CORPORATE OFFICE LOCATION SEARCHES AND THE CASE FOR HAMPTON ROADS: A SITE SELECTION CONSULTANT’S PERSPECTIVE*
Hampton Roads, Virginia — A Logistics Center of Excellence
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 and Mid-Atlantic regions are geographic assets. These, in combination with a deep logistics and distribution industry talent pool, a robust maritime and inland transportation infrastructure, 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 companies to establish or expand logistics competencies.
Hampton Roads has one of the most robust ecosystems for logistics / supply chain activities in the U.S., with an impressive core competency in maritime transportation. The competitively priced talent pipeline is far from saturated, which allows ample room for companies to establish new logistics centers of excellence.
* 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. Logistics Center of Excellence 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.
The region is a major inter-modal transportation hub, and this hub’s driving force is the Port of Virginia, ranked among the top five ports in the United States.
With major operations in the maritime, shipping, defense and technology sectors, Hampton Roads is a globally significant place where a logistics company can recruit world class talent, drawing from the industry ecosystem, and benefiting from knowledge sharing and innovation. All of this can be accomplished at an attractive price point.
A LOGISTICS CENTER OF EXCELLENCE: THE CASE FOR HAMPTON ROADS
• Scalable talent (50- 250 HC)
• Full spectrum of operations, technical, engineering talent with supply-chain experience
• Port / maritime / multi-modal ecosystem
• Collaborative partnershipsuniversities and logistics businesses
• Extensive track records
• Aligned technology presence
• Telecommunications
• Infrastructure (site by site factor)
• Proximity to regulators
• Ample office supply (5,000-25,000 SF) and submarket flexibility
• Occupancy costs
• Payroll costs
• Balance: workforce base and moderate cost
• Links with Maritime Data Analytic target segment
• Air Access: non-stop preferred but convenient connecting service okay
No critical red flags observed.
• Economic incentives
• Natural hazard risk
No critical red flags observed.
SNAPSHOT OF KEY ADVANTAGES
COMPANIES CAN DRAW UPON A DEEP POOL OF LOGISTICS EXPERTS AND A SUBSTANTIAL ENTRY-LEVEL
TALENT POOL: Hampton Roads can supply critical talent to logistics companies to perform functions including: supply chain design / flow path analysis, route planning, inventory deployment, risk mitigation, and advanced analytics to collect clean data, build models and conduct sophisticated planning and scenario analysis.
• Nearly 60,000 employees in the distribution, logistics and transportation sectors regionally, including 1,900 logisticians, 1,500 marine engineers, 2,000 civil engineers, 1,000 operations research analysts / statisticians
• A firm new to the area can become involved with local colleges/universities to support existing logistics curricula, create new programs, and enhance the talent pipeline.
PRESENCE OF AN EXCEPTIONAL INDUSTRY ECOSYSTEM. Hampton Roads has strategically significant players in academia, nonprofit, innovation/start-up, and established private sector companies. In addition to the Port of Virginia, these include:
• Old Dominion University’s Maritime Institute and Transportation Research Institute (two cornerstones of higher education collaborating with logistics companies in Hampton Roads);
• Defense Logistics Agency;
• Huntington Ingalls Shipbuilding and other private companies such as: Smithfield Foods’ Logistics Office, UPS Supply Chain Solutions, Norfolk Southern, CMA CGM America, Lineage Logistics and Zim Integrated Shipping;
• Old Dominion University’s Center for Cybersecurity Education and Research and the Virginia Modeling, Analysis and Simulation Center.
NATIONAL RECRUITING IS STRENGTHENED by the low cost of living, array of amenities/services, recreation opportunities, affordable housing, and the industry ecosystem.
A COMPANY CAN RECRUIT WORLD CLASS TALENT, DRAWING FROM THE INDUSTRY ECOSYSTEM, thereby benefiting from knowledge sharing and innovation. All of this can be accomplished at an attractive price point:
• Business costs are among the most favorable when compared to other logistics hubs, especially those on the coasts;
• Salaries are substantially less than in Tier One port city metros such as New York, Philadelphia, BaltimoreWashington D.C., Chicago, and West Coast cities;
• Virginia offers a moderate tax burden for business, and lower than many likely source regions;
• Office space is readily available throughout the region at moderate lease rates.
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 COSTS
For a 250-headcount logistics center of excellence, the salaries in Hampton Roads offer significant cost advantages. For example, in comparison to Washington DC, the logistics job family median is 34% lower in Hampton Roads, resulting in annual salary costs savings of over $5.5 million for a 250-person operation. Over 10 years, salary savings could exceed $50 million, prior to consideration of lower real estate costs, taxation, and other costs of doing business.
Median Weighted Salary Index (U.S. = 100) By Occupational Job Family
LOCATION SOLUTIONS
Hampton Roads boasts an exceptionally strong concentration of logistics and related occupational employment. Notably, location quotes are strongly supportive of this occupational segment in every major office submarket, with concentrations within a 1.3-1.4 range. This suggests that the market is far from saturated but has a strong core experience base.
Hampton Roads is geographically compact, offering workplace flexibility with respect to: premises in varied environments; access to the bulk of the area’s talent base and other locational resources within a 30-minute commute of Class A office assets; and high-speed connectivity for the hybrid-virtual worker.
IN CONCLUSION
What makes Hampton Roads a distinctively attractive location for a focused corporate center of excellence for logistics?
1. Hampton Roads is a major inter-modal transportation hub, and this hub’s driving force is the Port of Virginia, ranked among the top five in the U.S.; the region is attractive both for corporate (captive) logistics centers of excellence (COEs) and outsource providers such as consulting firms and 4PLs
2. A deep technical and professional talent pool in logistics disciplines including over 13,000 experienced workers; roughly 26,000 four-year college graduates & 4,000 two-year per annum; and a large professional military retiree pool, many of which having expertise in logistics-related activities
3. Talent pipeline is enhanced with local college and post-graduate programs focused on logistics and supply chain disciplines
4. The ecosystem is of sufficient size to accommodate logistics centers of excellence operating requirements without an overconcentration of players that could strain available resources -- even a modest size COE can stand out as an employer of choice, with the ensuing benefit of access to best-in-class talent
5. A sophisticated telecommunications infrastructure enables companies to introduce the latest technology in increasingly sophisticated operational processes
6. Companies now operating in Tier One coastal metros could realize payroll savings in the 30% +/- range. A company offering a market competitive salary and benefits package can earn and maintain employer of choice status in Hampton Roads
7. Hampton Roads comprises many submarkets offering varied combinations of operating environments and skill mixes – office space costs are modest compared to major metropolitan areas – several technically oriented environments available
8. Hampton Roads lies within a convenient travel radius of Mid-Atlantic / Northeast metros and has non-stop air service to a number of major gateways
9. The state and local communities have a demonstrated pro-business track record and are eager to support this industry, and there is a long-term history of attracting and sustaining office and technical operations of Fortune 1000 companies
10. National recruiting is strengthened by a low cost of living, array of amenities / services, recreation opportunities, affordable housing, and the industry ecosystem
Hampton Roads presents a compelling business case as one of the nation’s truly significant transportation, port, and supply chain hubs. And, even with this thriving logistics ecosystem, the region has not fully capitalized on these inherent advantages, creating opportunities for new entrants to successfully staff operations at moderate costs
