What’s Next – March 2020

From Lara L. Fritts, CEcD, President and CEO of the Greater Richmond Partnership

The Greater Richmond Partnership (GRP) weekly team meeting was a bit different on Monday. Trying to muddle through a conference call just after the announcement from the CDC encouraging us to all work from home seemed daunting. The most challenging part was how do I keep our team together and motivated. So, here we are social distancing – but now what?

I believe we can all agree that things won’t be back to “normal” for a while, that life before COVID-19 will seem like a distant memory. Yet, that doesn’t mean that we must hunker down in our houses, with CNN (or your news channel of choice) on constant loop.  Let’s use this time to think about what comes next.

It seems that the first six months after social distancing will be a race. Businesses and organizations will be seeking to make up for sales and revenue lost. Events will be rescheduled and as we emerge from our homes and our calendars will once again fill up with meetings. In the meantime, I plan to use this time productively.

Personal

Whenever I attend a conference there is an opportunity to meet an author and so I have a bookshelf filled with books given to me over the past few years about economic development and leadership that sadly have been collecting dust – perhaps I can use this time to read one or two of them. I’ve also learned that many colleges and universities offer non-credit courses here is a list I found: https://www.freecodecamp.org/news/ivy-league-free-online-courses-a0d7ae675869/. Last month I purchased a bullet journal and plan to use this time to set personal goals for myself and put them in writing.  

Professional

As the national and international sales team for the Greater Richmond region, the inability for our team to travel to meet with clients and the unknown regarding how businesses will be impacted and how these impacts will affect their expansion and/or relocation plans have left us a bit listless. We had been looking at a stellar fiscal year 2020 and then ‘this’ happened.  However, our team is not about to throw away the remainder of this year or let what is happening deter us from the great work we have been pursuing.

Our team members are taking courses on-line on the various databases and tools we have in the office – from our Salesforce CRM to CoStar – and having our staff be informed allows us to better serve our clients, regional businesses, partners and investors.

Along with our consultants at IBM Global Location Strategies, we are in the final stages of developing our strategic plan. The information found in this document will help to guide our efforts over the next 10 years. Yesterday, we spoke about the impacts of COVID-19 on our go-to market strategy and with our consultants agree our plan is still relevant and sound. We will utilize this time to begin to research and strategize the targeted regions, growth businesses and messages so when we start our next fiscal year on July 1, 2020, we will be ready to travel domestically and internationally promoting our region face-to-face.

The GRP staff meets with representatives of companies every day, and our travel and meeting calendars sometimes make it difficult to follow-up or check-in. Seeing that many of us are working from our home office – what a great time to reconnect. I know in just day two of teleworking I find myself starting at my phone hoping it will ring. So, rather than waiting for my phone to ring – I’m making calls.

We also know that for our local economic development partners, emerging from ‘this’ will mean a coordinated response to business retention. Our research team is already preparing information that will help our local economic development partners in their efforts. Together we are holding conference calls regularly to stay abreast of programs and efforts across the region and Commonwealth to support all of our businesses.

Together we can weather this storm and emerge even stronger personally, professionally and as a region.

Molnar, Gibson elected to professional boards

The Greater Richmond Partnership takes pride in our staff members holding memberships in professional organizations which further our organization’s mission and connects us to the business community. This month, two members of the business attraction team were elected to the Board of Directors of industry-related groups:

Olga Molnar, Vice President of Global Investment, was elected to the Virginia International Business Council (VAIBC) Board of Directors. She will serve as an at-large member of the Board until the end of the calendar year. Olga develops relationships with embassy representatives, consultants and delegations to maximize the prospect pipeline of international firms considering Greater Richmond, so this Board positions fits perfectly with the GRP’s global strategy.

Statia Gibson, Business Development Manager, was re-elected to the Board of Directors for the Commercial Real Estate Women (CREW) Richmond chapter. She will serve as the Director of Media Relations for the network which helps advance women in the commercial real estate industry. This is Statia’s second year on the board, previously serving as the Director of Programs.

Addressing the shortage of Class-A office space

From Lara L. Fritts, CEcD, President and CEO of the Greater Richmond Partnership

Last week I happened to be sitting to the right of a gentleman who was conversing with his friend to his left. That’s when I heard him say to his friend something that made my heart stop. He said, “I heard “Company X” is going to be moving out of their office space downtown. Isn’t that horrible? Just what downtown needs is more vacant office space.”

First, let me say, that “Company X” is not moving out of their space – just a horrible rumor.

I’m not normally one to eavesdrop – but… in this case the topic of office space was just too important for me to keep quiet. I shared with the gentleman within the entire Greater Richmond region there are currently only four Class-A office spaces over 50,000 square feet for immediate occupancy.

Current State of the Market

Yes, you read that correctly, according to CoStar the entire Greater Richmond region only has four Class-A office spaces over 50,000 square feet for immediate occupancy. The majority of vacant spaces are under 5,000 square feet. If an average office has 200 square feet per employee – that means the region has opportunities for less than 25-employee companies. Yes, there have been new offices built, but those have been constructed for a specific tenant such as Dominion Energy’s new building in downtown Richmond. There are also several buildings proposed in the region, but nothing is ready immediately.

To build a downtown office tower can take up to three years. A suburban office building takes at minimum one year but more likely a year and a half. I want to note here these construction timeline generalities have nothing to do with any governmental entity’s permitting process. In order to clear a site, dig a foundation, and build a tower or a building just takes time.

Knowing this is a challenge, I have been speaking with brokers, developers, and our local economic development partners to understand why there isn’t more office being built. What I am learning is this is the quintessential chicken-or-the-egg conundrum.

Real estate financing will only provide debt on a project if the building is 50% pre-leased. Which means companies need to be thinking 1.5-3 years in advance of a real estate move so they can occupy space that isn’t even being built yet. Let’s say that there is a proposed building of 300,000 square feet. The developer would need 150,000 square feet of pre-leased space to secure financing to start construction.  In reality, two or three tenants would be needed to reach 150,000 – it is difficult enough to get one tenant to agree to a pre-lease but three?

Now, think about your mobile phone – how much the technology has changed over the past three years. Most companies are not thinking more than a year out regarding their office space and or talent needs.  For example, this week I met with a technology company looking to move a portion of their company to Greater Richmond. They want to occupy the space next July. Oh, and they need to make improvements to the space before. In less than a year they need to lease almost 60,000 square feet. While I should be rejoicing, and I am for the jobs, I do keep thinking about taking another 60,000 square feet out of the market.

Greater Richmond boasts our lower cost alternative. However, this has been part of reason we haven’t seen new office developed. Land values in the region are increasing, and the cost of construction has escalated due to labor shortages and tariffs, thus the cost to build a new building is expensive. Developers must charge higher rents to cover this cost.

According to CoStar since first quarter of 2017 to today, Class A office rents have increased only $1.57. Placing today’s rental rate at $23.59. This is far less than the cost of building a new office building in our healthy economic climate.

Average prospect size

Over the last five years the Greater Richmond Partnership (GRP) has worked with 431 companies seeking Class A office space in Greater Richmond. Of those companies who signed a lease in the region – a median office space of approximately 85,000 was occupied.

Why is this an Important Topic?

In September 2019, the GRP engaged Ady Advantage an economic development consulting firm to conduct a qualitative study of Site Selectors. For those who may not know, Site Selectors, much as their name implies, help navigate companies through the decision process on siting an expansion or relocation of their company. Ady Advantage interviewed 25 of the top 50 Site Selectors in the country. The majority had over 20 years of experience in Site Selection. They spoke to Site Selectors who had visited Richmond either on a familiarization tour or for a project, as well as site selectors who hadn’t visited Richmond.

The Site Selectors had positive perceptions of Greater Richmond citing our diverse economic opportunities, talent, and reputation as reasons they would recommend the region to their clients. Lack of a brand (more to come on this later) and no room to expand were listed among the reasons why they would not recommend the Greater Richmond region.

The fact Site Selectors who are not even in the Greater Richmond region know that we have a lack of room to expand is an indicator that we need to address this issue. Much of Site Selection starts on the internet – Site Selectors will look at availability of land, office space, and industrial buildings before even putting on a list for their clients to consider. If a region doesn’t have inventory and in the case of Greater Richmond our lack of Class A office inventory impedes our ability of making the initial review.

As the national and international sales team for Greater Richmond, our team is focused on companies considering a relocation or expansion from out of the area, however, I would be remiss if I didn’t speak to the ability for Greater Richmond companies to expand here. Unless a company is making incremental increases in hiring, it will be difficult for our companies to be able to continue to grow here.

Finding Solutions

Challenges such as these take both the public and private sectors to address. If you are interested in working with me to find a solution to this regional challenge, I would welcome your assistance. In December I would like to convene a working group to see how we can find solutions. Please contact me at [email protected] to be included in the work group.

Virginia back on top as America’s Top State for Business

Virginia has been named the #1 Top State for Business in 2019 by CNBC. The newest ranking means a return to form for Virginia which previously ranked at the “Best State for Business” in 2007, 2009 and 2011.

The top ranking is due in large part to Virginia landing the most competitive economic development project in history — Amazon’s HQ2. This effort, led by the Virginia Economic Development Partnership (VEDP), is a reason why Site Selection magazine named VEDP the “most competitive state-level economic development group” in the country.

This new accolade comes just months after Virginia jumped up the U.S. News Best States Rankings, moving from #20 to #7 based on strong fiscal stability, economic opportunity, and education.

In addition to its top place overall, CNBC ranked Virginia:

#1 in workforce – The state-wide impact of HQ2 means that Virginia’s tech talent pipeline will double the already fourth-highest graduation amount in the nation. In Greater Richmond, the labor force of more than 680,000 (including nearly 55,000 veterans) work in a variety of industries and companies including the 10 Fortune 1000 companies that are headquartered here. In addition, business training programs, such as Virginia Career Works Capital Region, and exceptional education systems create a skilled workforce to meet the expectations of any business. The Virginia Jobs Investment Program and Workforce Investment Act rewards and assist businesses in sourcing and retaining skilled workers throughout the state.

#1 in education – The state’s exceptional educational program ranked first in 2019 by the Cato Institute for having the best public school system in the country with accreditation reaching 92 percent. At the university level, the state produces the fourth highest amount of STEM graduates in the United States. Here in the Richmond Region, K-12 education options – public and private – offer some of the best individual schools in the nation and an array of cutting-edge career programs. And there are more than 1.6 million higher education students within 150 miles of the region helping push the educational attainment level in the Richmond market at 36.1% for bachelors degree or higher versus the 31.8% average for the U.S.

#3 in business friendliness – State, regional, and local entities are welcoming and available to working with corporate entities, especially in Greater Richmond – the City of Richmond and counties of Chesterfield, Hanover and Henrico. The state’s tax rate has remained at 6 percent since 1972, causing the Tax Foundation to rank Virginia’s sales and corporate rates among the lowest in the nation in 2019.

Top 20 in five other categories, including infrastructure, technology and innovation, access to capital, economy, and quality of life – These core business attributes have been noted previously by various publications:

See the full rankings for CNBC’s 2019 Top States for Business here.

One of the nation’s “most anticipated buildings” (Architectural Digest) and “most important museum openings” (The Art Newspaper), is set to open in April in Richmond, Va.

The Institute for Contemporary Art is part of Virginia Commonwealth University, the second best graduate level arts and design school in the nation ranked by U.S. News & World Report. The building was designed by the famous architect Steven Holl and the dramatic architecture complements the thought-provoking non-collection exhibitions. Upon opening, the museum’s first exhibit is designed to confront current social issues. Thanks to the generous funding of Richmond-headquartered, Fortune 500 company the building itself is named The Markel Center.

The opening of the Institute is the latest in a region ranked one of the “Best American Cities for Creatives” (Thrillist) and one of the “Most Inspiring Art Scenes in America” (Departures). The region welcomes visitors with some of the “Best Street Art in the World” (Buzzfeed) and hosts an annual festival for the goal of creating a gallery of 100 murals by world-renowned talent. With private-sector, university and community support, it’s easy to see why Richmond has become a magnet for creativity.

Reasons 6-10 why companies choose RVA

The Greater Richmond region has so much to offer when it comes to business. But why exactly do companies decide to come to RVA? Choosing the right place to establish or expand business operations is critical and the selection process can be overwhelming. The challenge lies not in identifying exactly what Richmond has to offer, but in figuring out how to quantify those offerings and measure how Richmond compares to other places. We’ve previously listed the top 5 reasons why companies choose the Richmond Region, but here are reasons 6-10 (in typical countdown format, of course!)

10. Business Training Programs

RVA has numerous agencies that provide ongoing support for local companies, including the Business First Greater Richmond program and other workforce programs listed in the SourceLink database of business assistance organizations. We also have great workforce training programs like the Community College Workforce Alliance (CCWA). The CCWA provides world-class workforce training and services to both the public and private sectors to enhance individual lives and the economic vitality of the Central Virginia region.

Whether you’re looking for some good old-fashioned advice to better manage and grow your business, information on available financing resources, or help recruiting new employees and training ones you have already, solutions to address your business’ unique challenges are only a click away.

9. Local and State Support

Greater Richmond has received many accolades in recent years due to the numerous local and state government agencies that provide universal business support for free.

Economic development agencies from the local, regional and state level ensure the success of businesses in the region by connecting them to resources that can help them flourish in the Greater Richmond Region. When you start discussions with the Greater Richmond Partnership, you’ll receive plenty of information and data to help you narrow your site selection. But hang on to your hat, because when you visit the area you’ll receive a detailed itinerary outlining the contacts and resources for your group to meet. The Partnership values your time, and we make sure to make the most of your visit to the region. Just listen to Shannon Walls, of Aspen Products, speak about his experience:

7 & 8. Transportation/Mid-Atlantic Location

RVA’s central location allows it to benefit from economic growth happening throughout the state. It is also centrally located between Maine and Florida, which gives Richmond-area businesses timely access to corporate headquarters and production facilities along the entire East Coast. Richmond is strategically located approximately 100 miles south of Washington, D.C. and 90 miles north of Norfolk, while also being within a 750-mile radius of more than 50 percent of the nation’s consumers. Richmond’s location is arguably its greatest strength.

Two major highways — Interstate 95, a North/South thoroughfare, and Interstate 64, an East/West thoroughfare — converge in Richmond. The region is served by the Richmond International Airport and is within 45 miles of the Washington Dulles International Airport and the Ronald Reagan Washington National Airport. The Port of Virginia’s Richmond Marine Terminal, which offers a range of logistical support services (i.e. stevedoring, supply chain management, export packaging and transfer, and warehouse and inland distribution services), is located four miles south of Richmond’s central business district. In addition, Richmond is within 90 miles of the Port of Virginia, the world’s largest natural deep-water harbor. And the region is served by major rail services, CSX and Norfolk Southern.

Click here for interactive maps that include the Richmond Region’s transportation network, access to markets, and more.

6. Quality Public Education

RVA invests heavily in the region’s educational system (K-12, community colleges, and four-year institutions) to ensure the availability of education and training programs for their citizens so that they can compete for new economy jobs, thereby enhancing the community’s attractiveness to businesses. RVA’s population ranks third out of the 10 peer regions in terms of college degree attainment.

In addition to magnet and specialty programs in each locality, Greater Richmond’s gifted students are eligible for accelerated programs at the regional Maggie L. Walker Governor’s School for Government and International Studies in Richmond and the Appomattox Regional Governor’s School for Arts and Technology in Petersburg. And if math’s your thing, the regional MathScience Innovation Center provides special facilities and classes in STEM that would not be feasible for individual school systems.

Top 5 reasons why companies choose RVA

The Richmond Region has so much to offer when it comes to business. But why exactly do companies decide to come to RVA? So we asked our outstanding Vice President of Business Information and he combed through hundreds of reports from companies who were attracted to the Richmond Region.

Choosing the right place to establish or expand business operations is critical and the selection process can be overwhelming. The challenge lies not in identifying exactly what Richmond has to offer, but in figuring out how to quantify those offerings and measure how Richmond compares to other places. For those of you who can’t quite put their finger on exactly what makes RVA the best, look no further!

Here are 5 reasons Richmond’s business scene is so attractive:


5. Higher Education

The main reason Greater Richmond is so rich in human capital is the major universities and several community colleges in the region. Ten four-year and 13 two-year colleges and universities offer undergraduate, graduate, and professional degree programs in all major fields, including business, law, engineering, and medicine, which provides an especially valuable recruiting pipeline to companies looking to hire young talent. A high quality of life with an affordable cost of living, a 25-minute average commute, high quality education and outstanding health care services make Greater Richmond a great choice for attracting and retaining top quality professionals.

To learn more about our highly educated workforce, click here.

4. Arts & Culture

The Richmond Region has historical significance, an emerging hipster and arts scene, and evolving foodie trends all wrapped into one southern capital city. The diverse arts and culture scene that continues to grow with the building or renovations of many new venues for sports, concerts, and theater. From our frequent running marathons to our cultural festivals, there’s always an excuse to get out of the house and play on the weekends.

And on any night of the week, you can find live music at numerous local venues, from music clubs and restaurants to revived historic performance halls, including The National, Altria Theatre, and Richmond CenterStage, which regularly draw national acts.  Publications and websites like Richmond.com and STYLE keep area residents updated with calendars and news on the latest cultural events and activities occurring in town.

Watch the Video: Are you interested in relocating your work, family, or business to the Richmond Region? The region has something to offer people of all ages and walks of life. Learn what makes RVA such an ideal place to raise a family, to grow a career and a business.

3. Competitive Business Climate

Many companies consider the Richmond Region the first choice because of the supportive, business-friendly climate, competitive environment, and ease of doing business. Virginia’s investment in its economic future comes in the form of a variety of performance-based incentives, from tax credits to tax exemptions. Local and state politicians and legislators work enthusiastically with new and expanding employers who demonstrate a willingness to invest in those who invest in Virginia, create a high standard of living for residents, and enhance local and state economies through increased revenue growth.

2. Affordable Real Estate

Real estate in the Richmond Region offers a variety of options for both small and large businesses. RVA has prepared sites and buildings in more than 100 office and industrial parks, plus four incubator facilities for small start-ups. Building costs in the region are 13% below the national average and local economic development offices are ready to support fast tracking for real estate projects.

To search for available sites and buildings in Greater Richmond, click here.

1. Strong Workforce

The fact is, the Richmond Region boasts a workforce that outranks the national average in terms of quality and value. High educational attainment levels combined with an explorative approach to career planning is the main reason our workforce is so uniquely diverse. No matter the career path or industry, Richmond-based companies have the luxury of being able to recruit from a pool of high-performing employees with the necessary skills to be successful across a wide range of career paths and industries. Plus, the region has low levels of union activity because Virginia is an at-will, right-to-work state. Being one of the fastest growing metro areas in the country, RVA has experienced increased economic and housing growth which makes it an easy destination to relocate. Essentially if you are a company that can bring great jobs to Richmond, we have as much local talent as you can afford.

Watch the Video: the Richmond Region’s workforce and job market draws labor from more than 40 localities statewide. Diverse industries and companies, combined with numerous educational institutions, provide an ample supply of employees with positive work attitudes and a range of skills and experience for new and expanding companies.


CONCLUSION:

There are plenty of reasons why companies and site selectors choose to put Greater Richmond on their short lists, and a few of these top 5 were eye openers! But as you can see, the Richmond Region has a lot to offer businesses and their employees alike.