By Jack Rogers
From the January/February 2019 issue
When a state snares not one but two of the most coveted projects of the year, attention must be paid. When one of those projects already has been hailed as the “Deal of the New Century”—and it cements that state’s reputation as a leading high-tech powerhouse—it’s time to take a closer look.
Okay, we’ll override the spoiler alert and say it loud and clear: Virginia is Business Facilities’ 2018 State of the Year.
“Virginia snared more than $5.5 billion in capital investment for its top two projects, and its top five job-creation efforts netted nearly 28,000 new jobs in a diverse and well-executed growth strategy that has made VA a high-tech force to be reckoned with,” said BF Editor in Chief Jack Rogers, in his announcement of Virginia as the winner of BF’s top honor for 2018.
Rogers noted that VA previously has been a perennial contender for BF’s top honor due to its proximity to Washington DC, making it an attractive location for major corporate headquarters. In recent years, the Commonwealth has invested in fiber-optic networks that have made Northern Virginia the nation’s leading data center hub.
“The 21st-century infrastructure that Virginia has meticulously installed will serve as a fertile root system that will nurture a lush forest of high-tech enterprises in the Commonwealth for years to come,” Rogers said. “Virginia not only is ready to compete in the emerging high-tech battleground—it shows every intention of dominating the field.”
When Amazon launched an unprecedented bidding contest across North America for its HQ2 project—which promised a $5-billion capital investment and at least 50,000 least 50,000 new jobs—Northern Virginia and the Washington DC Metro area were on everyone’s list of top contenders for a prize that instantly became a bidding frenzy involving 238 locations that responded to Amazon’s unusual RFP.
But on the eve of what everyone expected to be the announcement of a single winning location for HQ2, Amazon boss Jeff Bezos abruptly decided to—big surprise here—think outside the box. Bezos bisected the HQ2 project; a few weeks later, Amazon announced that locations in New York City and Northern Virginia would each get a share of HQ2. [Both of the winner locations shared our Gold Award as 2018’s Deal of the Year. Click here for an important update.]
Virginia’s HQ2 victory was secured by a site directly across the Potomac River from Washington that had been renamed National Landing shortly before it was entered in the HQ2 sweepstakes.
Straddling the Crystal City neighborhood of Arlington County and the City of Alexandria, National Landing contains more than 17 million square feet of existing commercial space and 150 acres of developable land. According to the Virginia Economic Development Partnership, National Landing offers “the rare combination of a massive site in a vibrant, transit-rich, urban location.
The ultra-high-profile HQ2 victory was the second volley in an impressive one-two punch that also saw Micron announce in August a $3-billion expansion of its semiconductor complex in Manassas, VA. Micron CEO Sanjay Mehrotra told Reuters the expansion would meet the burgeoning demand for more powerful computer chips that run collision-avoidance systems and other semi-autonomous automotive systems, a global market expected to reach $6 billion by 2021.
Northern Virginia is now the largest data center market in the U.S. In the 1960s, the federal government began experimenting with wide-area fiber optic networking in Virginia. In the past decade, the proximity to major government agencies has driven the voracious demand for greater data center capacity in the Northern VA region. Colocation requirements in the Northern VA market generally are higher than other U.S. markets. Major consumers of data bandwidth include the aerospace, financial, managed hosting and telecomm sectors.
Digital Realty Trust, the biggest data center landlord in the region, recently announced the purchase of a 424-acre plot next to the Washington Dulles International Airport.
Hyperscale cloud platforms have been coming to Northern VA for several years due to the nexus of networks that interconnect through VA data centers; these platforms also are attracted by low utility rates. Large landlords like Digital have secured large-capacity, long-term leases with online giants including Amazon, Facebook, Google, and Microsoft.
According to Jones Lang LaSalle’s 2Q 2018 data center market report, net absorption of 166MW of data center capacity during the first half of 2018 exceeded all previous leasing records in Northern VA; this is more than full-year absorption of 115MW in Northern Virginia in 2017, the prior record year.
TRADITIONAL INDUSTRIES ALSO ARE GROWING IN THE COMMONWEALTH
“Our State of the Year honorees usually have one thing in common,” Rogers said. “They can walk and chew gum at the same time—which in this case means they’re upgrading traditional industries while accelerating emerging growth sectors.”
New investments in traditional industries in VA in 2018 included paper and packaging leader WestRock’s decision to put $248 million into its paper mill and extrusion facilities in Alleghany County.
Essel Propack, a global specialty packaging company serving the consumer goods and pharmaceutical sectors, will invest $31.2 million to expand its manufacturing facility in the City of Danville, VA. The Mumbai, India-based company also considered Brazil and Argentina for this project, which will create 45 new jobs.
“Essel Propack America is committed to community outreach around the world as a part of our Community Involvement Strategy, which focuses on contributing to and supporting the communities where we work,” noted Essel Propack Head of Finance Anindya Bagchi. “This region offers many advantages, including low operating costs and a talented workforce that has allowed us to grow and innovate at our facility.”
Essel Propack produces a wide range of multilayer collapsible tubes and laminates used for packaging in personal care, food, pharmaceutical and industrial applications. Essel Propack employs over 2,850 employees worldwide, including 252 at its Danville facility. The expansion will allow the company to double production at the Danville plant through the introduction of new Super High-Output tubes (SHOT) technology.
Smyth County Machine, LLC, a full-service machining and fabrication facility, will invest $2.1 million to add equipment and expand its product line in Smyth County, VA. The company also considered Tennessee for the project, which will create 35 new jobs.
“Virginia is a manufacturing-friendly, technology-driven state that fosters business integration and, through its team of state, regional and local partners, supports business owners with a multifaceted range of resources,” said Smyth County Machine President and CEO Greg Sanders. “The economic development professionals are agile, quick to respond, accommodating and make Virginia attractive by collaborating with local partners to offer training assistance and financial guidance. Smyth County is the place we want to be, and we are blessed to be in a position to provide jobs to the hardworking people of Southwest Virginia.”
The Virginia Economic Development Partnership (VEDP) worked with Smyth County, Virginia’s Industrial Advancement Alliance and the Virginia Tobacco Region Revitalization Commission to secure the project for Virginia. Gov. Ralph Northam approved a $100,000 grant from the Commonwealth’s Opportunity Fund to assist Smyth County with the project. The Virginia Tobacco Region Revitalization Commission approved $200,000 in Tobacco Region Opportunity Funds for the project. Smyth County Machine, LLC is also eligible to receive state benefits from the Virginia Enterprise Zone Program, administered by the Virginia Department of Housing and Community Development, as well as Sales and Use tax exemptions on manufacturing equipment. Funding and services to support the company’s employee training activities will be provided through the Virginia Jobs Investment Program.
“Smyth County Machine has been creating jobs and stimulating the economy of Southwest Virginia for more than 40 years, helping make this region a hub for the Commonwealth’s manufacturing industry,” said Gov. Northam. “We are pleased that this homegrown company has decided to expand and add new jobs in Smyth County, which will provide opportunity for our skilled workforce and result in a significant local economic impact.”
Virginia also excelled as a prime destination for foreign direct investment, including an announcement from Press Glass, the largest independent flat glass processing operation in Europe, to establish its first Virginia manufacturing facility in Henry County.
A TOP CHOICE FOR CORPORATE HEADQUARTERS
As its selection as an Amazon HQ2 winner showcases, Virginia continues to be a prime location for corporate headquarters. In April, Gerber Products Company announced it will invest $5 million to relocate its U.S. headquarters from New Jersey to the new U.S. corporate headquarters operation of its sister company, Nestlé USA, in Arlington County, VA.
Nestlé USA now occupies more than 250,000 square feet at 1812 North Moore Street, the tallest building in the metropolitan area. The project will create 150 new jobs.
“Closer proximity to Nestlé USA’s new headquarters in Arlington will provide efficiencies that will be reinvested in our people, products and production to fuel growth,” said Bill Partyka, President and CEO of Gerber. “Northern Virginia also offers a great quality of life for our employees and provides access to strong talent for our current and future needs.”
The VEDP worked with Arlington County Economic Development to secure the project for Virginia. Gov. Northam approved a grant in the amount of $862,500 from the Commonwealth’s Opportunity Fund to assist the County with the project. The company is also eligible to receive a Major Business Facility Job Tax Credit.
Funding and services to support the company’s employee training activities will be provided through the Virginia Jobs Investment Program.
“One year after Nestlé announced its U.S. corporate headquarters relocation to Arlington County, this global giant is bringing another top household brand to Virginia,” said Gov. Northam. “The company’s decision to reinvest and grow in the Commonwealth is a powerful testament to the advantages of our strategic location, infrastructure and top-rated talent, and reaffirms that Virginia is a prime location for headquarters operations. We are proud that Nestlé USA calls Arlington County home, and we look forward to a successful corporate partnership with Gerber.”
VA Secretary of Commerce and Trade Esther Lee added, “Gaining the headquarters of the iconic Gerber brand is an important win for Arlington County and the Commonwealth, and we are thrilled to welcome Gerber to Virginia’s corporate roster. Northern Virginia has proven to be an ideal home for a company of Nestlé USA’s size and caliber, and we are confident that Gerber will also thrive in the region.”
Blackboard Inc., a leading education technology company for teaching, learning and student engagement, recently announced it will relocate its global headquarters from Washington, DC to Reston, VA this year. The new location will combine the company’s existing DC and Reston offices into a new modern office in the heart of Northern Virginia’s tech corridor.
“We are excited to bring our Metro DC area workforce together into a new global headquarters in the vibrant Northern Virginia tech corridor,” said Blackboard Chairman/CEO Bill Ballhaus.
Blackboard’s Washington metro area workforce currently is divided between its DC and Reston offices. By bringing together the company’s local employees in one central tech hub, Blackboard will create a new, exciting and more vibrant work environment that will continue to fuel a culture of creativity, innovation and collaboration.
Blackboard evaluated office space options across the region for its global headquarters, considering best value, convenience to public transportation, commuter routes and airports, and lifestyle amenities like dining options and stores. The company selected Reston’s Plaza America complex, located only six miles from Dulles International Airport, a short distance from the Wiehle-Reston East Metro Station, adjacent to dining, shopping and other amenities, and less than a mile to the Reston Town Center.
Blackboard joins other tech companies who have announced that they are locating their headquarters in Northern Virginia’s tech corridor.
MicroStrategy Incorporated has renewed its headquarters lease in Tysons, VA and plans to invest $6 million in capital improvements. The enterprise analytics and mobility software company also considered Washington, DC for the project, which will retain more than 800 existing jobs in Fairfax County and involves plans for an additional 300.
“We have chosen Fairfax County, considered the East Coast center of technology innovation, for its proximity to the nation’s capital, a vibrant business community, access to several international airports and Metro’s Silver Line, and an incredibly diverse and highly educated workforce,” said Michael J. Saylor, CEO, MicroStrategy Incorporated.
A pioneer in the business intelligence (BI) and analytics space, MicroStrategy provides enterprises with world-class software and expert services so they can deploy unique intelligence applications.
“The relationship between MicroStrategy and Fairfax County, Virginia has produced great benefits both for the company and for this Commonwealth,” Gov. Northam said.
The governor added, “Virginia is home to the strongest IT workforce in the nation, and the company will continue to benefit from our exceptional talent pool and technology infrastructure that continues to attract major corporate headquarters to Northern Virginia. We are proud of the Commonwealth’s continued partnership with MicroStrategy, and thank the company for choosing Fairfax County and Virginia for this important expansion.”
The VEDP worked with the Fairfax County Economic Development Authority to secure the project for Virginia. The state approved a $1 million grant from the Commonwealth’s Opportunity Fund to assist the county with the project. Funding and services to support the company’s employee training activities will be provided through the Virginia Jobs Investment Program.
VA IS READY FOR THE DRONE AGE
Virginia posted a strong showing in BF’s 2018 State Rankings Report, earning top-10 results in our Best Business Climate, Cybersecurity Employment Leaders, Drone Leaders and Workforce Training Leaders categories, among others.
In May, Virginia’s winning bid for a spot in the U.S. Department of Transportation’s Unmanned Aerial Systems (UAS ) Integration Pilot Program put another notch in the Commonwealth’s long-term effort to become the national leader in the emerging growth sector for drones.
Through the program, the Virginia team will seek expedited flight permissions from the Federal Aviation Administration to perform some of the most complex flight testing ever attempted in the U.S., according to a report in Virginia Tech Daily.
“I have been happy to work closely with Virginia Tech and the Mid-Atlantic Aviation Partnership for several years now in promoting the safe use and development of drones in Virginia,” said U.S. Sen. Mark Warner, who supported the state’s application.
“[This] award is recognition that this team has assembled some of the strongest expertise in the nation and has put forward a proposal that will prove critical to shared efforts to safely integrate drones into our communities and airspace. I congratulate the team for winning this slot, and thank Secretary Chao (U.S. Secretary of Transportation Elaine Chao) and the FAA for giving us the opportunity to continue Virginia’s leadership in this field,” Warner said.
Over the next three years, the team will explore applications of drone technology that stand to offer Virginians significant benefits, including package delivery, emergency management and infrastructure inspection. The pilot also will focus on gathering feedback from the communities where testing takes place about their experiences with the program, so that technology and regulations can continue to serve the needs of the public as they evolve.
Virginia’s successful bid was led by the state’s Innovation and Entrepreneurship Investment Authority and the Center for Innovative Technology. The Virginia Autonomous Systems Center of Excellence, the Virginia Department of Aviation, the Virginia Commercial Spaceflight Authority, the Virginia Department of State Police, the Virginia Department of Transportation, the Virginia Department of Emergency Management and Virginia Tech round out the list of state organizations involved.
The state’s proposal was bolstered by support from a bipartisan coalition in Congress, including Sen. Warner and Reps. Bob Goodlatte, Morgan Griffith and Barbara Comstock.
The day-to-day operations of the program in Virginia will be managed by the Virginia Tech Mid-Atlantic Aviation Partnership (MAAP), which has accumulated significant expertise running one of only seven federal test sites for unmanned aircraft systems. The organization has built a reputation for facilitating groundbreaking testing while upholding the most rigorous standards of safety.
“The days aren’t far off when millions of drones will be flying in the airspace,” said Mark Blanks, MAAP’s director. “When you’re looking at an expansion of that scale, it’s critical to make sure it’s being handled carefully and safely. We’re grateful to the DOT and the FAA for creating this program, which recognizes the benefits drones have to offer and seeks to identify ways to balance the needs of operators and the public. It’s a perfect fit with the safety case work we’re known for, and Virginia’s team is a great one to take it on.”
Corporate partners joining Virginia include Project Wing, Intel, AT&T, Airbus Aerial, State Farm, Dominion Energy, Sinclair Broadcast Group and HAZON Solutions. Six VA counties—Buckingham, Cumberland, Loudoun, Montgomery, Prince Edward and Wise—participated in the proposal and are poised to become future hubs of innovation for drone technology.