considering who they want to work for.

What new development would you most like to see in Hampton Roads in the next 10 years?

The establishment of a professional sports team. I recently visited Denver. It has four professional teams that play in or very near downtown. The financial impact is significant. Athletics create camaraderie, and our community would benefit from that.

How has the pandemic and its economic impact affected your customers’ focus?

Since we are in a resort community, undoubtedly the common focus most recently has been on employees. I’ve seen restaurant owners cooking, bartending and [doing] whatever else it takes to survive this year. We’ve seen restaurants completely shut down for lunch or dinner or additional days of the week due to lack of staff. Similarly, I’ve heard stories of hotel operators bringing in spouses and other family members to assist with housekeeping services. The inability to have J-1 [visa] workers, coupled with unemployment benefits, has stressed the industries. Additionally, our builders have been impacted by the supply chain. Costs of projects have escalated, and delivery of completion [on projects has been] delayed.

Hugh Barlow
Partner, Brown, Edwards & Co. LLP, Newport News

What development would you most like to see happen in the Hampton Roads area in the next 10 years?

We have heard for many years that Hampton Roads, by population, is one of few metropolitan areas without a major professional sports franchise. Despite many failed attempts over the past couple of decades, we have yet to get things figured out as a region to make it work. Over the next 10 years, it would bode well for this area for the seven cities and surrounding counties to figure out how we can make this happen.

What industry is changing the most in the region?

The brick and mortar retail stores, along with the restaurant industry, have undoubtedly been among the worst affected during the pandemic. This industry has seen the most changes over the past couple of years with online shopping, touchless pickup service, outdoor eating and takeout options, etc. to meet consumer needs and generate revenue. Those that have survived will need to continue providing innovative ways to attract new customers.

Gilbert Bland
President and CEO, Urban League of Hampton Roads, Norfolk

What do you consider the industries with the most growth potential for entrepreneurs in the Hampton Roads region?

I believe there will be many new entrepreneurial opportunities with the commencement of the offshore wind initiative. Secondly, the Port of Virginia’s continued growth. And, in my opinion, health care and medical research will develop and bring many new businesses to our region.

What is the most pressing issue facing the region in terms of its economic health?

Broadly, the concept of brain drain — i.e., our students exiting the area for employment and social opportunities — could be a major future impact on our efforts to sustain a strong workforce.

Personally, I believe Hampton Roads is quite simply a great place to live and work and raise a family. Our location along the waterfront is a wonderful and fun asset. Additionally, I also believe we have a national class health care system, which is an imperative asset for employees, particularly since life expectancies continue to grow.

What new development would you most like to see in Hampton Roads in the next 10 years?

I would love to see our region began to rival other areas in bio-medical research and the continued growth of our port.

Todd Estes
Executive director, Community College Workforce Cooperative, Newport News

What is the most pressing issue facing the Hampton Roads region in terms of its economic health?

Workforce development is now at the center of nearly every economic discussion. Access to a pipeline of skilled workers and the ability to respond to evolving workforce needs must be a regional priority. There are great programs already underway in Hampton Roads, but the biggest challenge is working to align and coordinate these efforts so we can achieve the comprehensive and sustainable workforce systems we need. Working independently, we can make Hampton Roads a better place for businesses. Working together, we can make Hampton the best place to do business in the nation. A true regional approach to workforce development is needed, and the region is indeed coming together. The CCWC demonstrates our colleges’ commitment to alignment and coordination, and we are working with our other strategic partners to ensure our region achieves the results we seek.

What industry has the best future in Hampton Roads?

Hampton Roads is a vibrant economic region with well-established industries that remain critical to the region and emerging industries that will certainly help diversify our economy. The Hampton Roads shipbuilding and ship repair industry is a national asset that also offers great career opportunities for those entering their gates. The emerging offshore wind industry is expected to create thousands of skilled jobs in our region over the next several years. A robust supply chain will be needed to support this new industry. Coupled with our existing advanced manufacturing base, we anticipate significant job opportunities in this area. An emphasis on the technology sector is increasing to include unmanned systems and cybersecurity. Of course, the need to support our front-line health care workers has never been more apparent or more important.

Toi Hunter
Vice president of business retention and expansion, Hampton Roads Alliance, Norfolk

What new development would you most like to see in Hampton Roads in the next 10 years?

The development of more industrial sites in our region would position Hampton Roads for major projects, specifically in the advanced manufacturing sector. In order to attract those types of projects, it is imperative that there are available sites with the appropriate infrastructure improvements to fit the needs of a major manufacturing project. Manufacturers bring machinery, tools and equipment [that increase] local tax revenue and create well-paying jobs — both direct and indirect. The first step for our region is ensuring that available sites meeting manufacturers’ criteria are shovel-ready and on the radar of corporate site selection consultants.

How has the pandemic and its economic impact affected the work of the Alliance?

The Alliance, like other economic development organizations, is focused on marketing the region for external investment. Regular travel, domestic and international, is an integral part of the economic development practice. Traveling to meet consultants and meet with companies considering investment is one of our core functions, so the pandemic dramatically changed the way that most economic development organizations conducted business. Business development has not stopped, but figuring out new and creative ways to engage potential prospects has changed. The Alliance has developed virtual site tours, online industry forums and innovative marketing efforts to stay engaged and to continue to keep the Hampton Roads region as a part of the conversation for corporate decision makers.

Kurt Krause
President and CEO, VisitNorfolk, Norfolk

What is the most pressing issue facing the Hampton Roads region in terms of its economic health?

The lack of a full workforce is the most pressing challenge that the Hampton Roads region is facing. We all need a comprehensive understanding and strategy on how to attract a diverse workforce to the region. This includes those with experience, leaving the military, graduating from school or seeking higher education. Our businesses need to value a workforce that is seeking a career or job hoping to fulfill their own succession plan.

What projects under development in Hampton Roads are most important for the area’s future?

The two developments happening in Hampton Roads that will be important to the future are the two casinos [in Norfolk and Portsmouth] and the proposed arena [redevelopment project at] Military Circle [Mall in] Norfolk. When casinos are developed, it will provide another attraction to the area’s long list of things to enjoy. The proposed arena will be a magnet for more entertainment, larger sporting events and general excitement and energy for the region. However, nothing can take away from the spectacular waterfront views that we are lucky to have from the Atlantic Ocean, Chesapeake Bay and the rivers.

Heads in the cloud

Compare economic development wish lists across Virginia, and you’ll find one item in common. It’s not a specific manufacturer, a large health care system, or even a lucrative brewery.

It’s a data center — or two, or three.

These massive warehouse-like structures, full of computers, servers, and other digital equipment, hold the keys to internet connectivity, and they have become darlings of the economic development world.

Community leaders laud the many benefits that data centers can bring, from large capital investment and high-paying jobs to significant tax revenues and renewable energy. But they also bring some development challenges, such as requiring large tracts of land and fiber networks. Plus, not every resident wants a massive data center in their backyard.

Even so, data centers are multiplying throughout Virginia. And nowhere is that more apparent than in Loudoun County, which houses the largest concentration of data centers in the world.

Growing demand

“There aren’t that many growth industries in the country right now, places where there is ready capital and ready demand,” says Buddy Rizer, Loudoun’s executive director for economic development. “Data centers would be on that list. In our internal research, we think globally that demand for data centers will outstrip supply for the majority of the decade. The better the commonwealth does [with data center development], the better it is for all of us. It impacts education, … taxes and … quality of life.”

In fact, the data center drive is one of the primary reasons that Will Payne swapped his urban Richmond lifestyle for rural Southwest Virginia. He relocated his marketing business, Coalfield Strategies, to take on a major project to attract economic development investment — including data centers — to Southwest Virginia.

“It’s kind of a point of pride that this region should not be limited to certain industries,” says Payne, who formerly worked as chief deputy for the Virginia Department of Mines, Minerals and Energy, now rebranded as the Virginia Department of Energy as of Oct. 1. “We can go for the growing data center industry.”

Southwest Virginia has some big acts to follow, in particular Loudoun County, which has more than 25 million square feet of data center space.

Other localities in Virginia are attracting data center companies and eagerly eyeing growth, much of which has been sparked in the past year by a pandemic that intensified demand for cloud-based and streaming data services. From streaming movies on Netflix to holding Zoom meetings, if it’s an online activity, it originates from a data center.

“There’s no doubt that COVID-19 significantly increased the need for data or cloud services,” says Stan Blackwell, director of customer service and strategic partnerships for Dominion Energy Inc., one of the state’s top suppliers of power for data centers. “Our view is that this industry is not going to slow down. It’s the adoption of technology by society that’s driving growth.”

Loudoun County’s maximum daily energy use for its data centers is 2 gigawatts — “roughly the equivalent of powering 500,000 homes,” Rizer says. Also, data centers require “miles and miles” of fiber cables installed underground. In Loudoun, companies are adding fiber ducts underneath the center of roads, and the cables need to be replaced regularly. Some date back to America Online’s earliest days at Dulles, where its headquarters opened in 1996.

Henrico County’s data center industry got its start in the mid-1990s, when construction began on White Oak Technology Park, now home to the county’s burgeoning data centers. In 2017, QTS, a data center company, opened a 1.3 million-square-foot building at the park, its fourth-largest location in the world. Since then, Facebook launched the first phase of a $1 billion data center there in 2020, and there’s still 1,000 acres left at the park, says Anthony Romanello, executive director of the Henrico Economic Development Authority.

One of the attractions for data centers in Henrico is a network access point adjacent to the technology park. Established by QTS, the access point links to three ultra-high-speed, subsea fiber-optic telecommunications cables that come ashore in Virginia Beach, connecting data networks in the United States, Europe and South America.

Anthony Romanello, executive director of Henrico County’s economic development office, says the county is marketing itself for international connectivity. Romanello photo by Caroline Martin — Anthony Romanello, executive director of Henrico County’s economic development office, says the county is marketing itself for international connectivity. Photo by Caroline Martin

“This is big, big data,” Romanello says. “That’s why this is so critical for the ongoing development of Henrico and of Virginia, really.”

But Henrico isn’t trying to be the next Loudoun County, Romanello says. Rather, Henrico views itself as positioned for international connectivity, and it wants the benefits that data centers have proven to bring to many communities.

In 2017, Henrico slashed its tax rate for data centers from $3.50 to 40 cents per $100 of assessed value, which was likely a big factor behind Facebook’s decision to come to Henrico.

“Data centers are one of our target industries,” Romanello says. “They bring tremendous capital investment, and they are a good, clean industry.”

He points out that Facebook is offsetting its energy consumption at its Henrico data center with in-state solar energy farms. “Even though they consume energy, they are committed to providing renewables equal to what they consume,” Romanello says.

Attracting companies

Like Henrico, other Virginia localities are also lowering tax rates in an attempt to woo data centers.

Dickenson, Lee, Scott and Wise counties and the city of Norton entered into a pact in March to lower data center tax rates to 24 cents per $100 of assessed value to lure the lucrative data centers to Southwest Virginia.

The low rate is one carrot, but another is offering less costly opportunities for renewable energy, says Duane Miller, executive director of the Lenowisco Planning District Commission.

For example, last year, InvestSWVA, a Southwest Virginia economic development marketing campaign directed by Payne, commissioned a study that found that former mining sites in Southwest Virginia would offer natural geothermal cooling cost benefits for data centers. According to the Project Oasis study, companies could save more than $1 million in reduced electric costs and municipal water purchases by taking advantage of the site’s naturally cool underground pools.

“It’s nature’s refrigerator, but that in and of itself is cost savings,” Miller says. “That’s one jewel in our crown for data center recruitment.”

So far, the Project Oasis study results have led to inquiries from some companies, though, as of late August, there have been no announcements of companies intending to locate data centers in Southwest, Payne says.

Conducted by Richmond-based OnPoint Development Strategies, the Project Oasis study identified six Southwest Virginia sites that meet the criteria for a 36-megawatt hyperscale data center, and four sites suitable for a smaller data center of up to 10 megawatts. Also, the study estimates that a large data center in the region would generate more than 2,000 construction jobs, as well as 40 direct jobs and 59 additional permanent jobs. A data center could result in more than $50 million in economic activity annually once operations begin.

“We’re at a point where we are trying to sell the region based on that analysis,” Payne says.

Data centers are responsible for about 13,000 jobs in Loudoun County, including employees working for internet companies that operate inside data center buildings, Rizer says.

Loudoun Economic Development Executive Director Buddy Rizer notes that although data center jobs are not numerous, the positions are well-paid. Photo by Will Schermerhorn

When Rizer was trying to sell county supervisors on the idea of building data centers in 2007 and 2008, the county’s population was starting to grow exponentially, with “tens of thousands” of new residents, who were putting a greater burden on county services like schools and emergency responders.

Data centers, however, provide about $15 in revenue for every dollar spent on government services, appealing to cost-conscious politicians — even when they weren’t clear about the technology itself.

“Early on,” Rizer recalls, “one of the supervisors said, ‘Mr. Rizer, if we have this cloud, why do we need these data centers?’ It’s been a constant education.”

In 2018, the average annual wage for Virginia’s data center jobs was $126,250, a 106% increase from 2001, when the average wage was $61,310, according to a 2020 report by Henrico County-based Mangum Economics for the Northern Virginia Technology Council.

“The jobs are very high-paid jobs, they are skills jobs. It’s important work,” says Rizer. The self-styled godfather of Loudoun’s Data Center Alley, he advises countries around the world on data center development.

Typically, data center jobs include equipment installers, engineers, security personnel, operators, and executive functions. And the data centers also result in ancillary jobs, such as HVAC contractors needed to keep the centers cool. Servers running constantly in centers produces heat, but Rizer notes that newer technology allows data centers to operate at an average temperature of 90 degrees, up from 80 degrees several years ago. “Ten degrees may not seem like much, but it is when you’re cooling a 450,000-square-foot building,” he says.

Still, data centers typically are not the largest employers in a locality. What counts the most toward their economic investment is tax revenue, Rizer says. The industry has supplied about $1.5 billion in tax revenue for Loudoun County between fiscal years 2015 and 2021, and Rizer anticipates data centers generating $500 million in county revenue for fiscal year 2022, mainly from business property taxes.

Even so, this year the county received $60 million less in tax revenue from data centers than projected. Rizer attributes the shortfall to some data centers not replacing equipment as quickly as in the past. Also, “we as a county are so far out ahead of everybody else, we’re still figuring out how to project it,” he says.

In Virginia Beach, economic development officials see data centers as drivers of large capital investment and a complement to growth in the city’s tech industry and its subsea cable connectivity.

PointOne Development Corp., a data center developer, is now building the first of two data centers at Virginia Beach’s Corporate Landing Business Park, which also houses Globalinx Subsea Colocation, a carrier-neutral, colocation data center space that provides access to the MAREA and BRUSA high-speed subsea telecommunications cables that connect Virginia with Spain, Puerto Rico and Brazil.

Smaller data center companies also are inquiring about space in the Corporate Landing Business Park.

Globalinx is key to many of these daily inquiries, says Taylor Adams, deputy city manager and director of economic development for Virginia Beach.

“When those [subsea] cables were originally built, we didn’t have the ability to offload and distribute signal [bandwidth] here in Virginia Beach,” he says. “Globalinx was part of the solution to that problem. Now we can take advantage of the bandwidth. We are seeing considerably more activity.”

Like other economic development officials, Adams expects data center demand will only continue to grow. “In professional environments with telework and remote work being part of the framework, it’s going to increase the need for cloud computing solutions and data storage,” he says. “I think that’s very good for the data center industry, and Virginia Beach is well positioned for that.”

Develop vs. preserve

But not everyone wants to see data centers multiply.

In Prince William County, which already has a significant data center presence, Elena Schlossberg leads The Coalition to Protect Prince William County. She is opposed to data center development in areas that should be preserved, including close proximity to neighborhoods and in the county’s rural crescent, which has been designated for preservation.

“We know that data centers are not going away, but we believe they belong in the appropriate places,” says Schlossberg, who has lived in the county for 20 years. “We are turning into a digital gateway.”

Conversely, another group of Prince William County landowners wants the county to become a digital gateway and allow for more data center development. At least 12 landowners who live on Pageland Lane want their agricultural land, which already holds numerous Dominion Energy transmission lines, rezoned to allow up to 21 million square feet of new data centers. They call the project the Prince William Digital Gateway.

Although the county already has about 4.75 million square feet of data centers, these residents want more in order to bring jobs, help the county’s tax base and allow Prince William to compete economically with neighboring localities such as Loudoun. Plus, they want money for their land, claiming that the area’s once-rural atmosphere already has been disrupted by transmission lines and traffic.

“Where we live now is not the same as it was 22 years ago,” says Mary Ann Ghadban. One of the landowners leading the digital gateway project, she has lived in the county for 40 years. “Our way of life has been ruined. Our area is no longer rural. As landowners, we want to win. Why shouldn’t we make money off our land?”

There already are discussions underway with data center developers who are interested in the Pageland Lane land, she says.

“This is citizen activism at its best,” Ghadban says. “It’s the golden goose for us. It’s the golden goose for Prince William County. It’s a win-win.”

This article has been corrected since publication.

Va. Beach, Oceana ink economic development deal

An agreement between the Navy and Virginia Beach could give the city much-needed breathing room for economic development expansion while lowering the cost of operating the East Coast’s master jet base.

Under a concept called Future Base Design, Naval Air Station Oceana would lease about 400 acres of land to private businesses in exchange for up to $3 million worth of in-kind infrastructure projects and maintenance. The base, which is home to 17 F/A-18 fighter jet squadrons, has partnered with the city as the economic development driver for the project.

“We’re running out of space in terms of land development, but this just gives us a plethora of opportunities that we can take forward,” says Virginia Beach Mayor Bobby Dyer. “This is a win-win for everybody.”

Oceana Commanding Officer Capt. Bob Holmes says the idea has been in development for three years. In addition to the agreement with Virginia Beach, the base is also looking to reduce expenditures for non-core services — like managing the base’s golf course and other recreational facilities — by finding partners to take on those tasks.

“That money could then be directed toward much-needed building maintenance and other infrastructure projects on the installation,” Holmes explains.

While portions of the base could become publicly accessible under the plan, the flight line and essential military activities would remain secured behind a fence.

Oceana was threatened with closure nearly two decades ago after a Pentagon commission targeted it because Virginia Beach failed to rein in development too close to the base. The city subsequently partnered with the state to purchase encroaching properties from willing sellers and agreed to zoning changes.

Craig Quigley, a retired Navy rear admiral who leads the Hampton Roads Military and Federal Facilities Alliance, says the new plan gives Oceana the ability to pay for underfunded needs while the service has prioritized “the pointy end of the spear” — activities such as ship maintenance and training.

“If you’re the base commander of NAS Oceana, over years you have seen your needs for real property maintenance be underfunded year after year after year,” Quigley says. “So, you’re literally watching your infrastructure crumble around your head. So, you can either keep doing that and hope that someday magic will happen and you’ll get a boatload of money to catch up, and that’s not going to happen, or you can go about things a different way.”

Richmond casino plan goes to polls

Early voting is underway across Virginia, and in Richmond, residents will also decide by Nov. 2 whether Silver Spring, Maryland-based Urban One Inc. can establish its proposed $565 million ONE Casino + Resort in the city.

Urban One CEO Alfred Liggins has high hopes for what could be the nation’s only majority Black-owned casino and resort.

“South Richmond has been waiting for an economic development opportunity of their own,” he says. “Other sections of Richmond have seen tremendous growth in recent years, but that growth has not, to date, included South Richmond. ONE is going to be a catalyst for new jobs, critically needed tax revenue, and additional economic development and opportunities in this part of the city.”

Leonard Sledge, director of the city’s economic development department, notes that the city expects the casino to generate 1,300 direct jobs. It will also make a $25.5 million upfront payment to the city government if the casino referendum passes next month.

“We believe it’s a great opportunity for the city,” Sledge says. Beyond casino jobs, the Maryland media conglomerate plans to build a 15,000-square-foot soundstage adjacent to the resort for film, TV and radio production, with a promise to spend $50 million on productions there. The casino also plans to partner with Virginia Union University and Reynolds Community College for workforce training, Liggins adds.

Brian Anderson, president and CEO of ChamberRVA, says he supports the resort because it would produce well-paid jobs and include space for 15 local bars and restaurants. “This is going to be not chain-driven, not corporate-driven, but local restaurant-driven,” he says. “My gut says that it has a good chance to pass.”

No public polling has been done to gauge support for the casino, although the process has seen some opposition, particularly at earlier stages.

Quinton Robbins, political director for the progressive Richmond For All organization, which opposes the project, lives about two miles from the site and has canvassed area voters. There is “not necessarily a plurality of support,” and there’s also “a lot of anxiety” among voters over the project, he says. “This is another sort of bad deal the city has whipped up.”

Robbins notes that Liggins was quoted in The Washington Post in August as saying that nobody — Liggins included — wants a casino in their backyard. “I think people only want this deal if it’s going to benefit working Richmonders,” Robbins says.

This article has been corrected.

Plastics company to revive textile mill site in Hurt

At the site of what was once a Burlington Industries textile mill in Hurt, Staunton River Plastics is building a 250,000-square-foot manufacturing facility.

Staunton River Plastics is the first tenant for the newly named Southern Virginia Multimodal Park, says Linda Green, executive director at the Southern Virginia Regional Alliance in Danville.

Burlington Industries, once known as Klopman Mills, closed its plant there in 2007. “To see this come back alive is so critically important to the community,” Green says. “That was the largest employer in the area.”

Hurt Mayor Gary K. Hodnett notes that the estimated $34 million project is expected to bring about 200 new jobs to the area, slightly fewer workers than had been employed by Burlington Industries.

“It means so much to the town to rejuvenate the local area,” Hodnett says. People in Hurt who lost their jobs when the mill closed took jobs in Danville and as far away as Greensboro, North Carolina, he adds. “This will pull labor like a magnet back to Hurt.”

Hodnett is chairman of the Staunton River Regional Industrial Facility Authority — a joint partnership between Pittsylvania County, Danville and Hurt that is redeveloping the industrial park.

Staunton River Plastics is a wholly owned subsidiary of Rage Corp., an Ohio-based plastics manufacturer that produces products used in the health care and beauty industries.

Staunton River Plastics will manufacture parts for a long-term contract with a Fortune 500 company, according to a company news release.

Advantages to the Hurt location, according to Green and Hodnett, include railroad access and proximity to a Rage Corp. plant in nearby Altavista. The Altavista facility opened in 2004 and the company announced $2 million-plus expansion there in 2018.

The Staunton River Plastics project was announced in May 2020; it is estimated that it will be finished by early 2022. A groundbreaking ceremony was held for the project in mid-July.

The project received a $500,000 grant from the Commonwealth’s Opportunity Fund, as well as a $300,000 Virginia Investment Performance Grant from the Virginia Economic Development Partnership and $135,000 from the Virginia Tobacco Region Revitalization Commission.

Staunton River Plastics also is eligible to receive rail access funding from the Virginia Department of Rail and Public Transportation, and benefits from the Virginia Enterprise Zone Program. ν

Commercial realty: Demand remains high

Read our residential real estate story.

Trends are also pointing in a mostly positive direction for the region’s industrial, commercial and retail real estate markets, according to Ed Kimple, a senior vice president with Cushman & Wakefield | Thalhimer.

Office vacancy rates were at 9.2% for the second quarter, an increase over the 8.5% recorded in 2021’s first quarter. But Kimple and his cohorts see a silver lining due to increases in Department of Defense spending in the region, as well as Dominion Energy Inc.’s $7.8 billion offshore wind farm moving forward.

Demand for industrial space also remains high, with an overall 2.4% vacancy rate. Frito Lay recently leased a 228,000-square-foot former food processing plant and distribution center in Portsmouth, while smaller spaces in the Cavalier Industrial Park in Chesapeake received multiple offers less than a month after going on the market.

Though the pandemic caused fears for retail, Kimple notes that a 5.2% vacancy rate means “the market is really very healthy.” Box stores and casual restaurants that closed during the pandemic were already faltering beforehand, he says. In some cases, vacant big-box stores are being backfilled; a grocery store in Norfolk, for example, has been replaced by an AutoZone.

Although a full return to business was hampered late this summer by the highly contagious delta variant of COVID-19, Kimple says retailers remain optimistic. “You know, the only thing we’re really seeing is just the mask coming back.”

Letter from the publisher: Big impact

It’s nearly impossible to overstate the positive role that Hampton Roads plays in Virginia’s economic health. The region doesn’t fit neatly into a single name, location or brand. Is it coastal, is it the beach or is it the Port of Virginia? Is its economy mostly maritime, mostly military, mostly manufacturing, mostly international trade, or mostly higher education and high tech? All these descriptions fit, and that’s why the region has such a big impact.

No other region of Virginia reaches across the commonwealth or even the globe like Hampton Roads. Ships, trucks, trains and even planes send millions of cargo containers to storage and distribution centers worldwide. Transportation and logistics are big business.

2021 has been a comeback year for virtually all these sectors, and the region shows promising signs for growth. Wind energy is getting closer than just something on the horizon. The Port of Virginia has new leadership. Shipbuilding and repair are on the rise. And tourism was back to pre-pandemic levels in Virginia Beach this summer. Of course, at the same time the region still faces ongoing challenges such as sea-level rise, workforce training and the perennial problem of traffic jams.

Welcome to the 2021 issue of Hampton Roads Business. We hope that you will find it interesting and informative. Our goal is to help you understand the area’s economy and connect you to the businesses that drive this vibrant, exciting and important region.

— Bernie Niemeier, President & Publisher

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