Defense contractors,  health-care expansion to keep Fredericksburg humming

Defense contractors, health-care expansion expected to keep area humming

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Print this page by Robert Burke

The Globe and Laurel restaurant had a pretty good run at its location in an old Tudor-style building along Jefferson Davis Highway near Marine Corps Base Quantico in southern Prince William County. But a few years ago a highway-widening project uprooted the restaurant from its home of almost 30 years and sent its owner, retired Marine Corps Maj. Rick Spooner, looking for a new spot.

The Stafford County site he found isn’t quite as close to the base or the National Museum of the Marine Corps, but his timing was still good. The Globe and Laurel reopened in 2008 directly in front of one of the more successful commercial real estate projects in this region — the Quantico Corporate Center, a growing campus of Class A office buildings that are filling up with defense and government contractors. Where there used to be just woods there are now two 140,000-square-foot buildings, fully leased, and a third building is under way. When the project is built out it will have more than 1 million square feet of Class A office and flex space.

Spooner’s new restaurant can seat 152 people, and about a quarter of the customers now come from the new office park. “The corporate center is going to bring a lot of business to us and the whole area,” he says.

That’s a pretty good example of how this region’s economy has worked — defense and government-related growth helps drive growth in housing and retail and almost everything else. “We’ve been doing better than a lot of places by far,” says Gene Bailey, president of the Fredericksburg Regional Alliance, a regional economic development organization.

Unemployment in December for the Fredericksburg region was 6 percent, just below the state’s 6.4 percent. But that number hides the differences; not everyone in the area escaped the recession so easily.

There are about 324,000 people living in the region, with more than two-thirds of them in Stafford and Spotsylvania counties, two of the fastest-growing localities in the state. Those counties had December unemployment rates of 5.1 percent and 5.3 percent, respectively. Elsewhere in the region, King George County’s jobless rate was 7.8 percent, Caroline County’s rate was 9 percent, while Fredericksburg’s was slightly higher, 9.2 percent.

The last few months of 2010 started to brighten in this region like they did nationally. “Up until now there’s been a slow recovery, and many people have not felt it,” Bailey says. “By the spring ... we’ll have a recovery and people here will participate in it.”

The region’s rapid population growth helped spark an expansion in health-care options, which in turn is sparking its share of new growth. Tennessee-based HCA opened the 126-bed Spotsylvania Regional Medical Center in June. The year before, Fredericksburg-based Mary Washington Healthcare (formerly known as Medicorp Health System) opened the 100-bed Stafford Hospital. Those two hospitals join the 442-bed Mary Washington Hospital in Fredericksburg, which is now surrounded by a bevy of medical offices, along with some retail businesses. The new hospitals are expected to have a similar economic impact, although right now both are surrounded mostly by empty land.

The new Spotsylvania hospital won’t be alone for long, though. In January the county approved plans for up to 600 multifamily units on land next to the hospital, and a major local developer, the Silver Cos., is making plans to build apartments “that will cater to young professionals such as those employed by the hospital,” says Jon Riley, project manager for Silver.

A couple of new medical offices already are open near the hospital, including Central Virginia OB/GYN, which opened its third location there. Sheila Coleman, who handles sales and leasing for the 65-acre Silver project, called Cosner East, says there will be more medical offices and retail. The project is next to a big-box retail development, Cosner’s Corner, which Silver helped develop about six years ago, near the intersection of U.S. 1 and Interstate 95.

Like a lot of the other retail and office development in this region, this area depends on the traffic that passes on the region’s main highways. The new hospital is the trigger. “It’s still new to the community and they’re still bringing doctors on board and increasing their patient base,” Coleman says. “As that continues to grow and as more people come in, it’s only going to increase, especially as the apartments go up.”

Land around the new Stafford hospital still is relatively undeveloped, though it does have a 60,000-square-foot building attached to the hospital, called the Stafford Medical Pavilion. That building has nearly a dozen tenants and in May will add a new cancer center. The Mary Washington Hospital in Fredericksburg will open a new cancer center, too, in a building separate from the main hospital. That facility, which is scheduled to open in August, will be adjacent to the Imaging Center for Women, another MWH facility.

The Fredericksburg region isn’t close to having the kind of health-care options available in places such as Charlottesville, Northern Virginia, Hampton Roads or Richmond, but it’s getting closer. And the new facilities already have given the local economy a boost. “The hospitals have been providing a higher than average salary for the region, and they’ve provided significant construction growth during a time when construction was substantially down,” Bailey says. “I think going forward we have a strong potential to become a destination for health care.”

Meanwhile, in Fredericksburg, the city’s two biggest employers — the hospital and the University of Mary Washington — are expanding and starting to connect their properties. In 2007 the University of Mary Washington Foundation bought an aging shopping center next to the university, bulldozing old stores and building a mixed-used project. The shopping center property now is connected to the campus by an impressive pedestrian bridge that spans U.S. 1. In addition, the north end of the shopping center has a five-story, 156-apartment building for UMW students, a multideck parking garage and 33,000 square feet of commercial office space. The ground floor of the new building is filling up with retail, including Home Team Grill, a Richmond-based sports bar.

Berkley Mitchell, a Thalhimer agent with long experience in commercial development in this region, handles leasing for the new building. He says the next major project in the shopping center will be a hotel, and a new street that will connect the UMW project with Mary Washington Hospital’s campus. “The hospital has talked for years about the need for close-in hotels for their patients,” Mitchell says. “They expect strong demand from the hospital.”

As for the new street linking the two campuses, “that’s a big part of this project,” Mitchell says. “The college and the hospital are working on it.” In addition, on its side of the new pedestrian walkway, the university is building a new basketball arena and convocation center. That complex will be named after former UMW President William M. Anderson Jr., who retired in 2006.

If the next six months play out the way business leaders here hope it will, the Fredericksburg region will be ahead of most of Virginia in recovering from the recession.  There are good reasons to be optimistic, but it’s not all good. “The defense industry remains in good shape here, but a question moving forward is defense cuts, and how they might impact us,” says Bailey of the regional alliance.

In that way the region’s biggest benefactor — the federal government —  might be less reliable than it has been. But there is also hope that this fast-growing region has gotten big enough that it is about to cross a threshold. “I think we’re in line for the next wave of growth here to be corporate,” Bailey says. “Once we’ve got the retail development, once we’ve got the population, the next wave that will hit this area will be companies locating here. It fits the cycle.” 

More information on the Fredericksburg region:

Fredericksburg region at a glance

Caroline lands McKesson distribution center

Work begins on education center

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