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Economic Prosperity

Introduction

In order to better understand the local economy and Chesapeake’s strengths and opportunities for improvement, the City hired Partners for Economic Solutions (PES) to develop an economic profile and market analysis for the City. This public document provides information on everything from the City’s employment mix to commuting patterns to the future demand for office, industrial, flex, and retail space.

The Hampton Roads economy is built primarily on defense, port activity, and tourism. While Chesapeake has both military facilities and tourism, it has a reduced share of these major industries, particularly federal employment, compared to other Hampton Roads localities. Because of this, Chesapeake is less affected by changes to those industries, such as the temporary halt of tourism activities during Covid-19. Prior to the Covid-19 pandemic (reliable data is not yet available reflecting the economic recovery from the pandemic), some of Chesapeake’s largest employment categories included:

Chesapeake, once known as a bedroom community (a place where most residents do not work in the community in which they live), has seen significant growth in its share of jobs, and today 12.8% of all jobs in the region are located in Chesapeake.

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By 2045, Chesapeake is projected to add 52,600 new jobs.

This is a 39.2% increase in job creation from 2020, and is a higher percentage than the projected increase for the region as a whole. Chesapeake 2045 recognizes the need to prepare the City, and make sure the conditions are right, for those new jobs. There are several advantages Chesapeake has that support its economy, some of which are shared with the rest of the region. There are also areas for improvement.

Chesapeake 2045 seeks to leverage the City’s existing advantages and make progress towards areas for improvement, with the ultimate goal of improving the average wage and standard of living for those who live in Chesapeake. Advancing Chesapeake’s

economic goals will involve not just activities directly related to economic development (e.g., creating shovel-ready industrial sites) but also making Chesapeake an attractive community to locate to. This includes developing in ways that support the lifestyle young, professional, skilled workers prefer, with mixed-use, walkable environments. Where workers locate, businesses will follow.

ECON 1: Increase the average wage and the standard of living of the residents of the City of Chesapeake by creating a diverse, innovative, competitive, entrepreneurial, and sustainable local economy.

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ADVANTAGES

• Regional military presence
• The Port of Virginia
• Coastal location
• Regional skilled labor force
• Relatively high-income consumer base
• High quality of life

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DISADVANTAGES

• Tight labor market with low unemployment
• Auto-dominated development patterns
• Transportation constraints
• Shortage of attainable housing
• Limited shovel-ready industrial sites

Business Attraction and Retention

Attracting and retaining businesses is critical to maintaining and growing Chesapeake’s economy. These businesses generally break down into office, industrial, and retail. Each has different factors that impact the success of businesses and reasons why a business would choose Chesapeake.

Certain aspects of Chesapeake are already appealing to businesses, such as Chesapeake’s high household income (which equates to greater spending power) and highly ranked schools. Other things need to be improved to attract new businesses, such as increasing the supply of shovel-ready industrial sites, increasing the deployment of network infrastructure, and building more workforce housing.

Making sure the City has a business-supportive environment and offering assistance throughout the development review process will also improve business attraction. Because the region’s economy is so heavily driven by three major industries, the importance of diversification is always a consideration for localities.

The Chesapeake Economic Development Authority has targeted five industry clusters as having great potential for locating in Chesapeake:

• Logistics and supply chain management
• Defense and security technology
• Advanced manufacturing
• Professional business services
• Healthcare technologies and services

— ON AGRICULTURE —

Agriculture is very important to Chesapeake, both as a culture and as an economy. According to the 2022 United States Department of Agriculture census, in 2022 there were 180 farms, which collectively sold products with a market value of nearly $40 million.

Read more about this important economy in Growth Management and Rural Areas.

Each business type plays a unique role in the City’s economy and has different needs in terms of location, infrastructure, and workforce. By recognizing and planning for these differences, Chesapeake 2045 can guide development in a way that supports economic diversity, promotes compatibility and industry clustering, and ensures long-term sustainability and stability.

Office

While the City’s Economic Development Department has traditionally focused on industrial and office uses, the future of the office market is uncertain, and Chesapeake currently has a higher office vacancy rate than its neighbors. While Covid-19 drove many businesses to allow remote work, some have begun transitioning back to working in-office. However, it appears that there could be a permanent decrease in the overall square footage of office space attributed per employee, which could have permanent

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ramifications for the office market.

Additionally, there is a shift from traditional “office parks” – large campuses with multiple office buildings – to offices in mixed-use environments. Mixed-use work environments offer more opportunities for employees during the day and after work, and may be associated with a higher quality of life. For example, the Battlefield office submarket (north of the Elizabeth River along Battlefield Boulevard), where offices are more likely to be in office parks, has not added any new office space since 2012, and had a net loss of occupied space between 2018-2022. This suggests that business park offices may be less competitive than they once were.

Industrial

Chesapeake’s market for industrial space relies on distribution and warehouse activities along with light and heavy manufacturing. In addition to the proximity to the Port of Virginia, Chesapeake’s industrial demand is driven by excellent highway access and the ability to move around the City and neighboring localities. As of May 2023,

Chesapeake’s industrial market was extremely tight at 99.4% occupied, indicating a high demand for space in Chesapeake.

Distribution and warehousing in particular is in demand, and is projected to make up the majority of future demand for industrial space. Read more about trucking and warehousing further in this chapter.

Retail

Many residents often ask their local governments to bring certain retail businesses to their community; however, retail is very difficult to specifically attract. There has been little growth in retail in the City in the past

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14 years. Retail businesses typically have a defined set of criteria they are looking to fulfill when choosing new locations, such as median household income and total number of households within a certain mile radius. Thus, while it’s difficult for the City to actively court a specific retailer, Chesapeake can create the circumstances that would entice the retailer to locate here on their own, such as through creating areas of greater density.

The retail industry is one that evolves quickly and often. Shoppers today place a higher value on the communal activity of shopping, with public spaces and opportunities for shoppers to gather and interact. Large, underperforming shopping centers can be re-envisioned to better support mixed-use centers with retail, pedestrian activity, and gathering spaces. Again, the City does have a role in a shaping new developments and making sure they will be successful long-term.

New Industry

The City must also stay alert for new and changing industries that may impact the economy and assess whether new strategies are needed to attract and retain businesses. For example, offshore wind is a rapidly growing industry in the United States, and certain aspects of production are beginning to cluster in Hampton Roads. Data centers are also continually being studied for their environmental and local nuisance effects, but they generate high tax revenue for localities and can spark clustering of other technology- oriented industries. They also produce very little traffic. By understanding the impacts and benefits of these facilities, the City can better ensure proper mitigation so that this use can exist in harmony with surrounding uses.

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ECON 2: Focus business retention and recruitment efforts on businesses that diversify the City’s economy, provide living-wage jobs, are small, woman-owned, veteran-owned, or minority-owned, and/or utilize labor skills and knowledge that are prevalent in the area.

ECON 3: Provide technical and financial assistance programs to attract new and support expanding businesses.

ECON 4: Maintain a business-supportive environment by offering assistance throughout the development review process to stay responsive to the needs of businesses.

ECON 5: Focus on creating quality of life improvements, amenities, and vibrant communities in order to attract businesses to Chesapeake.

ECON 6: Prioritize repositioning large underperforming commercial properties, such as shopping malls, into mixed-use developments that increase pedestrian activity.

ECON 7: Support appropriate redevelopment and infill development opportunities, particularly in areas of the City that are unserved or under-served with retail, such as grocery stores, restaurants, and other amenities.

ECON 8: Continue to deploy network infrastructure that will support better access for businesses, residents, and employees.

ECON 9: Take advantage of existing state and federal investment programs to promote economic development.

ECON 10: Periodically assess the City’s business attraction strategy based on changing technology, and leverage current and future industries, such as offshore wind and advanced manufacturing.

ECON 11: Study and make recommendations on potential siting criteria and sample stipulations for data centers.

Economic Prosperity

Talent Attraction, Retention, and Training

For the City, workforce goals fall into three categories:

1. Attracting talent to the City
2. Supporting existing employees and making sure they are not underemployed
3. Creating a talent pipeline to guide students and other groups to successful employment

A local economy is only as good as its workforce, and as industries evolve and technology improves, the City must make sure its workforce evolves as well. With the industries that Chesapeake seeks to grow and attract, Chesapeake needs talent that have a background in STEM (science, technology, engineering, and math) fields and that are able to adapt to new technologies in healthcare, security, and other industries.

Chesapeake has a very low unemployment rate at 2.9%. While this is a good indicator for the quality of life of residents, it also indicates that the labor market is tight. Some job openings are hard to fill. In particular, the demand for technical skills has outpaced the worker supply. For example, while Chesapeake added 16,000 new jobs between 2010-2019 it had significant losses in the information industry, a typical STEM field. This is a problem affecting not just Chesapeake, but the United States as a whole, and Chesapeake must put in additional effort to either recruit or train STEM talent.

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Chesapeake has a labor force with high educational levels; 35.5% of residents have a Bachelor’s Degree or higher, so there may be greater opportunity to train and prepare the existing labor force for new industries, rather than looking only to attract new workers.

Some City departments, such as Information Technology, where STEM skills are important, regularly host interns to help prepare future talent. The City can also tap into exiting members of the military, who often have technology and skilled labor training. Working closely with existing employers to tailor workforce training would improve its value by linking directly to existing jobs.

Adding new talent to Chesapeake’s economy will still be important, although it may be more challenging than retaining those already in it. Chesapeake’s population of 20-34 year olds, those who would be “young professionals”, is lower relative to the region: this age range makes up 19.9% of Chesapeake’s population, but 21.9% of Hampton Roads. Conversely, Chesapeake has a higher proportion of established workers, those aged 45-64, than the region does.

Because Chesapeake has fewer higher education opportunities than other parts of the region and country, it must be an attractive place for these young professionals to come

once they finish school. This means providing the lifestyle, housing, and amenities that young professionals value.

The City has a large unmet demand for housing affordable at all income levels (see the Housing chapter for more), but this may be particularly impactful for companies trying to attract young professionals to work and live in Chesapeake. Multiple factors contribute to the restricted supply of housing affordable to younger workers and their families.

Concerns over housing affordability can ultimately affect company location decisions as executives worry about being able to attract and retain workers at wage levels consistent with their industry. The City must fully understand the needs of target young professionals in order to remain competitive for new economic development.

ECON 12: Attract and retain workers with strong math, science, engineering and technology training in order to support emerging and growing industries through work force development programs and incentives.

ECON 13: Work with industry experts to determine the housing and transportation needs and preferences of various economic sectors and provide this information to educate developers and other stakeholders.

ECON 14: Address workforce preparedness by creating programs that train to emerging and in-demand industries and connect workers to resources.

ECON 15: Partner with Chesapeake Public Schools to expand vocational programs and expose students earlier to various career opportunities.

ECON 16: Work closely with existing employers to understand their needs and tailor workforce training programs to them.

ECON 17: Build on available programs and grow partnerships with workforce-ready populations such as those in higher education and the military to help facilitate a transition to high-demand industries.

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Site Readiness

Given the high occupancy rate of industrial space in the City (99.4%), it is clear that to facilitate the growth of industrial industries and the jobs they bring,

more land must be prepared for industrial use.

Industrial users place a high premium on being able to quickly occupy a space and know that building space will be available when they need it. This does not necessarily mean that more land should be converted to or zoned for industrial use; there are many tracts of land that are designated for industrial uses but that remain undeveloped.

Undeveloped industrial land is often due to a “readiness” issue, such as a lack of utility connections to the site or hazardous materials that need to be remediated from the land before it is put back into use. Preparing these sites would make the properties more competitive for economic development projects. State programs exist to promote site preparation, including brownfield cleanup, and should be utilized in the City’s efforts. In particular, the Coastal Virginia Commerce Park offers a unique opportunity to attract one or more major industrial facilities to Chesapeake and is an example of the City’s efforts to make sites “ready”. Furthermore, properties that have been designated for industrial uses must be protected and maintained for these uses in order to maximize their strategic locations, such as along the deepwater channel of the Elizabeth River.

ECON 18: Conduct a study of undeveloped economic development sites to determine what factors are hindering development. Identify strategies and investments necessary to improve those sites to the appropriate level based on the VEDP Site Characterization Tier Levels, and identify both the City and developer’s role in improvement.

ECON 19: Identify and assess the viability of existing brownfields for cleanup and reuse.

ECON 20: Preserve and promote water-dependent industrial activity along the Elizabeth River’s deepwater channel.

ECON 21: Identify and protect the City’s prime inventory of large, strategically-located, project-ready economic development sites for such uses.

– SUPPORT FOR SMALL BUSINESSES –

When asked “what special or unique characteristics would you like to see introduced” to their planning areas, respondents frequently mentioned local and small businesses.

“Need small businesses like cafes, coffee shops, farmers markets.”

“More small businesses and non-chain restaurants”

“Opportunity for small business like a coffee house”

“Less restrictive zoning that allows more small businesses near neighborhoods.”

“Walkable roads/streets, boutiques, small food shops”

“Small business/restaurants”

“Support/promote small business owners who help support healthy lifestyles”

“Walkable town square/town center shopping and living spaces are attractive to young urban professionals. One-off small business restaurants and bars offer unique food options that would entice me to spend a night out on the town more than a chain.”

“Local coffee shop. Not a Starbucks. Local.”

“Local businesses, not chains”

Supporting Small Businesses

As is the case in many places, most of Chesapeake’s business are “small.” Of 5,700 non-government establishments reviewed in 2021, one-half of them had fewer than five workers. Two-thirds had fewer than ten workers. Attracting and supporting small businesses is something many residents call for. It’s important to note that most often when residents say they support small businesses, they primarily mean small retail businesses, where they can eat, drink, and shop in unique places. This carries some of the difficulties of bringing retail, discussed in the Business Attraction and Retention section, but there are more ways the City can offer support when businesses are small and just starting up.

Often, the needs of small businesses to get off the ground are relatively modest. They can benefit from the use of flexible spaces, opportunities for reduced rental rates, and other financial benefits. Other times, the needs can be as simple as help understanding the process for obtaining a business license, filing taxes appropriately, or other logistical support. While there are many organizations

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that provide this assistance, such as the Small Business Administration, there is a role for the City in this area as well. Creating and staffing a small business incubator space would allow these small retail businesses a place to grow and find their footing in one of the most competitive land uses.

The City can also consider ways to allow more flexibility in zoning and other regulations to support these businesses, or prioritize them in the procurement process. Given the numerous options for supporting small businesses, a full strategy should be put together that covers all preferred avenues for support and methods for implementing them.

ECON 22: Inventory and set aside City-owned sites that can be designated specifically for small business use.

ECON 23: Acquire or utilize an existing space for a small business incubator that will allow businesses to grow and ultimately enter permanent locations.

ECON 24: Develop policies and programs specifically to support new and existing small businesses such as promoting and investing in workforce development programs and training around cultural competency, promoting the use of small businesses in the City procurement process, and increasing flexibility on types of home occupations, among others.

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Military Partners

Chesapeake is home to three U.S. Navy installations: Naval Auxiliary Landing Field (NALF) Fentress, Naval Support Activity (NSA) Northwest Annex, and St. Juliens Creek Annex, each of which has unique mission requirements. These requirements often have land use implications that the City considers during the development process. The Navy is an important part of the City's economy and culture; to the greatest extent possible the City partners with the Navy to maintain mission-readiness without compromising quality of life for Chesapeake residents.

NSA Northwest Annex

This facility has sensitive communications equipment, including the Relocatable Over-the-Horizon Radar (ROTHR) system. It has the capacity to detect activity as far as South America, and is critical to the National Drug Control Strategy. However, the ROTHR can be impacted by electromagnetic inference (EMI), which certain land uses, such as solar facilities and some manufacturing uses, may produce, particularly to the west of the base. Because of this, the City works closely with Northwest Annex to acquire land and development rights in parts of the City where development could produce EMI, and to limit certain land uses on future Employment Centers or industrial sites.

St. Juliens Creek Annex

The Annex is located on the border with the City of Portsmouth, adjacent to community-used ballfields and residential neighborhoods on one side, and prime industrial land and sensitive environmental features on the other. The Annex provides a variety of important missions for the Navy. There may be opportunities for the City to partner with the Navy on this property for utility connection and redundancy, as well as land use agreements. This may continue to be explored based on the Navy's future needs.

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NALF Fentress

The primary mission of this airfield is to support practice aircraft carrier landings for fixed-wing naval aircraft, principally F/A-18 Strike-Fighter jets based at Naval Air Station Oceana in Virginia Beach. In keeping with Navy tactics and operations, a substantial portion of training is conducted at night. This training can create significant jet noise for those residents living near the airfield. The City and Navy therefore work together to ensure compatible development in areas around the airfield designated high noise zones (described as the day-night average sound level, DNL, in decibels) and aircraft Accident Potential Zones (APZs). This is accomplished through implementation of the Joint Land Use Study (see more here) which includes a dedicated overlay district in the Zoning Ordinance and unique character district in Chesapeake 2045. The Navy and City also partner to purchase properties or development rights with high development potential within these zones.

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ECON 25: Work closely with the Department of Defense regarding future plans to support mission readiness while also maintaining land use compatibility.

Maritime Economy

The City’s industrial waterfront makes use of a federally-maintained deep water channel in the Southern Branch of the Elizabeth River (“Southern Branch”). This channel allows large ocean-traveling ships to access waterfront facilities; the further down the river ships travel towards the Intracoastal Waterway, the shallower the channel becomes, and the less intense the industrial land use becomes as well.

The industrial waterfront is best described as a “tertiary port” rather than a large, centralized facility like those operated by the Port of Virginia. Chesapeake contains a cluster of smaller, private facilities that include supportive uses such as shipbuilding and breakbulk shipping (a method of transporting goods that don’t fit in standard containers).

Private facilities on the Southern Branch handle almost half of the non-container traffic in and out of the region. Many of Chesapeake’s industrial waterfront facilities sit on elevated ground, making them more resilient to flooding and sea level rise. The industrial waterfront is an important economic generator for the City, and will continue to be so in the future. The City’s Industrial Waterfront Study explores in much more detail the importance of maintaining the Southern Branch for water-related, industrial uses.

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ECON 26: Work with regional partners to support the expansion of maritime activities, including deepening the Elizabeth River deepwater channel and expanding port activities.

ECON 27: Quantify the economic value of the waterfront and advocate for supportive maritime and port-related business operations.

Airports

There are two regional public use airports in the City of Chesapeake: The Hampton Roads Executive Airport, located in Western Branch on West Military Highway, and the Chesapeake Regional Airport, located in Grassfield near Route 17. In 2025, the Hampton Roads Executive Airport was a reliever airport for Norfolk international, and is home to a number of airport-related businesses, including pilot training, aerial photography, aircraft management, and drone training. Chesapeake Regional Airport offers corporate and private flight services as well as light airfreight pickup for warehouse goods ready to move. It is also located next to a growing industrial area in the City, creating synergy between business and transportation.

The viability of regional airports can be tricky to manage, particularly when large national airports exist nearby and large military bases are regularly using surrounding air space. However, airports offer an important business advantage. The City should continue to work with the airports to maintain their economic viability.

ECON 28: Work with airports to remain economically viable and provide quality service.

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Trucking and Warehousing

In 2023, approximately two-thirds of Chesapeake’s industrial space was in warehouse and distribution;

it is also projected to make up the majority of future demand for industrial space.

Industrial space in Chesapeake is considered to be accessible (for both truck and rail) and affordable. Transportation and warehousing also saw the second highest net increase in jobs between 2010-2019, at nearly 2,500 new jobs. Of all Chesapeake industries, transportation and warehousing has the second highest location quotient, a measure of

a City’s competitive advantage in an industry. It makes sense, then, that one of the City’s top five targeted industries is logistics and supply chain management.

The Federal Highway Administration designates roadways for the National Highway Freight Network. In Chesapeake the primary network includes interstate I-64 and the portion of Battlefield Boulevard leading to the rail hub in South Norfolk. In addition, the Hampton Roads Transportation Planning Organization has identified freight gateways, among other things, within the region. The identified network and gateways are consistent with other policies and character district designations in Chesapeake 2045.

However, while warehousing and distribution may be an important piece of Chesapeake’s economy, it can have impacts on residences and roads where truck traffic is frequent. Truck traffic, which can occur anywhere in the City and not just near distribution sites, can be a nuisance in neighborhoods, so it is important that routes are managed to minimize noise and congestion in residential areas. Warehouses may be unattractive or noisy and neighborhoods can benefit from additional screening around such facilities.

Additionally, some roads were constructed before heavy truck traffic used them, and they weren’t built to withstand the regular wear and tear the trucks produce. Routes may need to be regulated to protect those roads. Conversely, where the City anticipates redesigning or improving roads known to have heavy truck traffic, care should be given to making sure roads are designed with trucks in mind.

ECON 29: When establishing trucking facilities and warehouses, minimize the impacts to the community while supporting this growing segment of the economy.

ECON 30: Study frequently used truck routes, particularly on rural roads, and determine if any need to be regulated in order to protect the structural integrity and safety of the road.

ECON 31: Ensure arterial roadway design reflects the needs of trucks, particularly on

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One of many trucks moving through Chesapeake.