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Tri-Cities to get boost from Fort Lee, Rolls-Royce

U.S. Army and Rolls-Royce projects expected to spark new development in Tri-Cities region

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Print this page by Garry Kranz

Albert Cruz eases his white pickup onto a new bridge that swoops across state Route 36 in Prince George County. Connecting Fort Lee’s existing military installation to newly cleared land on the opposite side, the private, two-lane span affords a bird’s-eye view that’s usually off limits to civilians. “This really gives you a sense of our wow factor,” says Cruz, a project manager with Fort Lee’s construction office.

Several hundred feet below, Fort Lee’s $700 million Ordnance Center and School is taking shape. Nearly two dozen buildings, their blue roofs glittering in the afternoon sun, dot a 380-acre parcel on which ancient hardwood trees once stood.

Made up of six barracks, 11 training buildings and a 75,000-square-foot dining facility, the Ordnance complex will train soldiers in the Army’s most critical job skills. Eventually, it will be home to more than 4,500 military students and instructors. It’s just one part of a major expansion triggered when the Base Realignment and Closure Commission, or BRAC, designated Fort Lee as the Army’s logistical nerve center. 

Nearly 40 separate BRAC-related construction projects are planned or under way. With $1.2 billion in BRAC contracts slated for Fort Lee, that equates to about 24,000 jobs created or retained from April 2007 through March 2010, says Fort Lee spokesman Keith Desbois.

Altogether the boom is expected to generate nearly $2 billion in economic activity during the next several years for Prince George County and the Tri-Cities region of Petersburg, Colonial Heights and Hopewell.

Fort Lee is the proverbial golden goose for this region. It will likely more than double the on-base population from 17,000 to more than 42,000 by 2011 as command elements formerly scattered across the country gradually are consolidated on this installation. Such a dramatic increase in population translates into more opportunities for the real estate market, since more stores, businesses and services will be needed. “Where else can companies find explosive population growth like that, and a captive audience to boot?”  asks Renee Chapline, executive director of Virginia’s Gateway Region, a marketing arm for the Tri-Cities region.

In addition to military-related contractors and suppliers, the fort’s increasing population also means military spouses will be looking for jobs and housing. “We are going to be adding a lot of talented people who will want to work and live in the area, and that’s going to be good for retail, office and industrial,” says Robert Walker, president and CEO of Roslyn Farm Corp., a commercial and industrial development company in Colonial Heights.

Walker says the growth at Fort Lee already has helped to stabilize the retail and service sectors in the Tri Cities. In particular, it has helped with retention of existing retailers, which in turn is helping to boost occupancy rates.

According to Chapline, the region does not have a large number of new, unoccupied commercial offices. “We don’t have an excess of commercial real estate in the region. We have a lot of available land and heavy infrastructure, and we’re working with developers all the time who are interested in [constructing] spec buildings,” she says.

Expansion brings controversy
Fort Lee’s expansion, however, is not without controversy. The Army plans to build a 1,000-room, on-site hotel to house the expected influx of military personnel stationed at Fort Lee for training. Last month it gave final approval for the project to proceed, despite objections from a coalition of local hotel chains that fear the $114 million project will hurt the local hospitality business.

The Army disputes that assertion, saying that studies show that the hotel will accommodate about 70 percent of total demand for lodging needed on the base. 

Still, Fort Lee generally is regarded as a linchpin of the regional economy, though certainly not the only one. In fact, the Tri-Cities region is making other localities doubly envious this year by welcoming a second plum project: a $500 million airplane components factory in Prince George County by Rolls-Royce North America.

Eventually, the British-based aerospace giant expects to employ up to 500 people at the new plant, situated on more than 1,000 acres in the Crosspointe Centre business park. That makes Crosspointe the largest Rolls-Royce plant, in terms of area, in North America, company officials say.

The first phase of the project includes a $140 million disc-manufacturing plant. Employing an initial complement of 140 full-time workers, the factory will produce the discs used in the engines of civil aircraft, including the double-deck A380 by Airbus. Construction began in October. Although this year’s harsh winter weather has slowed progress, the plant is expected to begin operations later this year.

A second phase will bring a 130,000-square-foot facility, with work on the second plant slated to begin by the end of 2010. In the meantime, Rolls-Royce has set up a temporary headquarters in Petersburg. Virginia won the coveted Rolls-Royce project after a rigorous nationwide search, because it was able to provide affordable, ready-to-go manufacturing sites, convenient access to transportation networks and skilled workers. “There are lots of machinists and other workers here with the skills we need,” says Rolls-Royce executive Paul McCoy.

In addition to the prestige of landing Rolls-Royce, there is the likelihood of a strong clustering effect as aerospace suppliers set up shop nearby. McCoy says 120 acres of land adjacent to the factories have been identified by Rolls-Royce for possible use by vendors capable of serving the company’s four sectors: civil aerospace, defense aerospace, marine and energy.

Thus far, the expected spinoff effect has been slow to develop. Still, there are signs that things could move quickly. Chapline says more than a dozen aerospace-related vendors reportedly have inquired about warehouse space since the start of the year — a heartening development in an industry that has suffered mightily during the recession.

In addition to land for vendors, the Crosspointe complex will house a pair of research centers established in partnership with Virginia Tech and the University of Virginia: the Commonwealth Center for Advanced Manufacturing and the Commonwealth Center for Aerospace Propulsion Systems.  Chapline says such “centers of excellence” should help promote Virginia as a center of innovative research and development. She likens its potential impact to that of Research Triangle Park in Raleigh, N.C. “Having this in place will definitely attract capital investment and hopefully create jobs,” she says.

The twin dynamos of Fort Lee and Rolls-Royce have been a boon during trying times, but not everyone is content. Steve McDonough, president of McDonough Real Estate in Prince George, questions whether local officials are doing enough to capitalize on the good fortune. He also is concerned that neighboring localities such as Chester along Interstate 95 might be more attractive sites for incoming vendors, in part by having established industrial parks and better housing stock for workers. “We’re very fortunate to have both Fort Lee and Rolls-Royce. But aside from those two projects, there isn’t a helluva lot going on” in local commercial markets, says McDonough.

Eclipsed by Fort Lee and Rolls-Royce is an under-the-radar deal that involves the recent sale of the former Brown & Williamson cigarette factory in Petersburg. Richmond-based Franklin Development Group bought the 282,000-square-foot building for a reported $3.5 million and plans to establish a mixed-use development featuring about 150 loft-style apartments, retail and commercial office space.
Chapline says the deal will help revive Petersburg’s downtown, which in recent years has seen many historical buildings adapted for residential and commercial uses in the Old Towne area.  These projects include upscale apartments and condominiums. Yet, as Chapline notes, there’s always “room for growth.” With two major projects in its backyard, now is the time for local businesspeople to keep the momentum going. 

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