HANOVER -- Despite a challenging set of circumstances that included a national pandemic and a significant economic downturn, Hanover County continues to attract new business and commercial investment to the county.
More importantly, Hanover County Economic Development continues to focus on a growing community of existing businesses and has expanded those efforts during the recent COVID-19 crisis.
Linwood Thomas, Economic Development director, presented his 2020 annual report to the Hanover County Board of Supervisors late last month, and, despite obstacles, the recap revealed positive trends that were interrupted, but not halted, by the pandemic.
“Like other departments, we quickly had to pivot when the COVID-19 epidemic hit. Within a week, we had a website up with local, state and federal resources,” Thomas said. “That website has seen more traffic in five months than any of our other announcements or web pages in the past five years.”
The department quickly partnered with local chambers of commerce and distributed PPE (personal protective equipment) to more than 400 local businesses, and created an app to link local residents looking for takeout options with local restaurants.
Through the county’s small business assistance program made possible by CARES funds, the department was able to assist 58 businesses with $270,000 in financial grants.
Thomas said the pandemic did limit face-to-face meetings with potential investors, but increased use of Zoom-type meetings rose dramatically and actually established new avenues of marketing contacts.
“Some of these things may stay for good,” Thomas said.
Over the last five years, commercial real estate values have increased 15%, 5% of that occurring in the past year. That increase amounts to about $150 million in additional revenue for the county.
Thomas accredited those increased assessments to a strong economy and Economic Development’s continued efforts to attract and land projects.
“We’d like to think that we’ve played a small role in that because we’ve added additional projects to the tax rolls,” Thomas said.
While some localities are struggling to attract and maintain office space clients, Hanover’s market has avoided those major downturns due to the prevalence of medical office units.
“We continue to see a decline in vacancy rates,” Thomas said. “Most of office space is medical office so we don’t have a lot of general office space so I think that’s the reason that component is very strong.”
Retail vacancies did increase slightly during FY 2020, rising from 2.1% to 2.8%, according to statistics that rely on the number of businesses maintaining leases.
“That doesn’t mean that people aren’t struggling in the retail space. What is does mean is that those leases are still in place,” Thomas said.
He said it will take an additional six to eight months to fully assess local impacts on retail space.
The county also has engaged in an ambitious effort to increase building space for industrial investment. Thomas said those efforts are paying off and the county has more options for prospective industrial investment.
“Through our speculative building program, we have been able over the past 18 months to develop approximately one million square feet of new space …. and a majority of it is being leased up,” Thomas said.
Regarding unemployment and labor force statistics, Hanover began 2020 with a historically low unemployment rate of 2.4 percent. During the pandemic, it spiked at about 8.9%, but has steadily declined to its current 4.4% rate.
Thomas said 1,500 new jobs were added last year, but most of those gains were negated by the spikes in unemployment during the pandemic.
Annual salaries in the county have enjoyed a steady increase during the past five years, enjoying a 20% percent increase over that period, and recording a 2% increase in the 2020 report.
“At the start of calendar year 2020, unemployment rates were hovering at all times lows of 2.4% and that spiked at its highest point in May during the pandemic at 8.9% but in the last two months has receded to 4.4%, which, by most Federal Reserve economists, is considered full employment,” Thomas said. “We do not know what the coming months will bring with virus itself but what we can say today that Hanover County's unemployment rate is well below most localities in the entire Richmond region except for New Kent and Powhatan counties, which are currently at 4.2% and much smaller jurisdictions by population."
Thomas said his office continues to make investments in site readiness, and added 1,100 acres of tiered sites during 2020, and said developing areas where commercial development is planned is essential to continued economic development in the county.
Thomas said there is less than 600 acres of commercial property that is classified above Tier 3 available in the county, and there is a need to continue site ready improvements on commercial tracts.
Last year, Thomas’ office announced more than 230 million of new business investment in Hanover County, but Thomas cautioned those investments only yield returns when they are up and running.
“They are just announcements until they begin to pull commercial construction permits,” he told the supervisors.
The report notes 87 new ventures or existing business expansions during the past year, a 35 percent increase from the prior year.
“Over the last fiscal year Hanover County has continued to see significant growth in many of its key industry sectors. This does not discount the fact that some sectors like the retail and hospitality industries similar to most localities across the Commonwealth and Nation are still struggling,” Thomas said.
By far, the biggest of those announced projects was the construction of a distribution center by Rochester, New York-based Wegmans.
“It did receive all the necessary local approvals, but at the end of the day this project is not done,” Thomas said. “It’s really not done until the doors open and the project is trying to get through the State Water Control Board regarding wetlands permitting and we don’t know what the outcome of that will be.”
Bon Secours Memorial Regional Hospital announced a $52million expansion that also will provide additional jobs, as well as the new Virginia ABC (Alcohol Beverage Commission) facility and Department of Forensic Science headquarters.
In addition to an expanding local commercial environment, Thomas said Hanover is garnering inquiries from an international market with 95 prospective hits in the past year from foreign countries.
He also noted a continuing positive trend in agribusiness and said Hanover’s 570 farms continue to provide a stable and vital component in the county’s economic development picture.
“Agri-business generates almost $200 million a year in local economic impact and thousands of jobs,” Thomas said.
Despite a significant drop in regional tourism due to the pandemic, Thomas said lodging tax revenue in Hanover was down only 20 percent from the preceding year.
He conceded that the closing of King’s Dominion will affect overall visitor numbers for the year, but those figure won’t be available until the end of the calendar year.
Thomas estimated those tourism visits could be off as much as 30 to 40 percent by next year.
Even with the downturns and unknown consequences regarding the pandemic, Thomas said commercial development in Hanover County remains on track.
“"Overall, the local economy exceeded expectations for the fiscal year FY-20,” Thomas said. “Commercial construction permits totaled over $61 Million which once again exceeded last year's figure which was the largest single year on record. The County also added over 1950 net new jobs in FY-20 which is the second strongest year on record since tracking began over 15 years ago."