What recession?

Fairfax County continues on a roll

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Fresh from signing a $3.8 billion deal this summer with the Bethesda, Md.-based National Geospatial-Intelligence Agency (NGA), Loudoun County-based GeoEye needed more room to grow. Staying close to this big client was important, but the company also needed to stick close to its 550 highly trained employees and to stay in an area where it could easily find new hires.

So it signed a deal to lease office space in Herndon in neighboring Fairfax County and will move early next year. That is about the time that the NGA will begin moving from Bethesda to a new building at Fort Belvoir in Fairfax. Helping to seal the deal for GeoEye was a package of state tax credits and other incentives worth about $200,000. Fairfax matched the state contribution with a study of road improvements in the Herndon area. 

GeoEye’s 10-year deal with the NGA will require a bigger staff, and executives say they’re in the right place. “Northern Virginia’s got a very educated labor pool,” says Randy Sherago, GeoEye’s vice president for investor relations. The company provides satellite images to a variety of buyers, including national security interests and private-sector markets. “There’s a lot of people there in the aerospace defense industries, and there’s a lot of satellite companies based there. You want to be close to your employee base,” Sherago says.

The GeoEye move isn’t the biggest gain Fairfax has made in recent years, but it does show how the rich can get richer. This county — which routinely lands at or near the top of the wealthiest localities in the nation in per-capita income — is coming out of the recession without having really experienced it. Its unemployment rate remains very low, at 4.6 percent in September, compared with 6.5 percent statewide and 9.2 percent in the U.S. Fairfax also has 22 of the top 100 technology companies in the region, according to a recent listing by Washington Technology magazine, and it is home to eight companies on the Fortune 500 list. Plus, Inc. magazine’s September list of the 500 fastest-growing companies in the U.S. included 24 in Fairfax, up from 16 last year.

Of course, a lot of the county’s economy leans on the presence of the federal government. Centreville-based Golden Key Group, for example, handles human-resource duties for scores of federal agencies and contractors. (It’s one of the companies on the Inc. list.) Robert Brewer, the company’s vice president for operations, says federal agencies increasingly have been outsourcing their HR tasks for several years. And now, the Base Realignment and Closure Commission’s decisions to move thousands of federal workers (including the National Geospatial-Intelligence Agency) to Fort Belvoir and other locations around the country by next September is creating even more demand for its expertise. “They’ve got to figure out how to move those people, and we’ve got folks who can help them figure that out,” he says.
Golden Key’s revenues grew 614 percent during the past three years. It now has more than 70 employees and expects to grow. Again, Fairfax is where it will stay. “We’re probably going to end up in Reston,” he says. “We haven’t finalized that, but we’re definitely staying in Fairfax.”

One reason the company is looking at Reston is the attraction of being close to the extension of the Metrorail system. That points up another of the county’s, and the region’s, biggest challenges: Getting people from one place to another can be extremely difficult on Northern Virginia’s crowded transportation network. Right now, the first phase of the Silver Line extension from Falls Church to the eastern edge of Reston is under construction and will be completed in three years. The second phase will continue from Reston to the Loudoun side of Washington Dulles International Airport.

There are also two HOT (high-occupancy/toll) projects under way — on the Beltway from the Springfield interchange north to Tysons Corner, and from near the Pentagon in Arlington County south to Spotsylvania County. For now the HOT lanes construction on the Beltway is a major headache for area residents, but supporters say the extra lane capacity will help.

The construction of the Metrorail line to Dulles is creating traffic headaches, too, as workers tear up highways to make room. But that project is key to the expansion of Tysons Corner, the county’s best prospect for even more commercial success. In June the county’s Board of Supervisors approved a 20-year redevelopment plan for the Tysons area, which is slated to get four Metro stations under the new rail line.

The purpose of the plan is to transform Tysons from a giant, car-dependent cluster of office buildings to a walkable, mixed-use urban core. Tysons now has more than 26 million square feet of office space, and that could rise to 45 million square feet under the plan. There would be no cap on housing; Tysons needs more people to transform it from a giant office park surrounded by bad traffic. It now has about 17,000 residents but could grow to more than 100,000 people. Much of the development would occur within a quarter-mile of the four Metro stations. “There’s probably nothing more significant than the approval this year of the Tysons Corner plan,” says Stewart Schwartz, executive director of the Coalition for Smarter Growth. “This would truly make Tysons Corner Fairfax County’s commercial downtown.”

Tysons has thrived, but other parts of the county have not, and Fairfax leaders are looking for ways to spread the wealth. Older shopping areas and commercial centers on the county’s eastern boundary, such as Seven Corners and Bailey’s Crossroads, are being studied with an eye toward redesigning the transportation networks and encouraging more commercial growth. And, much of the U.S. 1 corridor along the county’s southeastern edge is considered for a redevelopment plan.
Finding a way to encourage development in the southern and eastern parts of the county is a big challenge. “Even with all its wealth and success, there is some concern in these older corridors,” Schwartz says. His group would like to see the county create a redevelopment plan along the U.S. 1 corridor that is similar to Tysons, by allowing higher densities and encouraging more transit options instead of driving. “The problems in the south and east areas can mean more cross-county commutes,” he says. “We’ve got to get jobs down there.”

Gerald Gordon, president of the county’s Economic Development Authority, expects that the BRAC-related job shifts — resulting in the move of about 10,000 federal jobs to Fort Belvoir in southeastern Fairfax — will drive new development there. Along the southern half of U.S. 1 there’s a shortage of commercial office space to hold the government contractors who are likely to follow their federal clients to Fort Belvoir. “We’re going to see a lot of office space [built]; our estimates are as much as 8 million square feet in the next decade,” Gordon says.

The BRAC-related moves are good news for Fairfax, particularly when the wind is blowing in the opposite direction on federal spending. The Obama administration’s 2011 budget proposes a 4.8 percent decrease in federal contract spending, according to FedSources, a Washington-based firm that tracks government spending. And Secretary of Defense Robert Gates already has proposed cutting defense contractor spending by 10 percent a year for three years.

That’s not good news for Fairfax, home to federal contracting giants such as SAIC and General Dynamics. But Gordon says the county isn’t the government town it used to be, because it now has other business clusters, such as telecommunications and IT, and it is seeing some growth in areas such as biotechnology. If these proposed federal spending cuts do happen, “it would still hurt, and it would hurt a lot of specific companies, but it wouldn’t be as devastating as it would have been a generation ago,” he says. “The bottom line is that for a lot of these companies, if you want to be successful, you’ve got to be in a business community where there is success, and they found that in Fairfax.”

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