New Jobs, Professionals to Provide Needed Boost

As Northern Virginia digs out of a struggling economy, there is a light at the end of the turmoil, according to David Versel, senior research associate from the George Mason University Center for Regional Analysis.  Versel was joined by Dr. Gerald Gordon, President and CEO of the Fairfax County Economic Development Authority and Whitney Winn, Outreach Manager of the Dulles Corridor Metrorail Project, for NVAR’s April 7 Market and Economic Briefing. The presenters offered insight into this region’s changing economic makeup. 

The professional sector, employees earning $60,000 or more, is the key, Versel said. As current businesses find other sources of revenue and new businesses come into the area, Versel believes that the Northern Virginia economy will not only recover, but continue to increase in a steady and healthy pace. 

Both the 2008 market crash and last year’s federal government sequestration have negatively affected our region’s economy, he explained. “Federal procurement, the life blood of Northern Virginia, is the reason why what you see in this region now exists,” said Versel. “We had $82.5 billion in federal contracts in 2010; in 2013 [it dropped to] $69 billion, a 16 percent decline in that three-year period.” 

The 25,000 federal jobs that we gained during the federal stimulus were lost in 2014, he noted. “Federal employment is down almost 7 percent from four years ago. The federal payroll has gotten smaller, [due to] the decline of employment. Also, older workers are retiring at 13, 14, 15 GS levels, and are being replaced by younger workers at the 9, 10 and 11 levels. So less buying power, less contract spending – that’s had a tremendously negative effect on our economy,” stated Versel.

“There is a gap between the available multi-million dollar luxury homes and lower-end properties such as townhomes and condos found in higher density areas."

Although the higher paying jobs from the professional sector have declined and the lower paying jobs from education, healthcare and retail have increased, Versel said that he is beginning to see growth in the professional sector. 

Fairfax County has been helping in that effort by courting businesses in such places as Southern California and overseas. Plus, current businesses have started to branch out. 

“When Governor McDonnell was in office, he requested a meeting with all the prime contractors. The governor wanted to know, ‘What can I do to help you protect your federal contracts?’ ‘Wrong Question,’ [the executives said].” They told him that they have started to take their federally acquired skill set and apply them to private contracting, Gordon explained. 

Since Fairfax County has been supportive of economic growth for more than 30 years, it has attracted business from all over the world.  Most Virginia governors and Fairfax County Board chairs have emphasized economic growth, which has contributed to local taxes and flexible land policies, according to Gordon. “Businesses are comprised of people. I hear business leaders say ‘We feel loved here,’ or ‘We didn’t feel loved in Cleveland.’ Northern Virginia is a great location to influence public policy without being in DC to do it,” said Gordon. The more companies move in, the better our economy and real estate market will be, he added. 

Currently, the real estate market is growing at a healthy rate, about 4-8 percent a year, according to Versel.

Inova Health System’s long-term lease of Exxon’s property in Fairfax County is another potential for growth in our community, said Gordon. Inova strives to be a leader in translational medicine, which provides genetic research that could transform the medical field. This scientific hub could attract additional medial and research facilities to the area, bringing in more professionals to our local economy, he explained.

An influx of new talent into the area could also pose a challenge, Gordon added. There is a gap between the available multi-million dollar luxury homes and lower-end properties such as townhomes and condos found in higher density areas. There is not much inventory in the middle ranges. A professional making $100,000 a year, Gordon says, won’t be able to buy a single-family home, which would contribute more to the real estate industry, as well as our tax base. 

“...despite the economic recession, there is a positive outlook for Northern Virginia.”

Casting a wider regional economic net, the addition of the Silver Line Metro poses an attractive option for Northern Virginia residents. Ridership exceeded expectations at the Reston station, according to Winn. The expansion of the Metrorail provides an attractive option for current and new residents to enjoy the benefits of Fairfax County, while commuting to work elsewhere within the Metro D.C. area. Winn detailed the Phase Two construction, which has already begun at Dulles Airport. When asked when the Silver Line’s Phase Two opening, she explained that the estimated date is 2018, but it is still too soon to tell. At press time, that project date was reported to be delayed until at least 2019.

While recession effects still linger here, these should soon be in the rear-view mirror, the speakers agreed. With current businesses branching out to create new sources of revenue, and with new firms that are not dependent on the federal government moving here, the region will continue to attract professionals. Those people will buy homes, support local businesses and boost the Northern Virginia economy, Winn projected.

Versel, Gordon and Winn agreed that despite the economic recession, there is a positive outlook for Northern Virginia. Local contractors have expanded their reach beyond government contracts; incentives continue to attract businesses from outside the area; and the Metro expansion offers more options for the regional workforce.