by Robert Burke
For Virginia Business
James Pierce’s job is easier now than it was year ago. Back then, his company, MTCSC, an up-and-coming defense contractor, had employees scattered all over Stafford County. Some worked in a former thrift shop. Others were crammed into a strip mall next to a grocery store. Not the kind of locations that impress clients.
Nowadays, Pierce, the company’s vice president of marketing, can invite clients to nicer digs. MTCSC occupies the entire fourth floor of a gleaming brick-and-glass building a few hundred yards south of Marine Corps Base Quantico. The new, 35,000-square-foot space consolidates the company’s key employees into one building, with room for more. Sixty people work there now, and Pierce predicts another 40 will be hired in the next few years. The company had to grow rapidly, he says, because major clients such as the U.S. Department of Defense and Department of Homeland Security have ramped up demand for the company’s system-integration services, “We stepped to the plate and took the risk,” says Pierce.
For the region’s economy, the MTCSC expansion is a decent blip on the radar, but it’s not the biggest news of late. Wisconsin-based Kalahari Resorts announced last fall that it plans to open a $200 million water park on 49 acres next to Interstate 95. The giant resort is expected to boost the local economy and generate millions of dollars annually in taxes for Fredericksburg. It would also create about 1,000 jobs, making it one the biggest employers in an area that is among the fastest-growing in the state.
The water park proposal, however, underscores one of the biggest economic challenges of the region (which includes 307,000 residents in Fredericksburg and Stafford, Spotsylvania, King George, Caroline counties). Most of the water park jobs would pay $8 to $9 an hour in a labor market where the overall unemployment rate is low and thousands of residents commute to higher-paying jobs in the Washington, D.C., area. Commuters crave more local jobs like those created at MTCSC so that they can work closer to home.
There are reasons to believe that more better-paying jobs are coming in the next several years. Overall the region is a net winner in the 2005 Base Realignment and Closure (BRAC) process. Quantico is expected to pick up about 3,000 jobs by 2011. Combined with the region’s two other military bases — Fort A.P. Hill in Caroline County and the Naval Surface Warfare Center Dahlgren in King George County — the total number of BRAC-related jobs could hit 4,900.
What’s more, the region has a flourishing growth rate among small businesses. Chris Chmura, a Richmond economist who studied the local economy for the Fredericksburg Regional Alliance, says that for every 100 businesses that fail in the region, 138 new ones are started. Plus many of the jobs created by these startups are in the professional business service category. “This is important, because of the innovation that comes out of that sector, as well as the high-paying jobs,” says Chmura.
But if the government procurement dollars and defense-related spending are going to drive some of the job growth, it likely won’t play out equally. In fact, the building MTCSC occupies is the first office building in the Quantico Corporate Center, an 85-acre development of the Fredericksburg-based Silver Cos., the region’s largest development firm, which predicts its total investment in the project will exceed $300 million. The Quantico Corporate Center, when complete, will have 10 buildings with a total of 1 million square feet of space. If history is a guide, the expansion of government and defense-related jobs generally could follow the same path down the I-95 corridor taken by homeowners and retailers during the past two decades, though probably not as fast.
The corporate park’s location next to Quantico and in a region with an apparent shortage of Class A office space has Silver officials feeling pretty optimistic, though. The first building opened last year. Construction on a second building, also 140,000 square feet, began in February. When Silver started the corporate center, the company anticipated it would take 10 years to complete the development. Growth from BRAC is speeding up that timetable, says David Newman, who handles sales and leasing for the center. “That 10-year time period is probably closer to five to seven years,” he says.
Newman expects the shift of BRAC jobs to Quantico also will bring thousands more private-sector employees, too. “We’re probably talking closer to 9,000 jobs” in all, he says. “The corporate center’s going to be a big part of that.” There are other reasons the region seems primed for growth. According to CoStar Inc., a real estate information firm, the amount of office space in the region rose 27 percent in the past two years to nearly 5.1 million square feet. In addition, employees in the Fredericksburg area will work for less than their Northern Virginia counterparts, according to the Fredericksburg Regional Alliance. It estimates that the average salary in the Fredericksburg region for jobs in the professional business services category are about $51,000, compared with $81,000 in Northern Virginia.
While events such as the BRAC shift of jobs might bring more jobs, it’s also true that many of them will be held by people who already live in the area. Unitech, a 20-year-old Virginia-based company that does logistics support for the military, is moving about a dozen employees from Dumfries into a space two floors below MTCSC. “Most of my work force lives in Stafford. Most of my customers live in Stafford,” says John Beiswanger, Unitech’s Quantico operations director. “Stafford’s pretty much home for all of us. It’s an ideal spot.”
Boswell’s Corner project
The county also wants to turn a stretch of U.S. 1 near Quantico known as Boswell’s Corner into a corridor of office space and mixed-use development. Still in the early planning stages, the project depends heavily on whether local landowners and developers will go along. Still, the county sees a lot of potential. This stretch of highway is now a collection of small businesses and vacant land that evokes memories of how U.S. 1 used to look before I-95 was built in the 1960s. But with BRAC-generated growth, change finally may be coming. “You will not recognize Boswell’s Corner in the next five years,” says Tim Baroody, the county’s director of economic development. As people and development migrate south from the metro Washington region, they reach Stafford first among localities in the Fredericksburg region. So projects like the proposed Boswell’s Corner makeover have that advantage. Stafford’s population of around 120,000 people, though, is matched by Spotsylvania County to the south. The combined population of these localities dwarfs the other two counties and Fredericksburg. And Russell Seymour, Spotsylvania’s economic development director, says the BRAC impact may be less in the southern part of the region. It is having its own good fortune in attracting higher-paying jobs. Seymour says his office recorded more than 500 new jobs in the county last year, divided among nearly 20 different companies outside of the retail sector. Nearly two-thirds were professional and technical jobs. “We’re doing very well right now, not only in competing with Stafford,” Seymour
Seymour also suggests that homeland security and defense-related firms are looking at Spotsylvania because of its location 50 miles outside of D.C. down the I-95 corridor. A rumor has circulated for several years that homeland security operations were encouraged to locate at least that far away from Washington — so they’d be outside a nuclear blast zone, so the story goes. Nobody can point to a specific directive, but Seymour thinks it’s a factor that plays to Spotsylvania’s favor. Baroody of Stafford doesn’t buy it, noting that the FBI Laboratory is at Quantico and it isn’t moving. “I think there’s not much to the 50-mile story,” he says.
If the balance is shifting a little and bringing more employers to the region, a transportation project on the horizon has the potential to bring change as well. The I-95 corridor is about to undergo a major change with the addition of HOT (high-occupancy/toll) lanes. By as early as 2014, new lanes down the middle of the existing interstate could be open. If they can make it easier for workers to get to and from their jobs in the D.C. region, what impact will there be on the movement of employers and employees? Nobody’s quite sure yet. The BRAC impact, though, could help the region grow despite a slumping economy elsewhere.
Pierce of MTCSC says the company is in its new location because “we’ve seen such a growth in the past few years that we [knew] we would be needing a larger space.” This region may be 50 miles from Washington, but it’s close enough to enjoy the shelter that only federal dollars give.