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Spring 2011 Edition - OPPTY

OPPTY Spring 2011

In This Issue


Metro Funding Reaches Next Station

Each day, 1.2 million riders use Metro trains and buses to get to work, travel around the region, and visit the many landmarks and attractions of Greater Washington. Metro is the centerpiece of the region's transportation system.

The recent budget debate related to a potential federal government shutdown represented a real threat to badly needed funding for Metro safety improvements, putting at risk $300 million each year for the next nine years. The Greater Washington Board of Trade, which counts transportation among the region's top priorities, came out strongly in favor of full funding for Metro.

While future funding is not hurdle-free, the regional congressional delegation came through strongly in supporting this vital economic engine and preserving the fiscal year 2011 funding. The Board of Trade was proud to work alongside Metro's leadership in securing these critically needed resources to preserve Metro's safety and efficiency.

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Preparing for a Shutdown: Round 1 of 3

In March and April, when national news headlines were dominated by the looming possibility of a federal government shutdown, regional businesses braced for the worst. In a survey of regional companies conducted by the Board of Trade, 71 percent were concerned or very concerned about the effects of a shutdown. Approximately 60 percent did not consider themselves prepared for those effects.

The Board of Trade offered a seminar to advise businesses on making staffing plans, contacting government agencies to develop contingency plans, securing funding, and settling outstanding bills, among other recommendations. The Board of Trade followed up by creating a section on its website dedicated to providing important information on preparations.

Although lawmakers were able to avert a shutdown in April, this was only the first of three major fights to be waged on Capitol Hill this year. In the coming months, Congress will enter negotiations regarding our government's debt limit as well as the 2012 federal budget. These discussions will be contentious and could have drastic effects on our region. The Board of Trade will closely follow the debates and keep its members informed of impending actions.

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Rail to Dulles at Risk

According to plans, by 2016, Metrorail's 23-mile Silver Line will connect Washington, D.C., to Dulles International Airport and Herndon, Va., with major stops in Tysons Corner and Reston, Va., expected to open in 2013.

This major regional initiative hit a controversial hurdle recently, though, when the Washington Metropolitan Airports Authority announced the decision to put the Dulles Metro station underground, which would cost $330 million more than the initial plans for an above-ground station. This announcement caused concern from the local, regional, and state government entities that would ultimately bear the cost.

The Board of Trade played a significant role in securing the Silver Line project and is closely monitoring the situation to ensure the project isn't put at risk. "[The station] should go where it was always supposed to go, because there isn't money to put it anywhere else," said Jim Dinegar, Board of Trade president and CEO, in a story in The Washington Post. "It's a tight budget time, and it's going to be a tight budget for the foreseeable future."

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St. Elizabeths: The biggest federal construction project since the Pentagon

THE ISSUE

Within the next five years, 14,000 new people will go to work in a heretofore underused part of Washington, D.C. The implications and opportunities are so large and numerous that they are difficult to grasp, but one thing is clear: This project has the power to transform an important section of the city beyond recognition.

The Department of Homeland Security (DHS) is consolidating its headquarters to the historic St. Elizabeths hospital site. At $3.4 billion and 4.5 million square feet, it is the largest federal construction project since the Pentagon. The size and scope, along with DHS' $40 billion-plus in annual spending, give it the power to drive the region's innovation economy and completely change the nearby neighborhoods of Anacostia and Congress Heights.

"Other than our frontline mission, this headquarters consolidation is our highest priority," says Don Bathurst, chief administrative officer for DHS. "What we're doing at St. Elizabeths is the critical mass of headquarters consolidation."

That critical mass includes the federal government's 185-acre West Campus and the District of Columbia's 183-acre East Campus. The Greater Washington Board of Trade long has pushed for a group dedicated to smart planning and development at St. Elizabeths. Now, Victor Hoskins, deputy mayor for planning and economic development, is leading just such a collaborative effort.

"The size of the projects presents an amazing situation," Hoskins says. "I can't recall, in my own professional experience, having such a large assembled parcel anywhere, especially in the city."

Crystal City's evolution alongside the Pentagon is similar, but St. Elizabeths exists in an underserved urban core. The project's transformative potential may be more like the revitalization of Pittsburgh as an innovation center. In fact, through a grant from the U.S. Economic Development Agency, the District is leading a team of experts from Virginia Tech University and Carnegie Mellon University to examine the ways St. Elizabeths can serve as an innovation hub for regional economic activity.

THE OPPORTUNITITIES

For decades, St. Elizabeths has operated as a self-contained oasis. Now, it will host a workforce the size of a small city and create countless business opportunities well beyond its walls, now and in the future.

» Demand by Design Many of the biggest opportunities will come from serving the 14,000 employees at St. Elizabeths, and the projected 2,000 daily visitors. Despite having two Green Line Metro stations, the area lacks the amenities found in other parts of the city.

DHS will have on-site services, but it also plans to strategically push its people out into the community. For example, Bathurst notes that the cafeteria serving the West Campus will be intentionally undersized, with only approximately 300 seats.

However, employees venturing out need destinations, such as restaurants, grocery stores, and medical offices. Private enterprises have the opportunity to fill current voids.

» Real Estate and Development The District is overseeing a master planning process for mixed-use development at the East Campus. The goal is to maximize incentives and minimize risks for the private sector. A plan should be released this fall.

Butch Hopkins, CEO and president of the Anacostia Economic Development Corporation, expects that better amenities will make surrounding neighborhoods attractive for new employees. Local businesses Curtis Companies and Four Points LLC are working on a mixed-use, multibuilding, 1.5 million-square-foot master plan for Anacostia's Business District, with the first building set for redevelopment this fall. Such companies see huge growth potential, particularly centered around the Green Line.

"Land is cheaper east of the river," Hopkins says. "I'm hoping that the 14,000 people who work here will see the growth and say, 'I don't have to commute. I can live here.'"

» Contracts and Technology Professional services companies that specialize in contract jobs with DHS will want to find space on or near the East Campus.

The District also is pursuing a science and technology center for the East Campus, in part to give companies of varying sizes space to demonstrate their technology on location. DHS spending often relates to security and first-responder technology — technology that finds its way to the larger marketplace, too.

Collaborative efforts aim to turn the region into a regional innovation cluster, featuring a high concentration of techcentered businesses, workforce develop- ment, product development, and other efforts.

» Opportunities Beyond the Obvious Development of the West Campus includes a 1-to-4 ratio of parking spaces to employees, so DHS is encouraging the use of public transportation. There also may be potential for commuter lots. With that in mind, the U.S. General Services Administration likely will offer opportunities in the future for private shuttle services and parking construction.

The benefits will extend beyond construction, transportation, tech, and professional services firms, though. For example, advertising and branding firms should have the opportunity to compete for contracts to help spread the word about this transformative project.

"In the next few years, more than 6 million square feet of development will be in place in an area of the District that will be transformed because of it," says Jim Dinegar, president and CEO of the Greater Washington Board of Trade. "Think about the possibilities. Think about the opportunities."

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YOUR MOVE: Make the right moves to recruit and retain top talent

THE ISSUE

Confidence is growing across the Greater Washington region as companies begin to aggressively swing attention and resources back to recruiting and retaining employees. With the recovery taking hold, competition for talent in the private sector is increasing quickly again. The signs are unmistakable, in chatter at events, in the news, and in the reinvigoration of fresh eyes that new employees bring.

Companies are growing again, and new companies are expanding here — all while the unemployment rate of the region's college-educated workforce hovers near 3.5 percent. Demand is outstripping supply.

"It's time for all employers in the region to revisit richard mia/theispot C recruiting and retention strategies," says Lorraine Lavet, sector leader for the executive search firm Korn/Ferry International.

Further complicating the dynamic has been a new "competitor" for talent: the federal government. In a March 2011 Wall Street Journal survey of young professionals, government agencies were among the 10 most desirable employers, alongside Google and Apple. With new financial regulations and health care reform, the government sought more professionals than ever, especially accountants and finance professionals.

Factors such as more predictable and shorter hours, abundant holidays, impressive benefits packages, and a clear path for job progression in government work are cited as reasons for its appeal. Government hiring has slowed, and the future of benefits such as pensions is in doubt. Nonetheless, federal competition will continue to be a factor in certain sectors.

THE OPPORTUNITIES

Companies can position themselves to win the new race for the region’s top talent by taking a hard look at their policies. Don’t be last.

» Revisit HR Strategies What do employees truly want?

Lavet notes that workplace flexibility is increasingly important. The ability to work from home sometimes is so appealing that some employees will accept a lower salary as a tradeoff. Others want to be in a challenging environment with clear paths for growth.

It's not just about the money. Organizations must identify the people they cannot afford to lose and tailor packages to their needs and preferences, Lavet says. "These people are the guts, the heart and soul of your firm. As the hiring market heats up around the region, you can't afford to lose them, especially not to your competition."

» Refocus Resources During the recession, many companies focused on immediate crises and likely ignored recruitment issues. Leading organizations now are rededicating attention and resources to this crucial area. In the current climate, finding the next indispensable employees is just as important as keeping the current ones.

Candy Duncan, managing partner at big-four accounting firm KPMG, says her firm has ramped up its direct-entry recruitment. "We constantly make sure we are communicating what the profession has to offer," she says. For newly minted accountants, for example, Duncan emphasizes that they will have the opportunity to work shoulder-to-shoulder with executives who have been atop the field for 20 or 30 years.

The message will vary, but the idea remains the same: Market your strongest attributes, and let potential employees know their work will be meaningful.

» Track Trends Perhaps most important, pay attention to trends in the region and react accordingly.

For example, even as federal hiring slows, demand will remain as the government outsources key functions to the private sector. More companies now view the government as a strong place to recruit, too, says Pete Metzger, vice chairman of executive search firm CTPartners. The stigma against government executives is going away as companies realize the value of understanding the government's inner workings.

"Understanding the U.S. government and how it buys its goods and services is a top-three requirement for people who want to be successful doing business in the Washington area," Metzger says.

Companies should focus on other important trends, too, including:

  • Corporate social responsibility
  • Commitment to the environment and sustainability
  • Placing a premium on personal involvement in projects, volunteer activities, social outings, and meaningful connections to work

Given the strengthening, but still fragile, economic recovery and tighter federal budgets ahead, Greater Washington's businesses face a climate of change and uncertainty. But they also have a significant opportunity to revitalize and align their hiring and retention practices for the new economic reality. Companies that take the necessary steps now will emerge stronger than their competition.

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Take another Look at Rosslyn: Access, views, and knowledge workers position Rosslyn for opportunity

THE ISSUE

Rosslyn was once a haven for pawn shops, warehouses, and storage yards. Now it is a livable, walkable community on its way to becoming a true urban village with spectacular views, multiple transportation options, and access to knowledge workers.

There has been a quiet revolution in Rosslyn over the past five years, with almost imperceptible changes accumulating to present a very intriguing opportunity.

"The view in Rosslyn has always been unparalleled," says Terry Holzheimer, director of Arlington Economic Development, "but the view isn't everything. We can build on a density of transportation here that doesn't exist anywhere else, with two Metro lines and three bridges."

Private entities such as developers benefit from Arlington County's transitoriented planning along the Rosslyn-Ballston corridor, with access to Metro trains and buses, Interstate 66, Route 110, and other major roads. "Buildings stand alone, but neighborhoods and environments do not," says Brian Coulter, managing partner for The JBG Companies. "It's very important to us that the whole fabric be done in a thoughtful way."

Rosslyn's two new Trophy Class construction projects illustrate the "whole fabric." In October 2010, Monday Properties officially broke ground on its 1812 North Moore project, a building that will include 581,000 square feet of office space reaching a height of 390 feet. Across the street, JBG's Central Place will add roughly 1 million square feet of mixed-use development in two towers reaching that same height. High-end condos such as Rosslyn Associates' Turnberry Tower, Abdo Development's Gaslight Square, and Central Place aim to attract new residents to Rosslyn. Gaslight Square's January 2011 groundbreaking placed it among the first condo projects to move forward since the beginning of the recession.

Some of these projects also illustrate strong partnerships and a push for better amenities, two factors the Greater Washington Board of Trade views as crucial for success. For example, Central Place will connect to the Metro via three high-speed elevators, a public plaza, and a publicly accessible panoramic observation deck likely to become a tourist draw.

To Cecilia Cassidy, executive director of Rosslyn Business Improvement District (BID), restaurants and retail offerings — along with cultural amenities — will make Rosslyn a "live-work-play" environment that is attractive to both businesses and residents.

"We envision a very modern, vibrant, centrally located hub of government and business activities," Cassidy says. "With our breathtaking river and city views, when we can make it even more livable and walkable and add more amenities, people will be flocking here."

THE OPPORTUNITIES

Along with the tremendous growth of the past decade, Rosslyn offers significant future opportunities.

» A Hot Submarket "Arlington County has been very thoughtful about growth in Rosslyn," says Anthony Westreich, president and CEO of Monday Properties, Rosslyn's largest commercial landlord. That thoughtfulness has led to a consistently high-performing market.

Property management firm Jones Lang LaSalle reports that in 2010, the vacancy rate for prime office space in Rosslyn was a staggeringly low 4.9 percent. Comparable space is $10 to $15 cheaper per square foot in Rosslyn than in competing markets, a figure that appeals to businesses looking hard at the bottom line.

On top of that, residential buyers are finding more high-end options in existing locations such as Turnberry Tower (247 units, $700,000 to $7 million), Waterview (133 units, $400,000 to $5 million-plus), and upcoming projects such as Gaslight Square (117 units, $700,000 to $1.4 million).

"Rosslyn is taking a leap upmarket that's bigger than anything we've seen before," Holzheimer says. "The people buying condos can live anywhere they want. They're choosing to be here because it's a potentially exciting urban environment."

» New Demographics A new type of commercial tenant — the high-end corporation — is bringing cachet to Rosslyn. The Corporate Executive Board leased 625,000 square feet in Waterview in 2004 and subleased 172,000 square feet to Deloitte LLP in 2009. Earlier this year, The Carlyle Group expanded its regional presence with 72,000 square feet in Commonwealth Tower, which already housed tenants including BAE Systems. Other companies calling Rosslyn home include Albritton Communications (owners of Politico), Rosetta Stone, and Canon Design.

The Corporate Executive Board moved in part because a high percentage of the company's workforce already lived in the Rosslyn-Ballston corridor, a haven for young, highly educated, highly talented workers. Arlington includes 12 times the national level of scientists and researchers and seven times the number of attorneys, Holzheimer notes. More than one-third of residents 25 or older hold graduate or professional degrees, including those with expertise in the increasingly important knowledge economy.

Tim Helmig, Monday Properties' executive vice president and chief development officer, says the company has seen significant demand from law firms and professional service firms, too. "Many senior partners and executives are looking at the bottom line," he says. "They want a way to use their office space more efficiently."

» Amenities Once completed, new mixeduse developments will offer the kind of "urban village" Rosslyn wants as a model. The missing pieces as of now are fine dining, retail, and cultural amenities. Amenities will remain a big opportunity for new businesses to thrive in Rosslyn, capitalizing on centrally located retail space available now or coming online in the next two to three years.

"We have national retailers who are clamoring for space in Rosslyn," says Helmig, who mentions recent talks with a prominent restaurateur as an example. "You couldn't have said that 15 or 20 years ago."

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Connecting Commuter Rail: Regional run-through service would be a boon to businesses — employers and employees alike

THE ISSUE

When commuter trains arrive at Union Station, the journey for many riders is far from complete. In fact, roughly 50 percent of riders coming from Maryland continue their commute by some other form of transit. Many have to exit the station to connect to Metrorail and continue their trip to L'Enfant Plaza, Crystal City, Alexandria, and beyond. This convoluted commute leads to stressed workers, lost productivity, and increased costs to employers.

Imagine how this scene would change if Maryland Area Regional Commuter (MARC) trains ran all the way through to L'Enfant Plaza, Crystal City, and Alexandria. Imagine if Virginia Railway Express (VRE) trains could run into Maryland on the Brunswick and Camden lines, for example. A 1998 study by the Greater Washington Board of Trade proposed exactly this "run-through" service, with much of the funding coming from a projected increase in ridership. Thirteen years later, it makes more sense than ever.

In the near future, our region will see changing commuting patterns and thousands more cars added to the roads because of the Department of Defense's Base Realignment and Closure (BRAC) actions. With BRAC, there will be roughly 80,000 Department of Defense–related jobs along I-95 and I-395 in Northern Virginia alone, says Sean T. Connaughton, secretary of transportation for Virginia.

A run-through solution would ease the congestion on our crowded roads and Metro and provide clear benefits to riders. "A run-through that includes access to Metro would alleviate a lot of pressure on all forms of transportation," says Dale Zehner, VRE CEO. "That has benefit for the entire region."

Currently, L'Enfant Plaza is the most popular endpoint for Maryland commuters, for example, but there is no easy way to get there. Run-through would offer direct access. In turn, riders from Virginia would have easier access to locations in Maryland, which is increasingly important as job locations and commuting patterns shift. Run-through service would require collaboration among a number of public and private entities, including Amtrak and CSX, as well as local and regional governments.

"We're really concentrating on commuter rail, because that is where the biggest need is, and it could help address the greatest impact from BRAC," says Arthur Cotton Moore, longtime regional architect and planner. Moore adds that run-through service could ease stress at the overcrowded Union Station and cramped transfer points such as Metro Center.

THE OPPORTUNITIES

The regional benefits of run-through service are clear — and so are the opportunities for business.

» Employers and Employees Businesses and their employees in the Greater Washington region would be the biggest beneficiaries. Run-through service would mean more efficient, shorter commutes. This would ease stress for the region's workers and improve productivity, thereby reducing costs for employers.

"From a regional standpoint, it seems like a natural objective to continue to provide intermodal choices for folks in the region to get back and forth from jobs to home," says Beverley K. Swaim-Staley, secretary of the Maryland Department of Transportation. "I think it certainly is in line with the president's priorities in terms of rail connectivity and with [Gov. Martin O'Malley's] priorities with regard to commuter rail service."

» Construction and Infrastructure Completion of run-through service would be good for regional business. Run-through service would depend on upgrades to existing stations, as well as other infrastructure.

Improving the L'Enfant Plaza station would be central to any run-through plans. Right now, L'Enfant cannot accommodate both Maryland and Virginia trains. The Commonwealth of Virginia issued a 2002 study calling for an island platform to solve compatibility issues. More recently, Moore worked on plans for a fully intermodal L'Enfant station, meaning one that would allow for run-through service and also connect directly to Metro — a significant advantage because L'Enfant is the only station with four Metro lines.

Planners and architects would be required to draft such infrastructure upgrades, and then, of course, contractors and construction companies would compete for contracts to complete them. With tight federal and state budgets, there may be opportunities for public-private partnerships to move such projects forward.

» Transit Hubs On top of construction to improve infrastructure, better-integrated commuter rail would present other development opportunities at major transit hubs.

"Anytime you enhance transportation, your land-use definition shifts, as well," says Matt Klein, president of real estate development firm Akridge. "There's a great opportunity for increased density and mixed use."

Retail, restaurants, and other service providers would have opportunities to serve commuters at such hubs. In turn, transit-oriented hubs are more likely to attract new residents than areas that lack such amenities.

It's yet one more regional opportunity and potential benefit, out of many, from a smartly planned commuter rail system.

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Your Board of Trade

Time to Smell — and Sell — the Coffee

On March 31, Howard Schultz, chairman, president, and CEO of Starbucks, shared his approach to keeping the company's entrepreneurial spirit alive and addressed the changes he made to restore a sense of community and "soul" during a program at the Greater Washington Board of Trade. In a conversation with Board of Trade President and CEO Jim Dinegar, Schultz shared insights from his new book, Onward: How Starbucks Fought For Its Life Without Losing Its Soul. Read Schultz's valuable advice on page 16.

Nationals Start the Spring Swing

With the baseball season in full swing, the Board of Trade celebrated the return of the national pastime to the nation's capital at the Welcome Back Washington Nationals Team Luncheon on April 14. This unique event featured the entire Nationals team, all of whom dined among more than 300 business leaders from across the Washington region.

"The Nationals are grateful for the support of the entire D.C. business community," Nationals Principal Owner Mark D. Lerner said. "The Welcome Back Team Luncheon gives us the opportunity to thank some of our biggest fans."

Gov. Deval Patrick Inspires an Audience

On April 14, second-term Massachusetts Gov. Deval Patrick inspired business leaders and local students alike by sharing his personal journey from the South Side of Chicago to Harvard, the U.S. Department of Justice, Fortune 500 boardrooms, and the governor's office. As part of the TD Bank Morning Star Speaker Series, Patrick discussed his book, A Reason to Believe: Lessons From an Improbable Life.

"I was blessed to be around adults who didn't define my dreams by the limit of their own experience," said Patrick, the first in his family to attend college.

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Opportunity Talks

Howard Schultz talks about the Starbucks turnaround

Starbucks Chairman, President and CEO Howard Schultz returned to restore and refocus the company by bringing attention to detail and commitment to quality. He even made the stores smell good again by reintroducing fresh grinding.

In 2008, the company that once could do no wrong faced a precipitous drop in sales and stock prices, along with what Schultz viewed as a departure from the values that made it a success. Feeling the company had lost its way, he stepped back into his former role of CEO. Through a series of moves as bold as the company's coffee — losing the majority of an executive team, closing all stores for retraining, entering the instant coffee market, and much more — Schultz has helped Starbucks approach all-timehigh stock prices while returning to its core values.

In front of a sold-out crowd of 400 regional leaders at the Capital Hilton on March 31, Schultz shared candid leadership lessons and discussed his new book, Onward: How Starbucks Fought For Its Life Without Losing Its Soul, during his second book-tour stop after visiting CBS' Katie Couric.

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