CORPORATE OFFICE LOCATION SEARCHES AND THE CASE FOR HAMPTON ROADS: A SITE SELECTION CONSULTANT’S PERSPECTIVE*
Why Hampton Roads, Virginia adds value for Financial Transaction Processing
Hampton Roads, Virginia, with a population exceeding 1.7 million, is the largest metro between Washington, DC and Charlotte, NC. Connecting the Atlantic Ocean with the Chesapeake Bay and James River, this waterborne region comprises 17 localities. The Hampton Roads Alliance represents 11 of these including the cities of Virginia Beach, Norfolk, Newport News, Chesapeake, Poquoson, Suffolk, Franklin, Hampton and Williamsburg and the counties of Southampton, James City, York and Isle of Wight. Hampton Roads boasts a vibrant, diversified economy in the office sector, including financial services, headquarters, and other corporate functions.
Several well-regarded colleges and universities, including William & Mary, Old Dominion and two historically black colleges and universities, attract a diverse student body and faculty, both nationally and internationally as well as being important players in innovation across a spectrum of leading technologies. These institutions, along with local community colleges, provide an excellent source of talent within Hampton Roads. Generating more local job opportunities for graduates is an important economic development priority.
Hampton Roads’ proximity to the nation’s capital plus easy access to the Northeast corridor are geographic assets. These, in combination with a deep talent pool, business and living costs far lower than the Washington to New York City corridor, and welcoming state and local governments add up to an impressive value play for the many companies who have set up office hubs in the region.
Hampton Roads has a robust business services and solutions ecosystem, and a track record of successful expansions and relocations. These span an array of industries and functions, including financial transaction processing. The competitively priced talent pipeline is far from saturated, allowing ample room for companies to establish new office hubs.
* In April 2020, the site selection firm of Wadley Donovan Gutshaw Consulting (WDGC) began a 6-month study assessing the locational resources of Hampton Roads for corporate office entities that could capitalize on the region’s talent pool and other assets. Financial Transaction Processing was one of the sectors identified as a good fit for Hampton Roads. WDGC was selected to perform this study because they have been advising corporations on business location strategy for four decades and have performed numerous site selection assignments involving corporate offices.
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HAMPTON ROADS, VIRGINIA
Hampton Roads: Where critical office project requirements can be met at a price point that is essentially unmatched by peer metropolitan areas, along with offering an attractive, affordable, coastal lifestyle.
Financial transaction processing is an excellent fit for Hampton Roads’ talent and office market assets. Staffing requirements of 500+ headcount can be readily accommodated without unduly straining local labor market supply.
Hampton Roads has a strong financial skills ecosystem. The region has been successful with project expansions based on the local talent pool, quality of life, cost advantages and reasonable access to Northeastern cities, focused particularly with respect to and near New York City.
HAMPTON ROADS AS A FINANCIAL TRANSACTION CENTER OF EXCELLENCE
• Scalable talent (500 +)
• Northeast proximity
• Lengthy track record in siting corporate operations
• Pool of recent graduates of local 4 and 2 yr. schools, back to middle office skills
• Overall telecom bandwidth
• Moderate cost for Tier 2 metro
• Access to important investment sources (DC to NYC-NJ)
• Quality of life-transfer appeal
• No tax on financial transactions
• Property/sales taxes
• Size of executive talent pool
• Often not on the radar screen
• Multiple office submarkets and some available space in the 50,000+ SF range
• Air service
• Economic incentives
• Limited FinTech ecosystem (so focus more on utility function, servicing, collections and project management)
• Likewise, local cybersecurity and data analytics, not financial services focused
• Limited very large block space at present
• Commuter rail service
SNAPSHOT OF KEY ADVANTAGES
GOOD BENCH STRENGTH FOR THE CORE OCCUPATIONAL PROFILE FOR FINANCIAL TRANSACTION PROCESSING:
Skills base and scale present but not overheated. Although 2020 was economically challenging for many segments, office and financial skills employment remained at least stable to growing nationally. Labor market challenges of the previous few years could return at the national level – the Hampton Roads region stands out as a market with overcapacity in the skills and talent pipeline needed in this segment.
GEOGRAPHIC
PROXIMITY
– NORTHEAST CORRIDOR:
Hampton Roads is within driving distance of Northern Virginia and Washington and convenient to the large financial and corporate centers of the Northeast. The Mid-Atlantic culture is familiar to Northeast decision makers and relocatees, an important intangible. Combined with moderate costs not easily matched within 300 miles of Manhattan, the region is far enough to provide a distinct operating culture, yet close enough to attract critical relocating talent (within a weekend commute zone) from the source geography, whether it be New York City, Northern New Jersey, Connecticut, Philadelphia or even as far as Boston. All of these areas are served non-stop from Norfolk International Airport, and some are drivable in a pinch.
TRACK RECORD (SIZABLE PRESENCE OF RELATED CORPORATE FUNCTIONS SUCCESSFULLY OPERATING HERE): Companies often base decisions on paths laid by others – the safe bet play. Companies from the Northeast including ADP, The New York Times, Chubb, Avalon Bay and Avis all have sizable operations in Hampton Roads. Locally grown and Fortune-ranked companies headquartered locally include Dollar Tree, Dominion Enterprises, Portfolio Recovery Associates, Towne Financial and others. Companies establishing new operations in Hampton Roads can be confident that the region offers the assets necessary to enable them to operate successfully.
OPPORTUNITIES FOR OFFICING ACROSS THE SUBMARKETS: One of the outstanding assets of Hampton Roads is the flexibility of officing opportunities across multiple submarkets, each offering a variety of price points, amenities and local talent nuances.
SALARY COST ANALYSIS + SAVINGS
For a 500-employee financial transaction operation, the salaries in Hampton Roads offer significant cost advantages. For example, in comparison to New York City, the financial professional / clerical salary median is 29% lower in Hampton Roads, resulting in annual salary costs savings of over $12 million for a 500-person operation. Over 10 years, this savings could easily exceed $100 million, prior to consideration of lower real estate costs, taxation, and other costs of doing business.
The region can support 500+ headcount operations focused on financial transaction processing occupational employment within a 30-minute drive of most sites. Notably, location quotients are strongly supportive of this occupational segment with concentrations 16% - 20% above the national proportion, suggesting a substantial but not oversaturated talent base.
Hampton Roads is geographically compact, providing flexibility for companies to consider sites in varied environments and provide access to the bulk of the area’s talent base and other locational resources within a 30-minute commute.
LOCATION SOLUTIONS IN CONCLUSION
What makes Hampton Roads a distinctively attractive location for financial transaction processing?
1. A deep talent pool, both experienced and entry level, exceeds local demand – an enviable position in times of national talent shortages. This talent pool includes:
Over 47,000 experienced workers
A white-collar underemployed base, for entrylevel needs, exceeding 87,000
Roughly 26,000 four-year college graduates & 4,000 two-year per annum
A supplemental labor reserve of some 15,000 military personnel discharged each year
2. Companies now operating in Tier One metros such as Boston, New York, and Washington D.C. could realize payroll savings of up to 25%
3. Competitive demand for requisite skills is modest, so that supply / cost conditions will remain favorable well into the future
4. Hampton Roads comprises many submarkets offering varied combinations of operating environments and skill mixes
5. Office space is available at modest cost compared to major metropolitan areas
6. A sophisticated telecommunications infrastructure enables companies to introduce the latest technology in increasingly sophisticated operational processes
7. Hampton Roads lies within a convenient travel radius of Mid-Atlantic / Northeast metros and has nonstop air service to a number of major gateways
8. Virginia does not levy a tax on financial transactions processing
9. The state and local communities have a demonstrated pro-business track record and are eager to support this industry
10. Unique quality of life attributes and low cost of living for a metro of its size enhance national recruiting of executive and professional talent
Hampton Roads presents a compelling business case for corporate job investment in value-additive office operations including financial transaction processing, coupled with an affordable lifestyle and proximity to major Northeast and Mid-Atlantic cities. Yet, even with a thriving middle and back-office ecosystem, the region has not fully capitalized on these inherent advantages, creating opportunities for new entrants to successfully staff operations at moderate costs