Signs for optimism

Economic trends in the region continue to improve

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Print this page by Marjolijn Bijlefeld and Robert Burke

For a region that leans heavily on the federal budget, you would think the discouraging talk about the potential cuts in defense and government spending would rattle the Fredericksburg area. After all, a big chunk of the workers in its population of 350,000 people work for federal agencies, are in the military or work for one of the hundreds of private-sector contractors scattered around the region.

Despite the gloomy reports, economic trends in the area have been improving, giving rise to optimism. The region’s two biggest localities — Stafford and Spotsylvania counties — each had December unemployment rates of 5.1 percent, and the region’s overall unemployment rate is 5.8 percent. 

Plus, efforts to cut defense spending through the last Base Realignment and Closure (BRAC) process ultimately brought nearly 3,000 jobs to the region, mostly to Marine Corps Base Quantico. There also are new expansions by higher education institutions — mainly the University of Mary Washington — and a major new employer, medical supplier McKesson Corp., is opening a new 340,000-square-foot distribution center in Caroline County later this year, creating 150 jobs over the coming three years.

Other major employment sectors — retail, health care, finance and insurance — are making modest recoveries from the Great Recession and have all been growing in the past year. It’s not fast growth — just 0.7 percent in the 12 months ending last October, the most recent data available — “but it is sustainable,” says Todd Gillingham, director of strategic initiatives and technology for the Fredericksburg Regional Alliance, an economic development organization. “This is natural growth, this is our area working to grow.”

“This region has been lucky,” says Mary Katherine Greenlaw, a broker with the commercial real estate firm Thalhimer and a member of the Fredericksburg City Council. There are three military bases nearby, she notes, a university and a community college that are expanding, and three hospitals. Plus, the region is midway between the nation’s capital and the state capital. “We really are buffered.”

Corporate center expands
The focus for many business and government leaders is on getting the most out of the region’s opportunity to attract federal contractors. A lot of that growth is happening at the northern boundary of Stafford County at the Quantico Corporate Center, situated between U.S. 1 and Interstate 95. The project has two 140,000-square-foot buildings fully leased. A third building was finished in January and is anchored by QinetiQ North America, a defense contractor, which is leasing about 50,000 square feet.

The center’s developer, Silver Cos., is also close to breaking ground on an 8,000-square-foot retail and restaurant building near the center’s entrance on U.S. 1. The long-term plan is for 10 office buildings at the center, along with two hotels and some retail spaces.

Plus, Silver is getting ready to make its link to the base even stronger. A new 718,000-square-foot office building opened on the Marine Corps base last fall to house the government agencies moving there. Silver is going to extend the main drive through the Quantico Corporate Center to connect to the new building. Work on the project could begin later this year. The new road will make it a short drive from the corporate center to the new BRAC building at Quantico, says David Newman, a Silver vice president. “It’s been an ideal location,” he says. “When we started the project, BRAC had been announced, but we didn’t have any understanding of where the [new] building would be, so we’ve been fortunate.”

There are new efforts to bring educational resources into play in recruiting companies to the region. Stafford wants to open a research and technology park at the Quantico center and is planning to lease space there this year. Its partners in the project are ManTech International Corp., the University of Mary Washington, Germanna Community College and George Mason University. The county wants to lease space for classes and a business incubation center. In November the county Board of Supervisors committed $237,000 toward the project. Silver is offering rent-free or subsidized space.

Dahlgren Campus Center opens
Another major higher education initiative is already under way in King George County. UMW opened a new campus in January near the Naval Support Facility at Dahlgren. The new Dahlgren Campus Center for Education and Research is a two-story, 42,000-square-foot building with classrooms set up for distance learning. About 150 people take graduate-level engineering courses offered by several schools, including Virginia Commonwealth University, Virginia Tech, Old Dominion University and George Mason University.

Nearly all the people taking courses at the center work at the Dahlgren base and were enrolled in classes in a retrofitted building there, says Mark Safferstone, the campus’ executive director. The new building is better equipped and has room to hold up to 500 students, he says. The Dahlgren base is home to eight military commands and about 6,400 employees, which is nearly two-thirds of all employment in the county. The new center is expected to leverage more growth there, he says. “We saw it not as a construction project but an economic development initiative,” Safferstone says.

Several of the region’s main business-development and planning organizations are teaming up as well. In January UMW marked the opening of its new Center for Economic Development, which is housed in office space at the school’s growing Eagle Village mixed-use project. The school’s Small Business Development Center has relocated there, too, as has the Fredericksburg Regional Alliance.

One of the reasons for joining forces with UMW is “to get the university involved with the economic development process, because higher education and work-force training are such important parts of recruitment,” says FRA’s Gillingham. “We’re looking to gear our economic development efforts to higher technology, higher-paying jobs.”

One project moving forward is the Eagle Village development next to the University of Mary Washington in Fredericksburg. Eagle Village is a former strip shopping center directly across U.S. 1 from the school. The UMW Foundation bought the property several years ago and has already constructed some mixed-use development there. Work began last fall on a new street connecting Eagle Village to the adjacent Mary Washington Hospital campus, and construction is expected to begin this spring on a $14 million, five-story hotel in Eagle Village. The UMW foundation has not yet named the hotel brand.

Some projects stalled
Some other big projects, however, have stalled. A plan led by former Gov. L. Douglas Wilder to build a slavery museum on 38 acres in the Celebrate Virginia property in Fredericksburg has stumbled badly. The museum’s finances are in shambles; it filed for Chapter 11 bankruptcy last September and is now under pressure from the city, which wants a federal court to force the museum to liquidate its assets and pay $254,000 in unpaid real estate taxes. An attorney for the museum has said it would file a reorganization plan and hopes to resume fundraising.

A second languishing project is Kalahari Resorts’ plan for a $260 million water park in the Celebrate Virginia property, which borders I-95. The water park was announced in 2007, but the Wisconsin-based company has shelved the project while it looks for suitable financing. Fredericksburg leaders say they still expect the attraction to be built.  Unemployment in the city was at 9.2 percent in December. “It would make a difference,” says Greenlaw, who is running for mayor in the city’s May elections.

Also on the ropes is a transportation project that would have included a new interchange on I-95 and a toll road, dubbed the Rappahannock Parkway, connecting the interchange to an intersection on State Route 3, a few miles west of Fredericksburg. Route 3 is the main east-west highway through Spotsylvania County, and is jammed daily with shoppers and commuters. The toll road project, with an estimated cost of about $300 million, also would have gone through the Celebrate Virginia property. It had the support of the county and regional transportation planners until four new supervisors were elected in November. At their first board meeting in January, they voted to oppose the project, leaving it in limbo.

David Ross, one of the new supervisors, says the toll road would save drivers only a few minutes but cost millions and put many residents off their property. “I can certainly understand why Silver Companies wants an exit over there, but I just don’t think it’s in the best interests of Spotsylvania County,” he says.
Ross notes that a $25 million widening project is already under way along Route 3, adding extra lanes in and beyond the intersection where the toll road would have connected. “So Route 3 will soon be seeing immediate traffic relief.”

That relief will be needed as the area maintains its rapid growth rate. The region’s population is expected to rise 28 percent by 2020. Local governments continue to push economic growth initiatives to provide jobs for newcomers and longtime residents wanting to work closer to home.

Stafford, for example, is working with Mary Washington Healthcare (MWH) to spur development on land around MWH’s Stafford Hospital, which opened in 2009 along U.S. 1. The county owns 13 acres nearby, and the hospital has 45 acres to develop, says Tim Baroody, the county’s director of economic development. “We’re talking about how to best position our properties and push them out into the private sector,” he says. “We’re doing a lot better than most.” 


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