Posted on 07/24/19 by Christina Winn
Five years ago, the Arlington Economic Development Business Investment team set out to reduce Arlington County’s vacancy rate and diversify the economy. It was a daunting task that encompassed many challenges. After all, Arlington had historically been known as a lower-cost real estate alternative for the federal government. However, the last decade had brought vacancies as a result of BRAC, sequestration and increased competition from neighboring jurisdictions. What’s more, no one in the market saw Arlington’s potential as a thriving technology ecosystem.
One of the hardest challenges in marketing Arlington has been that companies weren’t familiar with our highly-educated, tech workforce, urban environment and extensive transportation network. Through various marketing and promotional efforts, both alone and as a region, our team delivered that message through various channels to reach site selectors, real estate brokers and executives in growing companies who would find Arlington’s assets attractive. It worked. Looking at the overall totals, 57% of the square footage, or 7.6 million square feet, is attributable to companies new to Arlington. In addition to Amazon, this includes companies like March of Dimes, Nestle USA and Lidl.
This past fiscal year was truly epic in Arlington’s economic development history. As you probably know, we successfully won the bid for Amazon HQ2, validating Arlington as a leading location for tech companies and highlighting our highly-educated, tech workforce. In total for FY19, we worked with 26 companies that will create or retain 7.2 million square feet of office space and over 42,000 jobs. New companies like Yext, Rapid 7 and Improbable joined Amazon in choosing Arlington and represent industry technology clusters such as software, cybersecurity and consumer tech. What is truly exciting is that we are seeing companies we recruited years ago now thriving and expanding. Although we continue our work to diversify Arlington’s business base, we prioritize our existing, foundational industries and large office space users understanding that they are the backbone of our office market. This fiscal year, we were thrilled to have worked with Public Broadcasting Service (PBS) to retain 120,000 square feet and 500 jobs in Arlington, as well as the General Services Administration (GSA) to retain the Drug Enforcement Agency (DEA) and their museum, retaining 511,000 square feet and over 2,000 jobs.
Our retention and expansion team has also been busy building engagement programming, developing opportunities for companies to take advantage of valuable public relations efforts, and creating marketing and promotional opportunities through AED sponsored conferences, trade shows and speaker panels. The team also developed robust relocation services to ensure new companies successfully launch in Arlington. Over the past five years, our team worked with 110 companies that chose to stay and renew or expand their offices in Arlington. Overall retention and expansion accounted for 5.7 million square feet and 38,000 jobs. We saw companies such as Deloitte, Applied Predictive Technologies and ABC 7 News Channel 8, key representatives of our strong professional services, technology and media sectors, grow in our commercial corridors by leasing additional space and creating more jobs.
Looking at the entirety of the past 5 years, you begin to see how these efforts have paid off. In 2015 the commercial vacancy rate was at its highest point at 21%. According to CoStar, the vacancy rate is now at 16.6%. Overall, we have worked 204 deals with over 186 companies since 2014, representing 13.5 million square feet. Almost half of those companies are in technology-related industries.
So, what’s next for Arlington Economic Development? The momentum is moving in the right direction, we gained national and international recognition through our HQ2 win and, on our way to the win, made huge strides in building regional partnerships. Moving forward, regional efforts to leverage scarce resources will be key to capitalizing on our newfound acclaim. Gone are the days when we spoke with a company about the advantages of Arlington and they think we’re talking about Texas! Regionalism will be key in taking advantage of innovative grant funds like GoVirginia, as it requires collaboration between communities and partnerships with the private sector. Recruiting and retaining our highly-educated workforce will be another key initiative, ensuring that the reason companies choose Arlington remains intact. And lastly, small business opportunities, not only for tech companies, but for retail, restaurants and service providers will be plentiful. We anticipate that with Amazon HQ2 will come many opportunities for entrepreneurs to venture off and create their own legacy businesses. AED will be right there to provide services and support in capacity building, access to capital, business planning and marketing and promotional efforts to ensure these entrepreneurs have what they need to succeed.
Sadly however, I will not be here at AED to oversee these efforts and watch our economy unfold. I have accepted a new position in Prince William County as the Executive Director for Economic Development. As such, this will be my last blog representing Arlington. I can assure you though that Arlington’s Business Investment Team is a group of highly-educated, capable and creative professionals that will not only continue these efforts but will create a new legacy of opportunities and successes that results in a lowered vacancy rate, expanded commercial tax base and more diverse economy.