The New Normal
A Diverse Economy Positions the County for Steady Business Growth in 2014
Dubbed the “battery-free toy store”by its owners, Dancing Bear Toys and Gifts on East Patrick Street in Downtown Frederick is a child’s haven for art supplies, science kits, puppets, board games and vintage books. While many small businesses around the nation were hit hard by the Great Recession, Dancing Bear not only thrived, but its outlook for 2014 couldn’t be any rosier.
“It’s been absolutely phenomenal,” says Tom England, who owns the store with his wife, Marlene.
“We’ve been in business for 14 years, and we’ve never seen a decline from year to year. My theory is it doesn’t matter how bad things are financially, the last thing parents want to do is skimp on their kids. It’s the timeless nature of toys.”
His optimism is not rare. Four years after the end of the recession and with a very gradual recovery under way, local business experts are optimistic that 2014 will be successful throughout Frederick County.
“We see growth in the housing sector, which has a ripple effect through a number of different businesses directly and indirectly related to the development community,” says Richard “Ric” Adams, president and CEO of the Frederick County Chamber of Commerce. “Frederick County remains a place where people come to do business, from our agricultural base to the highest level technology and research. We’re looking forward to a good year for the business community.”
America’s financial crisis dates back to 2007, rooted in the collapse of the U.S. housing market. Since then, thousands of people across the nation have lost their homes to foreclosure, businesses have downsized or shut their doors, and Detroit and other cities have been forced to file for bankruptcy. Frederick County has not been immune. “The climate for business in Frederick County has presented its challenges in the last few years,” Adams says. “National and state economic forces haven’t bounced back as quickly as we’d all hoped, and uncertainty over the federal budget negotiations hasn’t helped either.”
How are We Doing?
The commercial real estate market in the county is rebounding, but recovery is slow, says Helen Propheter, manager of Frederick County’s office of Business Development and Retention. Of the 630 office buildings in the county, 14.5 percent are unoccupied. “A lot of these spots weren’t built during the recession,” Propheter says. “They were built before, with the idea, that if you build it they will come.” She says her office is committed to filling those spaces. For example, each staffer is assigned a municipality in the county, and regular visits are made to each of their businesses.
The county also holds special bus tours, showcasing vacant land and vacant properties. The tours are free for brokers outside the county that may have clients interested in moving to Frederick. “The idea is that if your area is not meeting your needs, think about Frederick County,” Propheter says.
Tax credits are also available on properties with longterm vacancy, and her office maintains an up-to-date commercial site database for prospective companies looking for properties for sale or lease in the county.
“We want to help our businesses in the community to develop,” she says. “We’re absolutely doing everything we can.”
There has been recent progress. The commercial vacancy rate for the county in 2008, at the height of the recession, was 13.3 percent. That number climbed to 14.9 percent in 2009, 15.9 percent in 2010 and 16 percent in 2011, before falling to 14.7 percent by the end of 2012, according to county numbers.
Frederick County is currently home to 8,500 businesses, of that, 3,400 are located in the City of Frederick, according to city and county numbers. Local business experts paint a positive economic picture, pointing to the success of companies specializing in scientific research, technology and health care. “Our core industries have a fair amount of employment,” says Richard G. Griffin, director for the city’s Department of Economic Development. “Those are the ones we are focusing on.”
Fort Detrick, along with the National Interagency Biodefense Campus, is the county’s largest employer, with 10,500 employees. Since 2005, Fort Detrick has added 4,000 jobs, due to the federal military base reallignment. The Army base is also currently in the process of a $960 million construction and expansion project.
As of Nov. 15, the unemployment rate for the city was 6.3 percent and the county’s jobless rate was 5.9 percent; both were lower than Maryland’s unemployment rate of 6.9 percent and the national jobless rate of 7.3 percent. One of the reasons is diversity of employers. After Fort Detrick, the county’s top job centers are the Frederick County Board of Education, with 5,538 employees, Frederick Memorial Healthcare (2,652 employees), Frederick County government (2,355 employees) and Wells Fargo Home Mortgage (1,881 employees).
“Our unemployment rate has remained below state and federal [rates], because we have a diverse economy,” Griffin says. “We don’t have all our eggs in one basket. We have diversity.” He points to Lonza Bioscience in Walkersville and Life Technologies, a bio-science firm in Frederick, as two companies that have expanded in the county. Lonza has recently expanded its cell production and office space at a cost of $26 million, according to city documents. Life Technologies spent $5 million to expand its manufacturing and distribution center.
Frederick Municipal Airport is also one of the busiest airports in the state, second only to BWI. “That is because we don’t fly commercial flights,” Griffin says. Approximately 350 businesses use the Frederick airport each year.
On the retail side, Griffin points to the popularity of Clemson Corner off Md. 26 in Frederick, with its 370,000 square feet of retail space, including Lowe’s, Marshalls and Wegman’s, which is among the top 15 employers in the county. Manager Matt LePore said business over the last year has been great. He currently oversees 450 employees and credits the store’s unique products and competitive prices as a major draw for customers. “Business is growing and is continuing to grow,” he says. “Frederick is a great community and the people are terrific.”
The Crown Jewel
But it’s Frederick’s historic Downtown area that’s considered by economic leaders to be the gem of the county, attracting national attention for its culinary destinations and independent retailers. “When I look at the Downtown area, I consider it to be the hub of [county and city] government, and it’s the hub of commerce within the city and the county,” Griffin says.
In March, CNN included Downtown Frederick in its list of “America’s Best Small-Town Comebacks,” highlighting the mix of shops, restaurants, brick pathways and Carroll Creek Park’s pedestrian bridges. The restoration of Carroll Creek dates back to the 1970s when the city was devastated by floods. Today, it has become a focal point for tourists.
Kara Norman, executive director of the Downtown Frederick Partnership, a nonprofit that works to promote and preserve the downtown area, contends that 2013 has been a good year for businesses. Since last July, 14 new stores have opened Downtown, bringing the total number of retail and restaurants to around 264. “Overall, 2013 was a healthy year and a more successful year than the previous year,” she says.
In January 2013, the partnership surveyed Downtown businesses asking them to compare 2012 with 2011. Sixty-six percent said they did better in 2012 than in 2011, Norman says. “It’s nice to see a progression and steady growth for a majority of the businesses. In 2014, we hope to continue to see steady growth.”
For Dancing Bear owners Tom and Marlene England, success seems destined to continue. On July 1, the couple moved their shop from North Market Street to a larger location on East Patrick Street. The couple also opened Curious Iguana bookstore in the toy store’s former location. “We would be nowhere else other than Downtown,” Tom England says. “No other downtown comes close to Frederick. There is an excitement here. Everybody wants to be here. Everybody loves the downtown. We don’t sell a product, we sell the experience of being Downtown.”
Where are We Going?
Nationally, the economic forecast for 2014 is slated to be more of the same. Most people have survived 2013’s federal sequester, private and public furloughs, and the government shutdown, so consumer spending is expected to slightly rise, according to some national economists. But Congressional gridlock and cuts in federal spending will continue to be a concern on the local city and county level. Concern for the federal employees that live in the county is never far from their minds.
“The federal government and federal jobs, and with Frederick having Fort Detrick, this is certainly a concern,” Propheter says. “The average weekly wage for a federal employee is $1,489—that is 69 percent higher than the average weekly wage for a non-federal employee. The weekly wage for a non-federal employee is $886. So we’re concerned with further sequestration or another government shutdown. But there is nothing we can do. We can only hope and pray.”
Nevertheless, Propheter is optimistic going into the new year. “Frederick has so many strengths,” she says.
“I believe we are going to continue to prosper and our population is going to continue to grow. Not a lot of areas in the country can say that.”
Propheter praises the strong entrepreneurial spirit in the county. “Small businesses are doing well,” she says. “I’m impressed people are willing to take a chance. That says a lot about our community. When we meet with prospective companies our goal is to get them to Frederick, because Frederick can sell itself.”
However, she remains cautious. “Many of our industries are feeling better about 2014 than 2013, but it doesn’t mean we are going back to 2007 or 2006,” Propheter says. “Our pipeline of employees is highly educated and there are people that want to be here. One of the key indicators of a healthy environment is housing, and there are signs that it isn’t great, but it’s getting better—unless we have another fiscal cliff.”
The Chamber’s Adams is also hopeful going into the new year. “Take a look at our recent Chamber Business Expo,” he says. September’s expo featured 160 exhibitors and 1,500 attendees. “In 2013, we set a record for the number of local companies that participated, and a record number of attendees visited the expo. In spite of many challenges, entrepreneurs are still willing to take some risk, and we’re here to help them maximize their potential.”
Griffin says the city is well-positioned for business growth and development in 2014. A key factor is Frederick’s close proximity to Washington, D.C., and Baltimore. “The city is focused on attracting more businesses, more jobs and more private investment,” he says. “With us being so close to D.C. and Baltimore, it’s inevitable that Frederick will continue to grow and continue to add jobs in the foreseeable future.”
Griffin sites several construction projects either already under way or slated to break ground in 2014. For example, home construction will continue at Market Square, on Md. 26 in Frederick. Adjacent to Clemson Corner, Market Square is currently home to Home Goods, Pier 1 Imports, Sport & Health, Buffalo Wild Wings, McDonalds, IHOP and PetSmart. The 175,000 square feet of commercial space is 93 percent leased, according to a city report.
There are also plans for the redevelopment of the Golden Mile’s Frederick Towne Mall, the largest commercial property in the city limits. With Walmart serving as the anchor store, plans include walking and bike paths, a community center, picnic area and community garden. “Redevelopment of the old Frederick Towne Mall is the most significant thing happening on the Golden Mile in years,” Griffin says. “It isn’t the Bronze Mile, it’s the Golden Mile!”
Plans are also in the works for the long-awaited downtown hotel and conference center. Financing arrangements are slated for 2014, construction is planned for 2015, with the facility opening in 2016.
“What is good for the city is good for the county,” Griffin says. “…We have a high quality of life, low unemployment and a desirable and attractive environment for jobs. It’s exciting going into the future.”