by Carlos Santos
Morgan Perkins says weekends are busy but weekdays are slow for her business on Charlottesville’s downtown mall.
Charlottesville’s just refurbished pedestrian mall is often chock-full of shoppers who walk by pricey boutiques and fine restaurants, as well as the steel skeleton of a half-built luxury hotel.
That tableau could symbolize the area’s economic health. Generally, things are going well in this university town, but it has some rough spots. “On weekends, we’re very, very busy,’’ says Morgan Perkins of the Sage Moon Gallery on the downtown mall. “During the week we’re not seeing much.’’
Local retail sales are in a slump, and unemployment is creeping up. Yet because of the stabilizing presence of the University of Virginia, the Charlottesville-area economy has not suffered the sharp setbacks seen in other parts of the state during the recession.
The downtown mall is a key part of the local economy. It’s the third most visited spot in Charlottesville, just behind the U.Va. Rotunda and Monticello, says Chris Engel, assistant director of economic development for the city.
Engel says that while the city has no empirical evidence to support the ranking, “visitor surveys have suggested this as well as anecdotal information collected by our travel specialists at the visitor’s center.” Each year, downtown sites such as the Pavilion, an outdoor music venue, draw some 95,000 people while the Paramount Theater and live arts draw up to 100,000 visitors. The Virginia Discovery Museum pulls in some 50,000 people annually.
The mall renovation — including new bricks, lights, benches, landscaping and even WiFi — had to be done without scaring away shoppers and tourists. The job was completed under its $7.5 million budget and ahead of schedule. “We were able to do it in a bad economy and we did it quicker than expected,’’ says Ric Barrick, a spokesman for the city.
Home to 150 businesses
The result is a clean, 11-block expanse of red bricks that is home for about 150 businesses, including some 50 restaurants and dozens of offices and boutiques. “I expect that people will be flocking downtown this spring and summer,’’ says Mayor David Norris. “I think things will be better this year than last year.”
To encourage small businesses, the City Council recently halved the cost of permit fees, which vary based on the value of the project. The city also is touting some big new businesses. They include a 45,000-square-foot Whole Foods market (the second in the Charlottesville area), which expected to open next spring on Hydraulic Road, and an Urban Outfitters store, opening on the mall this month.
However, the refurbished mall and new retailers don’t make up for some weak spots in the city’s economy. City retail sales were off 13 percent in the first quarter compared with the same quarter last year ($2.09 million as opposed to $2.41 million) a decline of about $300,000.
And then there’s the luxury hotel that was touted as a draw for well-heeled tourists. The nine-story building, called the Landmark, was to cost $40 million and open next summer. Now the hotel — floors exposed and parts of it boarded with plywood — is empty of workers. A dispute between the owner and developer over cost overruns and a federal takeover of the lender bank has shut everything down. “It’s private property,’’ says Barrick. “Our role is to make sure safety and zoning requirements are met. But it’s certainly not to our advantage to have an empty shell of a building up.”
The economic health of Charlottesville is directly tied to Albemarle, the county which surrounds it. Together, Charlottesville and Albemarle — and nearby counties such as Greene, Nelson and Fluvanna — have a population of about 240,000 and offer more than 104,000 jobs. (Unemployment in the Charlottesville area was 5.5 percent in April, up from 2.5 percent a year before but still lower than the state rate of 6.6 percent.)
Like Charlottesville, Albemarle’s retail sales slumped in the first quarter, but the county is booming, at least in terms of proposed construction. Two shopping centers, for example, soon will be built in the county —both on U.S. 29 north.
And jobs are coming, too. A Joint Use Intelligence Analysis Facility slated to open in northern Albemarle next year will add more than 800 positions to the 1,000 military intelligence jobs already in Albemarle.
U.Va.’s $1 billion impact
But the area’s biggest employer by far is the University of Virginia and its medical center, which employ some 20,000 people. The school acts as a buttress for the area’s economy. “We’re always going to be insulated by the university,’’ says Norris, the city’s mayor.
A 2007 study, the latest available, estimated that U.Va.’s economic impact on Albemarle and Charlottesville in 2005 exceeded $1 billion. That figure represents total spending by the university itself, its employees, students and visitors. Students alone spent $211 million that year.
Those numbers have gone up since then, helping the local economy stay afloat. “We’re faring fairly well in today’s world,’’ says John Knapp, a senior economist at the Weldon Cooper Center for Public Service in Charlottesville who co-authored the impact study. “At least we’re not falling as fast as the others.’’
U.Va. is in the middle of a building boom with its huge South Lawn project scheduled to be completed next year. Other projects include a hospital expansion, the construction of the Emily Couric Cancer Center (named for the late state senator from Charlottesville who died of pancreatic cancer), and a new arts center. “I don’t think I’ve seen this many cranes in Charlottesville in my life,’’ says Barrick.
Though U.Va. is a tax-exempt institution, taxable real estate owned or rented by faculty, staff and students in the city and Albemarle was valued at $3.3 billion in 2005. That yielded $28.3 million in property tax revenues, according to the impact study.
University towns, in general, are somewhat insulated against economic downtowns because “of the very nature of higher education,’’ which is not given to layoffs or threatened by overseas competition, says Knapp.
That doesn’t mean the school hasn’t felt the sting of the recession. Hiring has essentially been limited to those who are already U.Va. employees. Outsiders are not being hired except in special circumstances.
Overall, however, a tiny touch of optimism appears to be on the rise. Morgan Perkins, who was forced to move her art gallery to share space with another business on the mall because of the economic conditions, sees signs of change. “It’s been pretty bad,’’ she says. “But everybody’s thinking that people are starting to spend some, that we’re seeing a little turnaround.’’
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