Region improves amenities in bid to draw more tourists and employmentNovember 29, 2012 6:00 AM
by Jenny Kincaid Boone
When Aaron and Michelle Dykstra moved to Roanoke in 2008, they didn’t plan to stay long. They grew up in the Roanoke Valley but moved away for college and later lived in larger cities, including New York and Chicago.
They figured a short Roanoke stint would allow Aaron Dykstra to pursue his dream, starting a custom bike frame business. Four years later, the Dykstras are still in Roanoke, and their bike business is thriving. They say the region’s growing outdoor culture keeps them grounded in Southwest Virginia.
In the past two years, local and regional orders to their Six Eleven Bicycle Co. have gone up 50 percent. “When we started the business, initially customers came from everywhere but Roanoke,” says Michelle Dykstra. “A lot of [the company’s growth] has to do, I believe, with the efforts taking place here in order to create this outdoor image.”
The Dykstras’ story underscores the impact of a marketing campaign that touts the Roanoke Valley’s outdoor amenities. With the Blue Ridge Mountains at the back door of a region of about 342,000 people, economic marketing gurus are selling the Roanoke area as an outdoor haven while organizing large events to complement the message.
Meanwhile, developers renovating Roanoke’s old, historic buildings into apartments are drawing more people downtown.
Another plus for the region: a $4 million upgrade to the terminal at the Roanoke Regional Airport. When it is completed next year, the project will bring new electronic-device charging stations, escalators, restroom upgrades and more. Between 24 and 27 flights depart and arrive daily at the airport.
In terms of jobs, the region is churning out new positions in health care and education, two of the largest employment sectors, alongside manufacturing. Yet, Roanoke still has a ways to go to recover from the recession, according to a quarterly analysis by Chmura Economics & Analytics in Richmond.
Job growth lags
Job growth in the Roanoke Valley lags much of the state. The Roanoke metro area’s unemployment rate in September was 5.9 percent, down from 6 percent in August, but higher than the 5.6 percent rate recorded in September 2011, according to the Virginia Employment Commission.
The Bureau of Labor Statistics reported in September that Roanoke’s nonfarm employment dropped 0.6 percent from September 2011. It is one of three metro areas in Virginia in which jobs declined during this period.
About 40 miles south of Roanoke, Blacksburg is one of only three metro areas in Virginia that has inched out of recovery from the recession, because of substantial job gains, according to the Chmura report.
Virginia Tech and Volvo Trucks North America are two of the New River Valley’s largest employers. Blacksburg also was ranked No. 6 in Area Development magazine’s top 20 South Atlantic cities this year. The magazine reports that since 2000, businesses that relocated or expanded in Montgomery County, Blacksburg’s home county, spent more than $265 million and created at least 4,600 jobs.
One retailer recently chose the county for an East Coast distribution hub, a testament to the Roanoke/New River Valley’s economy and outdoor marketing push. Backcountry.com, an online retailer of outdoor gear, opened a 315,000-square-foot distribution center in Christiansburg in August. It plans to hire 200 people in the next two years, says spokeswoman Marit Fischer.
The outdoor lifestyle offered by the Roanoke/New River Valley was crucial to Backcountry’s site choice. Pete Eshelman, director of outdoor branding for the Roanoke Regional Partnership, met a Backcountry representative at a trade show in Utah, where the retailer is based. The company wanted to open an East Coast hub to get merchandise to customers faster.
Before long, Backcountry was scouting Roanoke Valley sites. It expanded its search to Montgomery County when it could not find a suitable Roanoke location. Staying in Southwest Virginia was paramount. “We are very much a culture business,” Fischer says. “Our employees are out using the gear [that Backcountry sells]. We wanted to find a place that was an outdoor mecca.”
Backcountry is one of several success stories validating the region’s outdoor emphasis, Eshelman says. In 2010, the partnership conducted a study to compare Roanoke with localities with strong outdoor cultures, such as Asheville, N.C., and Chattanooga, Tenn. The study found that Roanoke had a lower volume of outdoor-related businesses.
So, Eshelman is stepping up the region’s outdoor branding. That effort includes creating a September workshop for entrepreneurs wanting to start an outdoor-related business and organizing the GO Outside Fest, now in its second year. This year’s festival, held in October, featured a mountain-bike exhibition, climbing wall, dog-jumping competition, trail bike rides, backpacking workshops and more. The event drew about 8,500 people, up from 5,000 last year, Eshelman says.
Ed Dawkins of Arlington and Kristin Bloodworth of Winchester were among those in the crowd. They found out about the festival while searching the Internet for weekend getaway ideas. “We’re both runners, so outdoor activities are always a plus,” says Dawkins, who ran 12 miles the morning of the festival on a greenway, a pedestrian pathway that connects areas of Roanoke.
One of the region’s biggest outdoor events is the Blue Ridge Marathon, which began in April 2010. In its first year, the marathon’s economic impact was about $346,000, a figure which included money spent at restaurants and hotels, Eshelman says. At this year’s marathon spending rose to $377,000, an 8.9 percent increase from 2010.
Despite the marathon’s mountainous course (runners climb Mill Mountain and Roanoke Mountain), participation is rising by 30 percent annually. The 2012 marathon and half marathon attracted 1,368 runners.
“When I first went to trade shows, [outsiders] had never heard of Roanoke,” Eshelman says. “We’re a sleepy mountain town that’s waking up.” Or so the numbers seem to say. Out-of-towners who visited the Roanoke Valley spent $703 million in 2011, up 8 percent from 2010, according to the Virginia Tourism Corp.
While more people are visiting the area, more local residents are moving to downtown Roanoke. From 2000 and 2010, the number of people living in downtown apartments and condos rose from fewer than 50 people to 600, according to the Census Bureau.
That downtown population now is much higher. Many new apartments have opened in the past two years. They include the former Patrick Henry Hotel on South Jefferson Street, home to 134 apartments, and the Lofts at West Station, which has 71 apartments on Salem Avenue.
High-end condominiums characterized the early years of the downtown living boom. But condo buying slowed when the national real estate market crashed in 2007-09.
Now, demand for downtown apartments is so robust that Glenn Gilmer, property manager for the Lofts at West Station, often receives four to six calls or emails a day from potential tenants. Most inquiries are from people moving to Roanoke, he says.
The Lofts at West Station opened in January and by the end of February, all the apartments were leased. Plans are under way for more apartments in the Shenandoah building at the corner of First Street and Kirk Avenue. The Shenandoah building would house 90 apartments and open in July, Gilmer says.
He expects the apartments to lease quickly, despite the abundance of downtown living options. Tenants ranging from young adults to retirees like the “ease of being downtown,” Gilmer says.
The property manager notes that much of the interest in downtown Roanoke is coming from Carilion Clinic employees and students attending the Virginia Tech Carilion School of Medicine. A trolley runs from downtown to the school and Carilion Roanoke Memorial Hospital about a mile away.
Carilion Clinic is the largest private employer in the Roanoke Valley, with more than 10,000 workers, according to the Roanoke Regional Partnership. Several health-care companies, in fact, are among the top 50 Roanoke Valley employers, according to the Virginia Employment Commission. They include Carilion Roanoke Memorial Hospital and HCA Healthcare, which owns LewisGale Medical Center in Salem.
The number of people who worked in education and health services in the Roanoke MSA increased 10 percent from 2002 to 2011, according to the Bureau of Labor Statistics. Jobs for health-care practitioners and technicians are projected to rise 23 percent by 2018 in Virginia.
Health care’s future growth is a major reason that a local group, Roanoke River Associates, is pushing forward plans for about 23 acres across from the VTC School of Medicine and Research Institute. The group wants to build apartments, shops, restaurants and a kayak launch on the land, which lies between the Roanoke River and South Jefferson Street. In late October, Roanoke River Associates was in the process of selling the project to a developer, says Bill Rakes, a local attorney who is a member of the group.
The project could receive up to $10 million, with $2 million upfront, in performance grants from the City of Roanoke. Development plans may take years to complete. Its first phase would include 150 apartments and a restaurant. “It’s an ideal location,” Rakes says, citing its proximity to Carilion facilities.
Challenges for retail, museum
But it’s not the best time to attract new retail to the Roanoke Valley. The battered economy flattened consumer spending nationwide. And there has not been a large influx of new retailers to the valley, according to a second-quarter 2012 report by commercial real estate firm Cushman & Wakefield | Thalhimer.
The firm says less than a third of quarterly retail transactions involved a tenant new to the Roanoke area or a new regional or national operator.
Meanwhile, a struggling arts venue in Roanoke received a substantial financial boost in October to secure its uncertain fiscal future. Since opening in 2008 in downtown Roanoke, The Taubman Museum of Art has been unable to lift its income above expenses.
In early October, the museum’s founding donors, Nicholas Taubman and Heywood Fralin, formed a new board of directors to contribute to the museum’s operating budget for the year. The anticipated budget shortfall was about $1.1 million, says Kathryn Garvin, the museum’s CFO and acting executive director. Now, it is debt-free. Also, Advance Auto Parts Inc., one of the region’s larger employers and its only Fortune 500 company, donated $150,000 to the museum, allowing it to offer free general admission.
Still, economic challenges have not stopped expansions this year at some of the region’s largest manufacturers and employers. In the past year, Dynax America Corp., a Botetourt County automotive parts manufacturer, added 95 jobs, with more planned, and $15 million in new equipment. Its expansion is tied to new contracts with automotive companies, including Ford and General Motors, says Twyla Elliott, a Dynax spokeswoman.
In Blacksburg, Federal-Mogul Corp., which produces an automotive bearing product, added about 90 new jobs and invested $10 million in new equipment, says spokesman Jim Burke.
Manufacturers in the Roanoke MSA employed 3 percent more workers in 2011 than in 2010, according to the BLS. In Blacksburg, manufacturers added 818 jobs in 2011, 69 percent of the area’s new jobs, according to a Chmura report.
Back in Roanoke, the Dykstras of Six Eleven Bicycle Co. are rolling out a new mountain bike line. Production would start next year for these bikes, sold online and in shops. “It’s been inspired by the people here in Roanoke who … are trying to see a resurgence in the local economy,” says Michelle Dykstra.
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