| Trends
by Rob Walker
Virginia Business
September 2004
Renovated
buildings draw small businesses
Finding digs in a desirable business location is a tough
assignment for small start up businesses. So when Ken
Ferris heard about plans to renovate Warehouse Row —
a group of old railroad buildings in downtown Roanoke
—into a business cultivator project, he jumped
at the chance to move his business there.
“This was immediately attractive to us for a couple
of reasons,” says Ferris, vice president of IHS
iMonitoring, which develops wireless sensors that monitor
oil and gas lines. “I love the character of the
old buildings. It’s a lot more invigorating than
carpet and sheet rock.”
Plus, Warehouse Row offered the latest in technology
and flexible lease rates. “They gave us a good
rate and a short-term lease. It would have been almost
impossible to find that combination somewhere else,”
Ferris says. Rates start at $13.50 per square foot —
far below the Class A and B office rates in downtown
Roanoke — and tenants can lease for as little
as six months and add space as needed to accommodate
growth.
All across Virginia, small businesses are moving into
historic districts, enterprise zones and technology
zones renovated by developers with the assistance of
tax incentives. In fact, such programs have become essential
to the rebirth of cities and towns throughout the commonwealth.
“These programs have been great for old buildings,
downtowns and smaller businesses,” says John Garland,
president of Spectrum Design in Roanoke, which developed
Warehouse Row and has an office there. When rehabilitating
historic structures or buildings in areas designated
for preservation, developers can tap into programs at
the local, state and federal levels. Generally, they
allow individual or corporate taxpayers an opportunity
to pay reduced taxes on improved properties for a period
of time, usually 10 years.
In addition, some abatement programs offer reductions
in income tax liability on money earned from rehabilitated
buildings.
Tax incentives enabled Spectrum to restore the grand
Mayan Revival-style Lincoln Theatre in nearby Marion.
In downtown Richmond, dozens of small developments facilitated
by tax-relief programs are providing opportunities for
small businesses ranging from designers to advertising
and technology firms that operate from buildings that
were formerly abandoned or underused.
Bill Chapman’s company, Hamilton Development Group,
used a blend of tax incentives to renovate a cluster
of buildings on South 15th Street in Richmond before
moving in. Now the company is developing properties
nearby for more small businesses, including restaurants,
office and retail concerns.
“Companies like ours are a perfect fit for an
area like this,” Chapman says. “There’s
an energy that comes with this group of smaller businesses
working in a creative environment, and we’re all
able to do it because of the tax programs. Without them,
there would be very few opportunities for us to come
into a place like this.”
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