Commercial developers plan for cold conditions

Cautious. That is the description commercial developers often apply these days to their ventures in Vermont. Little construction is occurring in the retail, office and manufacturing sectors around the state due to unfavorable national economic trends and worries about the looming impact of home heating bills and high transportation costs.

"Things will definitely slow down in the winter when people have to put money aside for their heating expenses," predicts Ron Larose, director of the Franklin County Regional Chamber of Commerce. It could even get to the point where "this winter could force some Vermonters to look at their decision to remain resident here," warns Susan "Sam" Matthews, director of the Central Vermont Economic Development Corp.

But for now at least Vermont does continue to fare better than many states. The unemployment rate for July stood at 4.8 percent in Vermont and 5.7 percent for the country as a whole, and manufacturers in a few parts of the state are reporting strong showings, with some actual hiring taking place. Many companies reliant on export markets remain relatively robust due to the relative weakness of the U.S. dollar.

Kevin Dorn, head of the Agency of Commerce and Community Development, emphasizes that "we're in a slowdown, not a recession." Not a lot of new investment is being made at present, Dorn acknowledges, adding, though, that he expects a pickup to take place by early 2009.

Even the rest of this year may not be so bad, suggests Duane Marsh, director of the Vermont Chamber of Commerce. He anticipates solid returns from tourism for both the fall and winter. "The cost of gas is coming down a bit, and people who want to travel will build it into their budgets," Marsh says. "Vermont's still going to be a very attractive destination."

A steep economic downturn could actually encourage more out-of-staters to visit Vermont, adds Jerry Goldberg, director of the Brattleboro Area Chamber of Commerce. "There could be a Depression mentality," he says. "Nobody enjoyed experiencing luxury more than the people at that time. Maybe visitors will only spend $50 instead of $100, but they'll still come here for relief from all the grey and brown."

Ernie Pomerleau, a leading statewide retail developer, also takes the long view and finds it's not so dire. "This would be my fourth recession," Pomerleau says. "I can remember gas lines, 18 percent interest rates, double-digit inflation. Are these challenging conditions we're facing now? Yes. Are they impossible? No."

His Burlington-based company has been "pretty busy," Pomerleau continues, with most of its activity focused now on renovations rather than new building projects. He points to work on Shaw's supermarkets in Bristol, Randolph and Vergennes.

Opportunities do present themselves in difficult times, Pomerleau points out. Jamie Stewart, director of the Addison County Economic Development Corp, affirms that view, arguing that Vermont is "uniquely positioned" to play a leading role in an emerging economy that, he believes, will feature alternative energy as its distinguishing characteristic. "There's a perception that we're well ahead of everyone else in how Americans need to live now," Stewart says.

He likens the present period, technologically, to the late 1980s. Stewart recalls buying a 10-megabyte IBM computer then and thinking that it was an amazing machine. "Look at how far we've come and look at how we see alternative energy today," Stewart advises. "But if we're to achieve what's possible, there does need to be some serious work on the policy side in this state."

Manufacturers in the Bennington area are generally doing well, reports Scott Murphy, the town's director of community and economic development. Plasan USA, a Bennington-based maker of carbon body parts for automobiles, has landed a contract with the U.S. military that will enable it to add several workers, Murphy says. Vermont Composites, another local carbon-fiber manufacturer, is also registering a strong performance, he adds. And F.W. Webb, a distributor of plumbing and heating supplies, recently completed an expansion project.

Southern Vermont College is building a 120-bed, $5.6 million dormitory. And. until that project is completed in 2009, the school will house about 45 of its students in America's Best Value Inn, a motel on Route 7.

Local developers are generally being "cautious," says Joann Erenhouse, director of the Bennington Area Chamber of Commerce. "There's very little new development taking place."

The search continues for a new site for state workers following the 2007 shutdown of an office building that was found to be causing health problems for some of its 135 occupants. Bennington officials are hoping to locate the new facility downtown.

Carbone Honda and Toyota of Bennington is working on a 50,000-square-foot expansion, Erenhouse notes. Lil' Britain, a fish-and-chips shop, recently opened on North St., she adds, while the Bank of Bennington is renovating a building on Route 7A in Arlington as a branch office.

It's been a lively summer downtown, Erenhouse says. Visitors have been drawn to an outdoor collection of 15 life-size, life-like sculptures by J. Seward Johnson. The internationally known artist perfected his bronze-casting technique by working with a local contractor, Erenhouse notes. The Southern Vermont Garlic and Herb Festival, marketed under the slogan "Vermont Stinks," also attracted crowds at the end of August.

Across the southern part of the state, the development scene is quiet in the Brattleboro area, reports Jeffrey Lewis, director of the Brattleboro Development Credit Corp. Noting that his nonprofit organization serves as one of the region's biggest commercial landlords, Lewis does indicate that deals may be near on leasing a sizable share of the Credit Corporation's 500,000 square feet of available space.

Local machine shops are doing well, he adds, but "paper mills are feeling real challenged" by overseas competition. On the retail front, a "cool breeze" is giving Brattleboro merchants a chill, Lewis says, pointing, for example, to the recent closing of Capers, a restaurant that "fell victim to the economy." That site represents one of a few "missing teeth" in Brattleboro's downtown, adds Goldberg, chief of the area's chamber.

Both the major ski resorts in southeastern Vermont - Stratton and Mount Snow - have changed ownership in the past 18 months, Lewis points out. Major upgrades are being made in Mount Snow's snowmaking capacity, he notes, adding that it remains to be seen how many visitors will take advantage of that investment this winter.

"Modest growth" is taking place in central Vermont - most notably at Green Mountain Coffee Roasters' national headquarters in Waterbury, says Matthews, head of the region's economic development corporation. However, most of the company's recent and projected Vermont job additions are in the Burlington area, not Washington County. The coffee roaster opened a call center in Essex Junction last month not far from a manufacturing facility it established last year. Up to 20 jobs are expected to be created at the new call center in the coming months.

Central Vermont planners do foresee opportunities in the specialty foods sector, Matthews adds. And she says out-of-state companies can be lured to the area because of Vermont's "stellar workforce."

The Vermont unit of the US Army Reserve is taking occupancy of a 20,000-square-foot building in the Wilson Industrial Park in Waterbury, reports George Malek, director of the Central Vermont Chamber of Commerce. The facility is to be used for vehicle storage and maintenance.

Middlebury should learn soon whether it will acquire a Staples office supplies store in a shopping center along Route 7 south of the village. The town's Development Review Board recently presented developers with a set of conditions that must be met in order for construction to begin on the projected building of nearly 15,000 square feet alongside an existing Hannaford's Supermarket. Local officials want the project to include features intended to ease traffic flow.

A small-scale Sears appliance store is being built on Exchange St. in Middlebury's industrial district, notes Town Planner Fred Dunnington. The Counseling Service of Addison County is also constructing a building near Mr. Ups bar and restaurant off Main St. in addition to adding a new headquarters in Catamount Park on Exchange St.

The former Wire Wheel building on Route 7 near the Salisbury town line is being converted into a metal-recycling works, Dunnington adds.

Retail businesses remain generally healthy in the historic village, although two storefronts near the Route 7 rotary remain vacant - a former Chittenden Bank branch and the site of a video rental shop that moved across Washington St. about two years ago.

One of the biggest projects in Middlebury's history is scheduled to get underway next spring when work starts on a new village bridge over the Otter Creek. Town voters approved a 1 percent local option tax in May to cover about half of the project's estimated $16 million cost. Middlebury College has pledged to donate the remaining share over the 30-year life of a bond being used to finance the bridge.

Expansion projects at both the Jay Peak and Burke Mountain resorts dominate the development scene in the Northeast Kingdom. But a few other projects are also moving forward in St Johnsbury and elsewhere in the region.

The Vermont Food Venture Center, an incubator for specialty producers, is moving from Fairfax to the Hardwick Industrial Park, which is already home to makers of soy products, whey-based wood finishes and dairy products from cows not injected with growth hormones.

Discussions are underway regarding construction of a wood-pellet mill in North Troy, reports Steve Patterson, head of the Northeastern Vermont Development Association. A Westfield-based investor plans to situate the facility on a 10-acre lot in a local industrial park.

Retail activity in downtown St Johnsbury is fairly strong, says Joel Schwartz, the town's economic development director. "We still have motivated entrepreneurs wanting to tenant retail space," Schwartz notes, citing a low vacancy rate in St. J's main business district.

Weidmann Electrical Technology, a major manufacturing employer in the Kingdom, is getting help from the town for its plan to build an electricity sub-station and high-voltage power lines, Schwartz says. Weidmann can then qualify for lower utility rates from Central Vermont Public Service, potentially resulting in larger investments in the local facility by its Swiss parent company, Schwartz notes.

GE Aviation in Rutland intends to augment its 1,200-person workforce as the company completes work on a 27,000-square-foot addition to its engine blade plant on Windcrest Road.

"We have a very productive workforce in Vermont, and that means a lot to GE," says JoAnn Graffam, director of the Rutland Economic Development Corp.

As a sign of the enduring strength of the Rutland region's industrial sector, the former Tambrands facility, which shut down in 2002, is now filled with manufacturing enterprises, says Tom Macaulay, director of the Rutland Redevelopment Authority.

The area has been challenged by the loss of 90 jobs at Vermont Tubbs, a furniture maker in Brandon that ceased operations in July. That blow came in addition to the disappearance of another 200 jobs late last year due to the closing of MetroGroup, a bulk mailing operation based in Rutland.

But those losses could be offset by the proposed development in Rutland of a woodstove manufacturing plant and a mill to turn out the pellets used in the stoves. The developer, Luis Algarin of Florence, says the twin facilities could employ up to 600 people by 2012. Algarin is seeking to arrange some of the financing for his Vermont Wood Energy Corp. through a new Green VEGI program that provides special state tax incentives for companies that make products with environmental applications. The Vermont Employment Growth Incentive Program is sponsored by the Agency of Commerce and Community Development.

No new retail development is occurring along the Route 7 corridor in Rutland, although a Taco Bell fast-food outlet recently opened there and an International House of Pancakes will be built nearby if the state grants an Act 250 permit, Graffam says.

Several downtown businesses were affected by a flood in mid-July caused by severe downpours, but nearly all have resumed normal operations, Graffam notes. Some city merchants have benefited from the Friday Night Live events held this summer along a traffic-free Center St., she adds.

In St. Albans, the closing earlier this of a Macro International calling center resulted in the loss of about 15 jobs. But business has otherwise been fairly good in the Rail City due in part to an influx of Canadian tourists this summer, reports Ron Larose, director of the Franklin County Chamber of Commerce.

The proposed 160,000-square-foot Wal-Mart, to be located near the St. Albans Drive-In off I-89, remains stalled. The Vermont Natural Resources Council and another environmental advocacy group have challenged the Act 250 permit approved for the project. Larose says the super-store would be a boon to the St. Albans area - not so much because it will attract shoppers from elsewhere but because it will enable Franklin County residents to avoid driving to the Wal-Mart at Taft Corners in Williston.

Not much new is happening on the manufacturing front, says Tim Smith, director of the Franklin County Industrial Development Corp. "That doesn't mean our manufacturing sector is doing poorly," Smith points out. "A number of our firms are continuing to hire workers."

Efforts to revitalize the Fellows Gear Shaper building in Springfield received a boost in July with the announcement that it will receive a nearly $345,000 tax credit through a state downtown development program.

Recovery continues in downtown Springfield following a fire in July that gutted the historic Ellis Block, which contained the town's movie theater. The owners have plans to rebuild and reopen affected businesses, says Patty Chaffee of the Springfield Regional Chamber of Commerce.

Commercial development is proceeding at a steady pace in the White River Junction area, which typically records the lowest unemployment rate for Vermont labor markets.

Olympic Precision recently converted a 9600-square-foot former car dealership into a research and development facility in White River. An existing Toyota dealership has meanwhile won approval for a 17,000-square-foot addition, reports Matt Osborn, the Hartford town planner.

A 37,000-square-foot aquatic center is planned for Route 5 South, adjacent to I-89. Osborn describes it as a high-end facility that will include pools for competitive swimming.

Downtown, developer Byron Hathorn recently started construction on a 17,800-square-foot commercial building. It's the third commercial property he has built on Railroad Row.

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