- The Washington Times - Monday, June 3, 2002

Businesses continue to flock to the metropolitan area, despite less-than-stellar employment figures over the last year that show continuing layoffs in certain sectors, such as the telecommunications industry.
News reports give mixed messages about the level of recovery taking place. On one day, drug-maker Eli Lilly announced plans to build a 600,000-square-foot insulin-manufacturing facility in Prince William County. That should bring in 700 new jobs and spur similar businesses in the region.
But days later, Teleglobe Inc., a Reston-based telecommunications concern, said it will lay off between 700 and 800 of its local work force in anticipation of a sale of the entire company.
Nevertheless, interviews with economists, analysts, business and local officials indicate that the Washington area is beginning to recover from the recession and the September 11 terrorists attacks on Washington and New York. Many expect that corporate hiring freezes throughout the region are thawing.
The increased business activity in this area ranges from biomedical and bioinformatics to information technology, health care and defense-related business tied to the Defense Department or as part of the homeland security initiative.
Who will be hiring
From where specifically will the new jobs come? HireStrategy Inc., an executive search firm that maintains its own database on employment trends, expects some of its larger clients to begin hiring and rehiring employees in the third and fourth quarters. Those clients include: Northrop Grumman, CACI Inc., Dyncorp, American Management Systems, SAIC and financial services firms such as CapitalOne, Fannie Mae and Freddie Mac.
Unlike past recoveries that relied mainly on government-related business, HireStrategy expects hiring from a more broad-based group of companies, from financial services, real estate and construction to telecommunications and electronic-commerce businesses.
"We've also seen an uptick in the e-learning area," says Paul Villela, president and chief executive officer of HireStrategy. Those Northern Virginia electronic-learning businesses include Platinum Technology, Carney Interactive and Smartforce.
The federal government is expected to start hiring 6,000 workers per year for the next three years, says Greg Leisch, founder and president of Delta Associates, an Alexandria real estate information business. A lot of the secret and security-related agencies will hire many personnel in coming months. Government contractors will hire 27,000 workers per year for the next three years, Mr. Leisch adds.
What's more, several major construction projects that had been on hold during the recession are expected to move forward, bringing more jobs to the region.
The District has an inventory of more than 500 construction projects worth at least $1 million each, according to the nonprofit Washington, D.C., Marketing Center, which functions much like a county economic-development agency.
Nearly 10 million square feet of office space is under construction in the District, with another 20 million square feet in the planning stage, according to the center. In all, some 27,000 units of single- or multifamily dwellings, renovations by the Department of Housing and Urban Development, and condominiums are under construction or in the planning stage.
"This is probably the most robust economy in the District's history," says Michael Stevens, president of the marketing center. "We probably have the strongest office market in the county now and some of the lowest vacancy rates."
Much of the District's activity revolves around the construction trade, but retail is re-emerging as a force with the Rhode Island Shopping Center being built at Brentwood and Rhode Island avenues. This month, Home Depot will open its doors at the shopping center. Also, the DC USA project, a mixed-use development in Columbia Heights, has yet to begin construction of the 550,000-square-foot facility, but negotiations are under way with anchor tenants.

Good prospects
Across the Potomac River, Northern Virginia's Loudoun County is home to 200,000 residents and has 47 active "prospects" or new businesses that may come to the area, said Robyn Bailey, senior marketing manager for the Loudoun County Department of Economic Development. In March, Loudoun County issued permits for 328,710 square feet of nonresidential construction.
One visible project in Loudoun County is the soon-to-be built Howard Hughes Medical Institute's biomedicine research campus. The $500 million facility will be built on the banks of the Potomac River near Leesburg. Although the scientific staff will number only around 200, county officials believe the new campus will serve as a magnet for similar businesses bringing more jobs.
The same theory applies to Eli Lilly coming to Prince William County, concurs Martin Briley, executive director for the Department of Economic Development. Construction on the insulin-making facility is scheduled to begin later this year and be fully operational by 2007.
The influx of new businesses to Northern Virginia has slowed considerably from 2000 when the area was awash in many information-technology companies. But there has been movement of late. Some of the growth in the region involves companies that are enhancing their presence or moving here from a nearby area.
BAE Systems Inc., which employs 4,500 in the metropolitan area, will soon open its 135,000-square-foot facility on Sunset Hills Road in Reston. The Reston facility, one of four divisions that eventually will employ 1,000, will report to BAE System's Information Systems Sector in San Diego and handle systems integration for the U.S. government.
BAE Systems and telecommunications giant Cable and Wireless PLC, which employs 2,000 people here, are two of 115 British-based companies in the metropolitan area, according to the Greater Washington Initiative, a division of the Greater Washington Board of Trade.
Because of the synergies that exist, Washington has become fertile ground for these companies, says Timothy Priest, director of business development for the GWI.
Prince William County hopes to attract bio-tech and additional pharmaceutical firms. American Type Culture Collection (ATCC), a nonprofit concern that collects and distributes biological materials, announced a 20,000-square-foot expansion to its 100,000-square-foot facility to accommodate business growth. The Eli Lilly facility will be adjacent to ATCC.
For more than four years, at least 125 technology-related and corporate clients have invested around $1.8 billion in Prince William, a figure that doesn't include working capital and nontaxable items. Help in attracting business also could come from academia, specifically the 100-acre Prince William campus for George Mason University. Three of the four planned buildings on campus have been built. When complete, the campus will hold classes in the bioinformatics, biosciences and biotechnology.
Analysts believe that Prince William's interest in the biosciences field may be because the telecommunications business has declined throughout the region, although the county remains home to two AOL Time Warner technology centers.
Neighboring Arlington County is witnessing the "shuffling of the deck chairs," says Terry Holzheimer, director of the business investment group of Arlington Economic Development. Businesses are coming to Arlington from a nearby locale and existing companies are undergoing limited expansion.
Example: The Federal Deposit Insurance Corporation (FDIC) announced recently that it will expand its Arlington campus significantly. The State Department's Bureau of Diplomatic Security has leased an entire office building at 1801 Lynn St. WJLA TV-7, an Albritton communications concern, is relocating from the District to the Twin Towers in Rosslyn. WJLA will fill the space vacated by Gannett's USA Today, which has relocated to Tysons Corner.
Montgomery County, home to several bio-sciences and information-technology companies, is talking to 30 companies about relocating there. The county is in advanced talks with a New Jersey biotech company about relocating here and doubling in size within a year.
"We won't land all 30, but we usually do fairly well," says Dave Edgerley, director for the Montgomery County Department of Economic Development, which invests around $6 million annually to attract new business.
Montgomery County's success in attracting biotech business is partly because of the Shady Grove Life Sciences Center, a county-owned business park that is home to several biotech firms, including EntreMed and Otsukua Pharmaceuticals.

Muddy waters
Whatever recovery is taking place has been muddied somewhat by the Department of Labor's seasonally unadjusted data that show continued job loss in the metropolitan area year over year.
From March 2001 to 2002, the District lost 600 jobs. Yet for the same 12-month period ended February 2002, the District showed that 1,600 jobs were created, an indication that the District is recovering faster than surrounding areas, according to one economist. Still, the District maintains the highest unemployment rate in the metropolitan area.
"We are on the rebound. No question about it," says Greg Irish, director for the D.C. Department of Employment Services. "The District and the area will benefit because of the applications of technology for defense and war."
Government procurement will account for a lot of the vibrancy of the region, he adds.
As of May, there were 218,500 government workers in the District, Mr. Irish says. Government employment for the entire metropolitan region has gone from 606,400 in February 2000 to 608,800 currently.
Suburban Maryland lost 10,300 jobs or 1.1 percent of the 909,400 jobs for the 12-month period ended March 2002 , while Northern Virginia lost a whopping 24,500 jobs, a 2.1 percent decline. As of March, suburban Maryland and Northern Virginia employed 909,400 and 1,149,700, respectively.
Bill Mezger, chief economist for the Virginia Employment Commission, says the job losses in Northern Virginia were mainly in two sectors, transportation and business services, which saw an 8.7 percent decline in the 12-month period ended March 2002. In retail and wholesale, Northern Virginia lost 1 percent of the jobs. In the financial sector, the area lost 0.5 percent.
Employment in Northern Virginia appears in stark contrast to its 5 percent growth rate one year ago. But there could be other reasons why the downturn appeared to be worse in Northern Virginia than in other areas.
"The job loss in Northern Virginia was widespread and the downturn was made worse by the hype that kept expectations unrealistically high," suggests Charles McMillion, chief economist for MBG Information Services.
But others like economist Stephen S. Fuller, a public policy professor for George Mason University, believe the problem lies with the data-gathering methodology for Northern Virginia that fails to count temporary workers and entrepreneurial activity.
This oversight makes the situation look worse than it actually is, says Mr. Fuller and county officials. Regardless of the debate, Northern Virginia and the metropolitan region will continue to be shielded on the downside because of the federal government's continued presence and because the area has a more diverse mix of businesses.
"This resilience of this economy is quite apparent, and we continue have the lowest unemployment rate among the top 10 metropolitan areas," Mr. Fuller says.
HireStrategy's Mr. Villela agrees that job loss, in Northern Virginia particularly, is troubling. But the continued strength of government contracting and direct hiring, financial services and other areas such as real estate development "help keep things in balance in our area," he concludes.

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