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Arlington Will Bounce Back

Public officials, real estate agents and analysts predict Arlington will be able to replace defense jobs.

When viewed through the conduit of a PowerPoint presentation, the fallout from the Base Realignment and Closure Commission’s recommendations couldn’t appear much graver for Arlington:

A net loss of 17,000 defense-industry jobs, or eight percent of Arlington’s total workforce; almost 4.2 million square-feet of office space in 39 buildings vacated over the next ten years; thirty percent of leased space in Crystal City could lie fallow.

Yet lawmakers, real estate agents and analysts heading a BRAC discussion panel last week spoke with optimism of the county’s prospects as these stark figures loomed on an overhead screen.

To them the exodus of dozens of Defense Department offices presents an opportunity to restructure and diversify Arlington’s economy and transform Crystal City into a more vibrant community that is not beholden to a single industry.

“Arlington has the economic power to absorb this shock,” said Stephen Fuller, director of George Mason University’s Center for Regional Analysis. “You have the ability to deal with the short-term effects and the long-term effects will be good for all.”

PRESIDENT BUSH ENDORSED the commission’s plan last Thursday and the proposal will become law in 45 days, unless Congress rejects it in full. Though implementation could be challenged through legal action, local officials accepted that there was little they could do now to stop the process, which will relocate thousands of Arlington-based defense workers and private contractors to Fort Belvoir in southeastern Fairfax County, Fort Meade outside Baltimore and other military bases across the country.

The inevitability of the move did nothing to quell the disappointment and indignation of lawmakers, who questioned the political motives of Secretary of Defense Donald H. Rumsfeld.

“This can’t be justified economically or from an operational standpoint,” said U.S. Rep. Jim Moran (D-8). “We had a synergy here that was helping the defense industry. Arlington is a hub of the best-skilled technology people.”

Most of the panelists speaking at the Greater Washington Commercial Association of Realtors meeting predicted that Arlington’s economy will suffer some short-term consequences from the loss of so many jobs. The retail and hospitality industries in Crystal City will be adversely affected, in the interim at least, as customers who presently eat lunch or do their dry cleaning in the neighborhood move elsewhere.

This temporary hit will not constrain Arlington’s robust growth potential, Fuller said. The overall strength of the region’s economy, which sees an influx of 53,000 jobs a year and is growing at a healthy clip of 4.5 percent, will help mitigate any lasting fallout. New construction projects, and the refurbishing of older buildings as new tenants move in, will cost billions of dollars and will help offset the economic impact of losing thousands of jobs and a significant portion of the tax base.

The speakers on the panel all agreed that Arlington should have little difficulty filling the impending open office space. Arlington’s prime location, close to the Pentagon and downtown Washington, will enable it to attract new technology, retail and hospitality companies, Moran said.

“This won’t be harmful in the long run,” he added. “Arlington will continue to thrive.”

It is unlikely that many firms situated in Fairfax County will relocate to Arlington, Fuller said. But companies in Washington will be attracted by Arlington’s proximity, abundance of space, safe environment and lower taxes and costs. This confluence of factors will also make it competitive for businesses who want to move to the metropolitan area from other regions of the county.

“I would worry about Arlington stealing my customers,” Fuller said. “It has all the location advantages and not many of the disadvantages of the District. Arlington will also be a prime choice for start-ups.”

FIFTY-FIVE PERCENT of the jobs that will disappear from Arlington will remain in the greater Washington metropolitan area.

Few of those individuals are expected to move their families closer to their new offices. Many would rather have a long commute time to, say, Ft. Belvoir than force spouses to find new employment or pull their children out of the Arlington school system and away from friends.

“There will be little residential impact,” Fuller said. “If they can, people tend not to move locations when their job changes.”

MUCH OF THE CONCERN has centered on Crystal City, where three-quarters of the vacant office space will be located. Terry Holzheimer, director of the Arlington Economic Development office, said fears of a multitude of empty buildings are unfounded and asserted that Crystal Drive will not turn into a desolate and abandoned urban canyon.

BRAC will inevitably transform the identity and look of Crystal City. The area, known for its domineering glass office buildings and defense number crunchers, is slowly repositioning itself as a hip urban “experience” with trendy bars and shops. New companies would help invigorate the neighborhood and convert it into a new downtown that will be a major attraction in the county.

“I think Crystal City will be a different place,” said Mitchell Schear, President of Charles E. Smith Commercial Realty, which owns 70 percent of the buildings there. “It is already starting to become a destination location.”

Right now Crystal City becomes something of a ghost town after 6 p.m. New restaurants, like Ted’s Montana Grill and Corner Bakery, are hoping to infuse the neighborhood with vivacity and bring people back after hours.

“Crystal City is resilient,” Schear said. “It has been moving itself forward for some time and government contractors will still find it attractive.”

THE DEPARTMENT OF DEFENSE and their contractors take up less than a quarter of the space in the majority of buildings they occupy. It will be significantly easier to attract a company to a building that has an open floor, than if the entire office complex is unoccupied.

Rental space will also be arriving on the market in equal increments over a seven-year period, with the bulk occurring in 2007 and 2008. The staggered leases provide a more manageable retail market and will cause far fewer disruptions to the local economy than if all the tenants moved out at once, Schear said.

It is highly likely that the first batch of expired leases, which will be up in 2006 and 2007, will be renewed because the buildings the departments are scheduled to move into will not be ready in time, Holzheimer said.

Just as important has been the stanching of the brain drain. Two valuable research facilities that supply 1,700 jobs, the Office of Naval Research and the Defense Advanced Research Project Agency, will remain in Arlington and enable it to retain some of its most highly-skilled workers. The county government’s focus will be on preserving the talent and expertise of those whose jobs are relocating. The Arlington Economic Development department is looking to create a job center that will help displaced people find other employment in the community.

“These are well-educated individuals and we want to keep them in Arlington,” Holzheimer said.

The county is in the early stages of formulating an incentive package to encourage companies to transfer to Arlington. One possibility is a rehabilitation tax credit to aid those who move into space formerly occupied by the Defense Department.

“We’re going to continue promoting Arlington as a place to live, work and do business,” Holzheimer said. “This is an evolutionary process.”

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