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The Art of the
Deal
by Rob Walker
Virginia Business
September 2004
THE
DEAL: Development
of the 135-acre Victory Crossing Business Park in Portsmouth,
a project expected to generate $350 million worth of
high-end office space. Development includes 40 acres
for a Portsmouth campus of Tidewater Community College.
KEY
PLAYERS: Victory Crossing Developers LLC will
design, construct and arrange financing. The partnership’s
managing member is Robert T. Williams, former Portsmouth
city manager and now president and CEO of Tri-City Developers
of Suffolk. Representing the city on a public-private
team assembling the park is Steven L. Lynch, director
of economic development; CMSS Architects of Virginia
Beach, NAI Harvey Lindsey, a Hampton Roads commercial
real estate firm that will manage the park; Woolpert
Engineering LLP of Portsmouth, Ellis-Gibson Development
Group of Portsmouth and David Tynch, a Portsmouth attorney
with Cooper, Spong & Davis who will handle the partnership’s
legal work.
HOW
THE DEAL UNFOLDED: For years Portsmouth city
leaders wondered what to do with the distressed Fairwood
Homes complex on prime city land at the intersection
of I-264 and Victory Boulevard. Built during World War
II as temporary homes for shipyard workers, the small
rental houses had long outlived their usefulness. In
1999, the city Industrial Development Authority acquired
part of the property and began demolishing the units,
hoping to provide space to expand the city’s office
inventory. In 2002, Virginia Beach developers L.M. Sandler
and Sons bought the rest of the land and began planning
New Port, a $450 million residential development of
more than 1,600 units of town homes, condominiums and
single-family homes. Construction on New Port is expected
to begin this fall. With that major project providing
a boost to the area that already had a new shopping
center and a spruced up golf course, the city in 2003
began seeking proposals for a master developer for the
expansive, mixed-use business park. Victory Crossing
Developers plans to build out the park over the next
decade. It will be privately owned by the partnership.
Funding for the new 40-acre community college campus
will come from a $25 million bond issue approved in
2002 for higher education projects in the state.
MAJOR
HURDLES: Communicating with all the players.
People and groups who had to be brought on board included
the Portsmouth City Council and city attorney, the community
college system, the Virginia Attorney General’s
office and private attorneys, developers and architects.
That the agreement was hammered out in about six months
is testimony to the team’s commitment to get the
deal done. A remaining challenge is moving forward with
the gateway to the project on Victory Boulevard. To
get it built and open requires approvals for the acquisition
of right of way, improving and widening the road, burying
utilities and landscaping a new median. Budget constraints
have delayed the project along with dozens of others
at Virginia’s Department of Transportation.
ECONOMIC
SIGNIFICANCE: The Victory Crossing project
may be the largest commercial real estate venture in
Portsmouth’s history. As much as 700,000 square
feet of office space is expected. The team is in the
early stages of recruiting tenants, but the opportunity
to develop substantial Class A and Class B office space
“is a gap the city has needed to fill for some
time,” says Lynch. Park revenues will help pay
for schools, public safety and other community needs.
Officials say location of the community college campus
within the park will promote valuable synergies including
work force development initiatives, collaboration in
research and training and internship and teaching opportunities
for park employees. Since the site carries enterprise
zone, empowerment zone, foreign trade zone and HUBzone
designations, it could attract a blend of entrepreneurs,
including small businesses, minority-owned businesses,
businesses owned by women and businesses engaged in
international trade. The center is expected to create
at least 1,200 new jobs.
Return to Virginia Business - September 2004
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