With an economic recovery on shaky ground and cases of COVID-19 rising nationwide, economic leaders from across Northern Virginia gathered for a virtual version of the Northern Virginia Chamber of Commerce’s Annual State of Economic Growth on Thursday.
The event came amidst some positive news for the state. Earlier in the day, state officials announced that the revenue shortfall in fiscal year 2020 was $236.5 million, well below the possible $1 billion loss that some had expected. All told, revenues in the previous fiscal year rose by 2%, but the General Assembly had budgeted for a 3.1% increase.
Meanwhile, Amazon announced last week that it had hired 1,000 workers over the last year for its HQ2 project in Arlington, though a decrease in tourism forced Arlington Economic Development to withhold the first of 15 incentive payments to the company for the project.
And according to keynote speaker Stephen Moret, CEO of the Virginia Economic Development Partnership, Northern Virginia had fared better than most of the state at the worst point in the economic crisis. The state, meanwhile, has done better in terms of percentage of job losses and other indicators than most of the country.
“Northern Virginia has done better than just about every other region in the state. … Probably the biggest reason is the large presence directly and indirectly of the federal government,” Moret said. “If you look at Virginia as a whole compared to the rest of the country we’ve been doing significantly better. Two reasons we’ve done better are that strong connection to the federal government directly and indirectly; roughly a third of the Virginia economy is tied to the federal government. … And professional occupations that really lend themselves to be able to work remotely.”
For the panel discussion, Moret was joined by economic development professionals from Alexandria, Fairfax County, Arlington, Prince William and Loudoun Counties.
All described similar approaches to the early part of the shutdown, which were primarily predicated on getting money to small businesses through grants and loans as quickly as possible to compliment the Payroll Protection Program coming from the federal level.
Moret said that most economists were projecting a “Nike swoosh” recovery that would produce strong third and fourth quarters, but local development leaders were more cautious, arguing that the region — like the rest of the nation — was in the “stabilization” phase and hadn’t yet entered “recovery.”
“I would characterize that initial phase as really chaos in a sense. Like others, we responded by trying to get the resources out to our existing business community, we were in reactionary mode,” said Christina Winn, the executive director of the Prince William Department of Economic Development. “I would really call [stabilization] really building the plane as we’re flying it. Here in Prince William County we’re standing up microgrant programs, we’ve put out PPE distribution, we’re pivoting and we’re trying to be as agile as possible as we try to respond and give our business community that support and that information that they need.”
Hopes of a V-shaped recovery in Northern Virginia and elsewhere have not come to fruition. According to Thursday’s Virginia Employment Commission, continuing unemployment claims increased by about 2,200 to 107,062, indicating that only about 58% of all first-time claimants have returned to work. In the week that ended July 4, another 5,775 filed for first-time unemployment, which was down about 6% from the previous week but still about 10 times more than normal levels.
But the region, the panel agreed, has a number of distinct advantages, particularly with the way it has diversified its workforce and become attractive to the tech industry. The economic development heads touted the big names and tech projects on their way to Northern Virginia: Microsoft in Fairfax, Micron in Manassas, Virginia Tech’s forthcoming “Innovation Campus” in Alexandria and a number of currently “classified” data center projects in Loudoun County. The tech industry projects to be relatively stable going forward, unlike what was being described as the “touch economy”
Two concerns emerged from the group, however, in the event that widespread remote working becomes the norm post-pandemic. First was over the commercial real estate market. Most local development panelists said that companies searching for office space in the region were still looking, but new leads had dried up.
“It’s going to be a long build back and there’s no question for us,” said Buddy Rizer, the executive director of economic development for Loudoun County. “We know that the telework thing is going to be kind of a mixed bag… We’re also trying to fill office space and build office space around our two new Metro stations. We’ll need people out in the economy.”
The other concern was whether or not housing costs may drive some remote workers away from the region.
“It would be crazy for us not to see that as a potential threat,” said Stephanie Landrum, the CEO of the Alexandria Economic Development Partnership. “Our cost of living is right at the top and so if people have the ability to relocate somewhere else and keep a salary like a D.C.-based salary, that certainly is something people might do.”
But as would be expected from a panel of local economic development leaders, optimism about the region as a whole was everywhere. Between a largely well-educated professional class, big names in technology arriving frequently and the stability provided by the federal government, if any area was prepared to weather this economic storm, the panel agreed, it’s Northern Virginia.
“I think there’s a lot of interesting things that are going to play out, but I think overall we’re still in a really good position in Northern Virginia,” Winn said, “because we have worked really hard over the past 5-10 years to really diversify our economy so that if one piece is struggling, the rest can help keep it afloat.”