Strong and Steady

Moderate Economic Growth Expected in New Year

By Gina Gallucci-White | Posted on 01.01.17 – Feature, Lifestyles, People & Places

When heading to the Frederick Regional Health System’s Rose Hill campus on Oppossumtown Pike, you may find as many construction workers as there are patients seeking services and medical personnel.

The skyline for the area will soon be changing as the James M. Stockman Cancer Institute continues to take shape. “Right now, the two phrases that we always like to use is we are on time and we are on budget,” says John Verbus, senior vice president and chief operating officer for the health system.

Residents can expect to see a $40 million revitalization of the Rose Hill campus with cancer treatment as the centerpiece. Construction of the 45,000 square foot cancer institute, funded mainly through around $20 million of philanthropic donations, is estimated to end in June with a grand opening set for July. The site will also be adding 16,000 square feet of physician practices that will refer patients to the institute and renovating about 10,000 square feet of existing ambulatory space that support cancer care such as laboratories and imaging spaces.

Verbus estimates Frederick Regional Health System will be increasing its staff between 5 to 10 percent to meet the needs of the growing volume of patients coming to the new cancer center for care, making it one of the local economic highlights for a 2017 that officials anticipate will be marked by moderate growth in Frederick County.

The economic outlook for the county is generally positive with the economy having a fair amount of momentum from the housing market, according to Anirban Basu, chairman and CEO of the Baltimore-based economic and policy consulting firm Sage Policy Group. “Home sales are up and the inventory of unsold homes is down,” he says. “That implies that home prices should continue to be stable or perhaps even rise. That is a positive for the broader Frederick County economy. The Washington Metropolitan area economy generally also continues to perform and that serves as a tailwind for Frederick’s economy. We continue to observe significant job growth in the Washington Metropolitan area in professional services and that is often an indication that the government contracting segment continues to be healthy.”

The new year is also expected to bring increased wages, which have not seen growth for several years. The state household income median is around $73,000, while Frederick’s is about $84,000. “As wages are rising, we expect to see the household incomes in Frederick City will increase,” says Richard Griffin, the city’s director of economic development. “Whenever that happens, that is usually a net positive for retail because people have more disposable income. Residents and visitors and folks coming into Frederick may be eating out once more a month or spending more when they do go out to eat or buying more home improvement goods for fixing up their house or those kinds of things. We certainly are expecting to see those types of things [this year].”

The county’s population currently is around 245,000, which is projected to increase by 8 percent by 2020.  “That’s a nice growth,” says Helen Propheter, director of the Frederick County Office of Economic Development. “That’s not too much. It’s not too little. It’s just right, so that’s nice.”

While the state’s unemployment rate is around 5 percent, the county is about 4 percent, according to the U.S. Department of Labor. “The question is, how low can it go?” Griffin asks. “When you get to around 3 percent unemployment, they often consider that to be full employment. We’ve continued to track below the state and national unemployment rate and we expect those will probably continue to drop down as businesses are continuing to add jobs. They have been doing that in Maryland and they have been doing that here in Frederick, so we certainly expect to see unemployment continue to fall here in the city.”

NONPARTISAN NEEDS

With a new administration poised to enter the White House on Jan. 20, how will the change affect Frederick County?  “It is not clear what the economic implications are of ‘draining the swamp,’” Basu says, quoting President-elect Donald Trump’s familiar refrain. “There is undoubtedly going to be a period of transition in Washington, D.C., that could be very jarring to many agencies. That may have some impacts on the Frederick County economy, many of which are unpredictable. That said, the outlook for Fort Detrick is bright given its role in Homeland Security and in preparedness. There have been calls by the President-elect to raise defense spending and generally that is a positive for the Frederick County economy.”

Trump is a businessman, so Propheter hopes that will translate to economic growth. “I’ve always said that economic development isn’t Republican or Democrat,” she says. “It’s the foundation of what makes a strong community. Both Republicans and Democrats run on increasing jobs so hopefully economic development prospers either way. We are certainly interested and paying attention to what will be coming out and how that will affect our industries.”

Seven years after the Great Recession of 2008-09 and continuing into the early months of 2016, Marty Lapera, president and CEO of Frederick County Bank, has seen the effects of a weak economy and consequential historically low interest rate environment. “I don’t want to make a political statement, however, the outcome of the elections has been followed by record breaking highs in the U.S. stock markets and rising interest rates which reflect anticipation of an economy that is warming up, if not heating up,” he says. “Whether the renewed optimism is just a post-election temporary bump is yet to be seen, however, the consensus among many business leaders is that a pro-business presidential administration, Senate and House of Representatives are likely to act to reduce corporate tax rates and roll back some of the legislations, the unintended consequences of which include a drag on economic growth.”

Banks often talk to their clients to see what their plans are for the future and how they feel about the economy. “In general, I would say everybody is very upbeat about economic growth, locally as well as in the region, and when people are feeling good about their prospects going forward then they tend to borrow money to expand by buying equipment [and] real estate and borrow money to expand and hire people,” Lapera says. “We are feeling pretty good based on what our clients are saying.”

ON DECK

As 2016 came to a close, Flying Dog Brewery officials were looking to close on more than 31 acres of farmland off Bowmans Farm Road near Frederick Municipal Airport, where they plan to build a 150,000-square-foot campus in the next few years. “What we are most excited about is that in our 26-year existence, we’ve always sort of inherited buildings. We have done our best to make them feel really Flying Dog,” says Ben Savage, Flying Dog’s chief marketing officer. “I think what we are really excited about with the [airport] property is we get to design from the ground up what will ultimately be the quintessential Flying Dog experience. Every inch of the campus will feel like Flying Dog because we will be able to design it that way.”

Currently at capacity at its Wedgewood Boulevard facility, company officials do not have a groundbreaking date for the new brewery, as design and layout will need to be completed first. “In some regards, the work is just beginning, now that we will close on the land,” he says. “… We’d like to do something over there sooner than later.” Savage noted the company could take a phased approach to construction with the full $45 million to $55 million campus opening potentially in three to four years.

The campus could potentially add between 75 to 150 jobs to the area and lead to expansions of its popular concerts, tours and events. Industrial tourism has become quite popular, especially in the craft beer industry. Flying Dog brings in thousands of tourists to Frederick every year to its facility. “I think being in the city, having a campus that is fully designed as a Flying Dog experience and with our world-class beer, I think we are able to bring more people to Frederick and turn more people on to Frederick and not only create more jobs [and] more tax revenue, but also continue to position Frederick as a really great place to live with cool local companies that are really big parts of the community,” Savage says. “We are excited to get going on it. It is going to take a long time but I think at the end it is going to be a great addition to Frederick City and we are really excited to be a part of it.”

Propheter says every time she is outside of Frederick County and she introduces herself as the director of economic development, the response is the same: “‘Wow. I am paying attention to Frederick’ and there are lots of really cool things happening in Frederick,” she says.

In the city, the second phase of Carroll Creek Park was completed in 2016 and local officials expect announcements of new commercial construction in the corridor this year. The proposed Downtown Frederick hotel and conference center at the former Frederick News-Post building at 200 E. Patrick St. will also be a hot discussion topic. “I continue to view that as a very important project that would unlock a lot of Downtown Frederick’s potential,” Basu says. “Obviously there is a lot of disagreement about that and there are intense politics around this issue and that’s too bad, because if one looked at it objectively, Downtown Frederick needs precisely the type of facility that is proposed and there really is no substitute for that proposed facility existing in the region, though some might claim otherwise.”

Pharmaceutical giant AstraZeneca will be completing its $200 million-plus expansion of their biological manufacturing center in Frederick this year. The project adds 40,000 additional square feet of manufacturing, laboratory and administrative space, along with an estimated 300 new jobs. Once construction is complete, the facility must go through U.S. Food and Drug Administration validation process. “We hope that they will get that validation completed and we will see that new expanded plant put into production,” Griffin says.

NEXT STEPS

The county’s Office of Economic Development will also be launching a six-month leadership program for minority business owners. “We know [minority-owned businesses] continue to grow in Frederick and we want to reach out to them,” says Propheter, who hopes to pick around 10 owners to participate. Applications for the leadership program will begin to be processed this month with a potential start date around March 1.

The Frederick County Chamber of Commerce spent 2016 identifying areas where there is room for business development opportunity, interviewing many local company officials and asking what is important to them. Three main needs came out of the interviews: infrastructure improvements; workforce development to make sure companies can find the talent they need in this community; and doing a stronger job of promoting Frederick County as a great business destination. “We have looked across the country for inspiration for places that really do those things well in the areas we have identified,” says Elizabeth Cromwell, president and CEO of the chamber.

Cromwell will join a delegation of chamber members on a trip to Greenville, S.C., in March to see how that city has rebranded its business community and evolved in new areas and drove economic development through arts, entertainment and culture, with the goal of bringing inspiration back to Frederick. “[Greenville officials] are doing a lot of things really well,” Cromwell says. “As we [tour the city], my goal is to be out there really advocating and talking up Frederick County to other parts of the country,” she says. “I think there is a very good chance that we could become the destination where businesses want to come visit and get inspiration from us just like we are doing in other places. … I think we have the opportunity to really show off a lot of best practices here in the coming couple of years.”

The Frederick County delegation initially asked if they could visit Greenville in September or October 2016, but were told 4,000 business officials from other parts of the area already scheduled to study the city. “What I want to do is figure out how [to get] those 4,000 people to pick Frederick for next year’s exploration,” Cromwell says. “I want to be that community that they want to come to. They will as soon as they know more about us. They will.”