By Peter Galuszka
By Peter Galuszka
by James A. Bacon
While most commercial real estate markets across the United States are slowly recovering from the recession, office vacancies in the Washington metro area ticked higher over the past year, to 13.8% in the first quarter, according to the Wall Street Journal. Clearly a sequester-related decline in federal spending was partially responsible, particularly in Northern Virginia, home to the Pentagon and locus of the defense industry, where vacancies hit 15.8%.
But that’s not the whole story. Buried in the article was an anecdote that should send shivers down the backs of commercial property owners, real estate brokers and local government officials everywhere — not just NoVa, but everywhere — who depend upon commercial property tax revenue to balance their budgets.
Booz Allen Hamilton Holding Corp. signed up in 2011 to take one quarter of the space in MetroPark VI in southeast Fairfax County near a National Geospatial-Intelligence Agency base. But late last year, the WSJ reports, the firm reversed course. The company halted construction and put its entire space on the market for sub-lease. The reason for the move? Not just defense cutbacks.
James Fisher, a spokesman for Booz Allen, said the decision to sublease at least a portion of the space came as more employees have been working from home or at clients’ offices, and as the company has been looking to trim its real-estate footprint.
Companies everywhere are realizing that they have way too much office space. Given the increasingly mobile nature of work — cell phones, laptops, Wi-Fi, the Cloud — more and more people are conducting work at home, at Starbucks, on the road, or in client offices…. just as Fisher said. Mobile work has been around for a while. What’s different now is that building-automation systems have reached the point where it is possible to measure office utilization far more easily and less intrusively than before. Energy-efficiency systems installed to eek energy savings from HVAC and light bills keep track of when offices are occupied and when they’re not in order to adjust lighting and temperatures. What many companies are discovering is that offices are literally half empty most of the time.
Other than payroll, office buildings represent one of the largest cost centers for service-sector businesses. Increasingly, companies are realizing that they can save loads of money by utilizing their work space more efficiently. This shift in thinking is a secular trend arising from new technologies, having nothing to do with the level of federal spending, and will persist regardless of what happens to federal spending.
As an aside, the Journal noted that tax revenues from commercial properties in Fairfax County are coming in $33 million short of expectations this year. Revenues grew only 0.1%, far less than the 6% anticipated.
If I were a commercial property owner in the Washington area, I would be very afraid.
If I were a Northern Virginia government official dependent upon property tax revenues to balance my budget, I would be very afraid.
If I were anyone, anywhere, counting on metropolitan growth and development patterns to continue on the same trajectory as the past six decades, I would be very afraid.
by James A. Bacon
Here’s the good news about the Amtrak Station at Staples Mill in Henrico County: The number of passengers increased 8% last year to 345,000, making it the busiest rail station in the South.
Here’s the bad news: The suburban station’s 288-space parking lot is totally swamped. On any given day, as many as 50 vehicles park on curbs, driving lanes, grassy areas and other non-parking spaces, according to Peter Bacque’s article this morning in the Times-Dispatch. Passengers have encroached upon the lots of nearby businesses, who have resorted to erecting signs threatening to tow.
So, what’s the solution emanating from the Department of Rail and Public Transit (DRPT)? Enlarge the parking lot!
Yes, the first instinct of the department in charge of encouraging rail and public transit in Virginia is to make it easier to access the station by car. Thelma Drake, DRPT director, told Bacque that the department would like to acquire enough land near the station to double the parking. “We hope there are property owners in the general area interested in selling. We will not use eminent domain,” she said.
Somewhat more encouragingly, the state also is working with an outside vendor to provide a shuttle service between the Staples Mill station and a nearby park-and-ride lot. But it’s discouraging that DRPT’s first instinct is to spend more money and dedicate more land to parking.
The parking predicament at the Staples Mill Station creates an opportunity to think differently about things. A couple of ideas…
Charge more for parking! The state charges only $5 per day for parking at present. Has anyone at DRPT heard of the law of supply and demand? When demand exceeds supply, the price needs to rise! This is not a difficult concept, people!! I know that’s not the ideal solution for train lovers, who worry that a higher parking price will discourage train ridership. But doubling the charge to $10 per day still would make it cheaper than airport parking. Moreover, when the financial return on parking rises, parking supply tends to materialize. Perhaps it would become profitable for a private vendor to run a shuttle. Maybe some of the neighboring businesses would lease out some spaces, which, judging from Google maps, aren’t exactly filled to the brim with cars.
Rezone the area around the Staples Mill station. The land around the station is clearly under-utilized with nothing but low-density commercial right now. Among other consequences, Henrico County is not generating nearly the tax revenue that it could from the presence of an extraordinary asset, the most heavily used inter-city rail station in the South.
DRPT should initiate a conversation with Henrico County along these lines: “Dudes, would you like to increase your tax base without incurring a lot of additional infrastructure costs? Why don’t you try rezoning the land around the station?”
The Staples Mill Station represents a tremendous opportunity for both DRPT and Henrico County. Instead of having a station surrounded by the likes of Miles Auto Services, Gundlach Plumbing, Heritage Antiques and Anthony George Steak House, why isn’t it encompassed by walkable, transit-oriented development including mid-rise offices and apartment buildings? Professionals who travel frequently to Washington, Philadelphia or New York might place a premium on convenient access to the station. Not only would higher-density development stimulate a built-in market for the Amtrak service, it would support the construction of structured parking that potentially could solve the station’s parking problem.
Staples Mill is an under-utilized six-lane boulevard that could easily handle additional traffic generated by higher-density development. Such a project would be no-pain, all-gain for Henrico. Why aren’t Henrico supervisors pursuing re-development around the train station to bolster the county tax base instead of pushing for a meals tax that nobody wants? Because they are stuck in a rut of out-of-date thinking, that’s why. As a citizen of Henrico and Virginia, I’m not willing to tolerate such mental lethargy anymore.
As much as it pains me to serve Virginia-bashing fodder to Don the Ripper and PeterG on a platter, I follow the facts and evidence wherever it leads. And the findings from a new paper published by Filipe R. Campante and Quoc-Anh Do, “Isolated Capital Cities, Accountability and Corruption: Evidence from US States,” do not paint a pretty picture of the Old Dominion.
It is the hypothesis of Campante and Do that there is a strong correlation between the geographic isolation of a U.S. state capital and the level of corruption in state government. The authors argue that geographic isolation, as measured by the average log distance of the population to the capital, results in less media oversight, a lower level of voter interest and a greater propensity for bad guys to engage in corrupt practices. They measure corruption as the number of federal convictions for corruption-related crimes relative (1976 to 2002) to the size of the population.
The authors rank the 10 most isolated state capitals and 10 least isolated, using two measures, and Virginia falls into neither basket. Presumably, Richmond lies somewhere between the two extremes regarding geographic isolation. Richmond itself is only the third largest population center in the state. On the other hand, the capital is reasonably centrally located vis a vis the statewide population distribution. Residents of Wise County famously say that they are located closer to seven other state capitals than Richmond… but Wise and other counties in the far southwest comprise only a tiny percentage of the total population.
There are two reasons to be distressed by the graph above, which is taken from the study. First, by my count, 32 other states have a lower per capita-adjusted rate of corruption than Virginia. We’re not up there with Louisiana, New York or Illinois, but we’re not the squeaky-clean place that so many would like to think we are.
Second, adding insult to injury, our corruption level is significantly higher than the level that would be predicted by geographic isolation alone (the brown line). In other words, there are other, unidentified factors at work contributing to Virginia’s corruption. I’m guessing that Don could suggest a few candidates.
The only potentially mitigating aspect of this study that I could find is the fact that the corruption-conviction data are old — more than 10 years old. It is conceivable that conviction rates in Virginia have declined since then. But, then, it is also possible that they have increased.
I would be interested to see the study’s Virginia-related data. Do voter participation rates tends to decline with greater distances from the capital? Do Virginians tend to be less interested in state politics in the larger media centers of Washington and Hampton Roads, where newspapers might have greater resources to identify corrupt dealings? Inquisitive minds would like to know.
Are warming seas forcing fish to migrate to cooler waters?
That’s the thrust of an intriguing report in Nature magazine as covered in this morning’s Post. The impacts on the seafood industry are already playing out. New England fishermen after cod and haddock report having to move farther north to catch them.
There are impacts in the Mid-Atlantic as well. According to The Post, warmer waters from Delaware to Virginia are pushing Atlantic surf clams to move farther north, and this has resulted in the closure of a clam processing plant in Virginia. Atlantic surf clams are a popular variety used for fried dishes or in chowders
I tried and failed to find out what plant it was. I did find one that was shut down in recent years near Mappsville on Virginia’s Eastern Shore but could not confirm the reason. The firm, Eastern Shore Seafood, was bought by Maryland-based Seawatch International which later shut the plant down.
I spoke with Mike Hutt, executive director of the Virginia Marine Products Board who had seen The Post story but couldn’t confirm details of any related plant closings or the impact of warming waters regionally
It would seem that warmer waters will add further stress to the region’s troubled seafood industry, especially for certain species. I’m not certain how it would affect favorites such as blue crabs that seem to thrive in tepid waters much farther south or oysters, which are struggling make a comeback in Chesapeake Bay. My guess, and I am no expert, is that other prized species such as bluefish and rockfish (striped bass to Northerners) might change their migration patterns because of climate change.
If the Nature research is correct, the fish may be sending us a powerful message that many haven’t figured out yet.
by James A. Bacon
Outsourcing management of Virginia’s five traffic operations centers will save about $47 million over the life of the six-year contract and accelerate the adoption of state-of-the-art technology and best management practices. So says Dean Gustafson, state operations engineer for the Virginia Department of Transportation.
In a presentation yesterday, Gustafson briefed the Commonwealth Transportation Board (CTB) on the path-breaking contract, which, he said makes “Virginia very much a leader” among the 50 states in the field of traffic operations management.
The Virginia Department of Transportation announced the deal with Serco, Inc., last week, and the CTB formally approved the contract yesterday.
By replacing 11 existing contracts, the Serco contract allows VDOT to achieve economies of scale, achieve consistency of performance across the state and drive innovation, Gustafson said. The hand-off to Serco will take place over 180 days in the second half of this year, and the England-headquartered company will phase in its software over 24 months.
The most obvious benefit will be inter-operability of the five traffic-management centers, which monitor traffic flow, clear accidents and keep motorists informed of traffic conditions on Virginia highways. At present, only the Salem and Staunton offices are inter-operable. The centers in Northern Virginia, Richmond and Hampton Roads have incompatible systems that restrict their ability to work together. VDOT deems inter-operability essential because it allows the centers to back up one another in the event, say, that a severe thunderstorm knocks down a lot of trees and overwhelms a particular center with phone calls.
But Serco, which runs state-of-the-art centers across Europe and Asia, brings other strengths to bear, including predictive analytics that give its technicians the ability to understand 30, 60 or 90 minutes ahead how weather-related or other events might affect particular corridors and intersections. That knowledge allows them to place service vehicles in optimal locations for rapid response.
Serco also will provide advanced safety-patrol vehicles with specialized tools and capabilities, such as the ability pull or push a stranded car out of a traffic lane. The contract’s performance standards will incentivize Serco to clear traffic accidents and broken-down cars as rapidly as possible. Such incidents are the cause of the worst traffic pile-ups around the state.
What makes the Serco contract special, VDOT CIO Murali Rao explained to Bacon’s Rebellion, is the comprehensive nature of the contract and the programmatic approach to managing traffic across Virginia. Having a single vendor also allows clearer lines of responsibility. “We have one person to hold accountable,” he says. The contract contains metrics by which Serco’s performance can be judged. Those metrics will hold Serco to a higher standard than VDOT is able to achieve today.
The technologies and management practices that Serco will introduce to Virginia are routine in its overseas operations, said Michael Plymack, Serco senior vice president, but this contract will put Virginia in the lead in the United States. “Virginia is the first state to integrate these types of services.”
There’s an apocryphal story about a big corporation that assigned its scientists and nutritionists to concoct the healthiest dog food they could devise. After great effort, they unveiled the product. This dog food, they announced, would keep dogs fit and slender. It would give them thick, smooth hair. It would take away their bad breath. There was just one problem…. the dogs wouldn’t eat it.
I remember that story when I hear the claims, mainly from boosters of the Washington Dulles International Airport and economic developers in Loudoun and Prince William Counties, that building a $1 billion-or-more north-south corridor will stimulate the growth of the air cargo business at Dulles, creating thousands of jobs and millions of dollars in warehouse-and-distribution investment.
What if Virginia built this fantastic new intermodal highway connecting Dulles airport with points west and south for the purpose of stimulating air cargo business… and the air cargo companies turned up their noses?
Del. Bob Marshal, R-Manassas, took it upon himself to actually contact two representatives of major air cargo enterprises. He talked to a mid-level representative of FedEx at its New Jersey office. She had no knowledge of the North-South Corridor. If anyone at FedEx was open to establishing a major presence at Dulles, that knowledge had not trickled down to her.
More tellingly, Marshall also talked to Mark Alagna, vice president for corporate public affairs for UPS in the Washington, D.C., office. Said Marshall: “He told me that UPS does not support this road, that they are unaware of this road and they were not pleased that [Virginia Department of Transportation] representatives made that claim.”
If the McDonnell administration has expressions of concrete interest, Marshall said, “Please reveal your names.”
My sense is that all the talk of boosting air cargo at Dulles is purely aspirational — it’s something that Dulles officials and economic developers would like to see happen. Building the road would make it a lot easier to get a conversation going with major shippers — hey, come on down, and expand your operations here. But the McDonnell administration has provide the public no evidence that the shipping community is interested.
For all the talk comparing Dulles to the ports of Virginia in Hampton Roads as “engines” of Virginia’s economic growth, there are huge differences between the two. There is no question that the Panama Canal is expanding. There is no question that Hampton Roads has the deepest channels on the East Coast and will be the only port capable of handling fully-loaded post-Panamax ships for several years. There is no question that the shipping community is seriously interested in Hampton Roads. Whether that interest justifies an investment of more than $1 billion in public dollars to build the U.S. 460 Connector to create a second highway route out of Hampton Roads is another question. But the business potential is widely acknowledged to exist.
No such case has yet been made for air cargo at Dulles. That’s not to say that conditions won’t change and interest in Dulles won’t materialize. But given what we know now, there is no evidence whatsoever that the dogs will eat this dog food.
This quote from Del. Bob Marshall, R-Manassas, at the Commonwealth Transportation Board was just too good to bury in the longer news story I filed last night….
Here’s the context: Marshall was making the argument that the Virginia Department of Transportation and McDonnell administration had provided insufficient transparency to the approval process for the Bi-County Parkway (a key link in the North-South Corridor) and inadequate opportunities for citizens to express their opinions. He then referred to the CTB meeting itself, where only a dozen or so residents among the hundreds who had gathered in Northern Virginia meetings to protest the project, had made an appearance. Holding a CTB meeting more than 100 miles away in Richmond, in the middle of a weekday when working people affected by the project cannot in all practicality attend, he said, “is a profound disservice to citizens.”
Then he added this zinger:
Reflect on this fact and consider that America’s Founding Fathers detected the same fault in Britain’s King George: “He has called together legislative bodies at places unusual, uncomfortable, and distant from the repository of their public records, for the sole purpose of fatiguing them into compliance with his measures.”
Shades of the Tea Party? The Bi-County Parkway is giving rise to the same alliance that defeated a proposed increase in the regional sales tax a decade ago: small-government fiscal conservatives and Smart Growth-minded liberals. Governor Bob McDonnell would do well to reflect upon his legacy.
Under withering criticism for a lack of transparency, the Commonwealth Transportation Board has agreed to a one-month delay before formally endorsing the McDonnell administration’s vision for the North-South Corridor.
by James A. Bacon
In deference to a scathing letter from Congressman Frank Wolf, R-10, and personal appeals from two members of the General Assembly, the Commonwealth Transportation Board voted Wednesday to delay formal acceptance of the Northern Virginia North-South Corridor Master Plan by a month.
Any recognition of the master plan would have been purely symbolic — it represents no more than an aspirational vision for a north-south multimodal corridor west of Washington Dulles International Airport. Blocking the plan would not thwart any of the specific projects discussed within it. And the deferral was equally symbolic. Not a single member of the CTB expressed reservations of any kind about the plan. Its acceptance in June seems pre-ordained.
But in the trench warfare over new transportation projects, warring parties place great stock in even symbolic victories and defeats. And opposition to the linchpin segment of the 45-mile North-South corridor, the so-called Bi-County Parkway (also referred to as the Tri-County Parkway), is intense. The crux of the conflict centers on the alleged necessity of routing the Parkway through or around the Manassas National Battlefield Park. The interests of stakeholders as varied as the McDonnell administration, the National Park Service, Northern Virginia commuters and residents of nearby farms and subdivisions seem largely irreconcilable.
Approval of the Bi-County Parkway, which is moving along its own bureaucratic track, is not contingent upon acceptance of the North-South master plan. But accepting the master plan would confer legitimacy upon the Parkway. And that was enough to goad several Prince William County residents to travel to Richmond to address the CTB and to inspire two elected officials, Del. Tim Hugo, R-Centreville, and Bob Marshall, R-Manassas, to endure four hours of CTB tedium in order to speak on the behalf of constituents who had packed previous Northern Virginia gatherings to protest plans for the parkway.
“Normally, we can’t get 15 people to a town hall meeting. We had 400 people show up,” Hugo told the CTB. “Congressman Wolf is not a flamethrower. I’m not a flamethrower.” But both are concerned by how the project is progressing. The Bi-County Parkway, the delegate said, will create “a traffic armageddon.”
But the Parkway had its defenders, including representatives of the Loudoun County and Prince William chambers of commerce and an aide to Loudoun County Board Chair Scott York. Brian Fauls, manager-government affairs for the Loudoun Chamber, said Loudoun needs a north-south highway to improve access to Dulles airport. Like the ports in Hampton Roads, Dulles is regarded as an economic engine of the state. But unlike Hampton Roads, which is served by five existing Corridors of Statewide Significance, Dulles is served by none. The North-South corridor would remedy that deficiency.
Richard McCary, past-president of the Committee for Dulles, also pointed out that the corridor is needed to serve the massive population growth in eastern Loudoun/western Prince William projected by the Metropolitan Washington Council of Governments.
The Master Plan outlines several components to the corridor. One piece already exists — Rt. 234 (the Prince William Parkway), which runs from Interstate 95 to Manassas. The corridor would continue north past the Battlefield Park and through the rural, western reaches of Prince William County — the Bi-County Parkway — and then tie into a northern segment aligned with Northstar Boulevard in Loudoun. Additional pieces of the corridor would include an east-west link to Dulles airport and a widening of Rt. 606 on the airport’s western edge. VDOT has not yet developed a cost estimate for the projects.
The great sticking point is the middle segment where it would run along the western edge of the battlefield and through the so-called “rural crescent” of Prince William. According to the latest version of a deal negotiated between the National Park Service and the Virginia Department of Transportation, the Bi-County Parkway would align with the western half of a proposed battlefield bypass. When the Bi-County parkway is built, park authorities would close Rt. 234, a parallel north-south road that runs through the center of the park, and install unspecified traffic-calming measures on a section of U.S. 29 that runs east-west through the park. Traffic on those two roads, which park officials say disrupts the visitor experience, carry roughly 24,000 cars a day. In theory, completing the eastern half of the bypass will improve conditions for east-west commuters, but no one has identified a source of funds for that project. Continue reading.
by James A. Bacon
By 2035 the Richmond region will grow by roughly 200,000 households (435,000 people) and 200,000 new jobs. That’s a mind-numbing number for a metropolitan region with barely more than 1 million inhabitants today. But, assuming the forecast is valid, where those people wind up living and working will have a dramatic impact on the livability and fiscal sustainability of the region.
Where should they go? The Richmond chapter of the Urban Land Institute (ULI) hosted a Reality Check visioning exercise today in which teams of participants got to play God (or dictator) and decide where the housing and jobs should be located. The idea was to stimulate thinking about the choices the region faces in the years ahead. Participants indicated their priorities by placing Legos on a detailed map of the region, with each blue block representing 156 jobs and each yellow block 312 housing units. (There were also tan blocks for low-density housing.)
As readers of Bacon’s Rebellion know, I have a number of pronounced opinions on the subject. To avoid the temptation of launching into extended pronunciamentos on the subject of growth management or, worse, lunging across the table and snatching Legos from the hands of team mates, I attended as a mere observer. That’s just as well for, judging from what I witnessed, I might have popped from frustration.
While there were a number of well-informed people in attendance — I chatted with two Richmond City Council members, two senior Chesterfield County administrators, two well-known developers and a prominent land-use attorney — most of the attendees were interested local citizens. Citizen input is exceedingly important. But most citizens are ignorant of the economics, politics and fiscal realities of land use and transportation, and I found that ignorance, shall I say… frustrating.
At the same time, I found the basic instincts of the 300 or so participants to be sound. Most of the 10-person teams supported a far more compact, urban-focused development than has prevailed in the past. Richmond has been the fastest-sprawling region in Virginia, much to its detriment. If business, political and civic leaders heed the voices of the Reality Check participants, the region will head in a very different direction.
Reality Check took place in the basketball arena of Virginia Commonwealth University’s Siegel Center. Each team was arrayed around its own table containing a large map of the Richmond region showing building densities and transportation arteries overlaid by a grid of 1/4-square mile squares. The maps depicted no political boundaries. The idea was to treat the region as a single organic unit.
The first step in the exercise was to articulate guiding principles. The big themes running through the sessions included conservation of natural resources, with particular attention to the James River, regional cooperation, preservation of historic assets and mixed use development.
As I wandered from table to table, I observed a surprising commonality in thinking. Each table stacked up Legos on downtown Richmond, already the densest part of the region: both blue for commercial development and, in a departure from current reality, yellow for housing. The Innsbrook office park in western Henrico, now purely commercial, was marked consistently as a second node for mixed-use development. Chesterfield County got lots more medium-density housing. What hardly anyone found appealing was-low density sprawl. If these 300 participants had their way, the development frontier of the Richmond region would not advance one meter in over the next two decades.
Players got to demarcate road upgrades and mass transit routes by laying down orange and blue string. Admittedly, this was an exercise in visioning, not serious planning, but some groups seemed oblivious to basic fiscal principles. First, transportation infrastructure is extraordinarily expensive and, second, you don’t plan a light rail line without planning density around the friggin’ stations!
As Sidney Gunst, developer of the original Innsbrook Office Park and a devotee of Ayn Rand’s philosophy of limited government, observed, Reality Check is an exercise in collectivist thinking. Neither supply and demand nor cost and fiscal limits provided any constraint. Yet he seemed to enjoy himself nonetheless.
After the session was over, VCU students compiled the number of blue and yellow Legos placed on each grid cell on each map. The results will be entered into a spreadsheet and used to replicate a grand unified vision. ULI-Richmond will disseminate the findings to stimulate further discussion of Richmond’s land use future.