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Despite pandemic, tech ventures flourish
Stephenie Overman// February 28, 2021//
The coronavirus pandemic divided Loudoun County into two worlds in 2020 — tech and touch, says Buddy Rizer, the county’s executive director for economic development.
While the pandemic devastated in-person “touch” businesses such as restaurants, shops and service providers, Northern Virginia’s tech-related companies continued to forge new deals. The number of major announcements in Northern Virginia last year represents “votes of confidence in our future,” says Julie Coons, president and CEO of the Northern Virginia Chamber of Commerce.
Much of Northern Virginia prospered despite the pandemic because “the federal government continues to need partners,” Coons says.
Loudoun’s economic development department concentrated on “trying to continue with the growth in tech industry and to support touch as much as we could,” says Rizer.
“Data centers probably had their biggest year. We’ve had 26 fast-track applicants since March,” he says. “Microsoft, Google, [Amazon Web Services] — all have increased their footprint.” Equinix Inc. also opened a data center in Ashburn, the second addition to its campus last year, and European multinational aerospace corporation Airbus SE added more than 500 jobs.
Reston saw a lot of activity in 2020, with expansion announcements by several key corporate tenants.
Microsoft Corp. was the big deal in Fairfax County last year, having announced in May that it would invest $64 million to establish a software development and regional R&D hub in Reston Town Center, creating 1,500 jobs by this summer. The move comes nearly two decades after the software giant established its first facility in Virginia in 2002, the Innovation & Technology Conference Center at Reston Town Center. In early January, Microsoft announced it would lease space in Arlington, where its U.S.-regulated industries team, including Microsoft Federal, will be located by mid-2022.
Also, Volkswagen Group of America Inc. announced in October 2020 it was signing a 20-year lease agreement at Reston Town Center. Volkswagen will be the anchor tenant in a 1.1-million-square-foot development under construction, and it plans to occupy 196,000 square feet of the space.
Keeping Volkswagen in Fairfax County, where it has had its North American headquarters for more than a decade, was critical, says Victor Hoskins, president and CEO of the Fairfax County Economic Development Authority. “We’re really glad they made this decision. It was on pause for a long time.”
Macedon Technologies, an IT services company, announced that it would invest $1.65 million to expand its corporate headquarters in Reston, creating 147 jobs, and Carahsoft Technology Corp. announced plans to add 200 jobs.
In December 2020, Peraton Inc., a Herndon-based affiliate of Veritas Capital, signed an agreement to acquire Northrop Grumman Corp.’s Falls Church-based federal IT and mission support services business for $3.4 billion in cash. And in January, Peraton announced its $7.1 billion cash acquisition of Chantilly-based tech contractor Perspecta Inc.
“Technology is still having a very strong expansion. That’s probably the most important thing to note. Tech companies for us are like data centers for Loudoun,” Hoskins says.
Aerotek, a provider of recruiting and staffing services that specializes in IT positions, announced plans last June to add 1,500 new jobs in Fairfax County.
Telly Tucker arrived as director of Arlington Economic Development in late January 2020, excited about the prospect of expanding upon Amazon.com Inc.’s HQ2 plans in National Landing.
But within a matter of weeks, he and his office “had quite a shock for our system,” courtesy of the coronavirus.
“It’s challenging in a pandemic to make larger deals, but despite the pandemic we were able to pivot to do things virtually,” Tucker says. “While we didn’t have the volume, there were plenty of bright spots, even in the midst of COVID.”
He counts “10 substantial deals” in 2020, adding more than 205,000 square feet of occupied business space and more than 650 jobs. Energix Renewable Energies Ltd., one of Israel’s largest renewable energy companies, announced plans in August to invest $1.1 million to establish its U.S. subsidiary headquarters in Arlington.
Construction of Amazon’s $2.5 billion, 2.1-million-square-foot headquarters campus is “still on schedule,” says Tucker, with developer JBG Smith managing the construction of the first phase. Renovations of a 14-story office building under lease by the e-tailer were completed in December, ready for move-in two quarters early and under its $80 million budget. Tucker notes that Amazon’s HQ2 employment grew to 1,500 employees this year.
Retention also played an important role last year in Arlington’s economy. Raytheon Technologies Corp. renewed its 116,000-square-foot office lease in Rosslyn, and the Public Broadcasting Service chose to stay in Arlington.
Holladay Property Services Midwest Inc. announced plans in February 2020 to buy 4.4 acres in Innovation Park in Manassas to develop into 30,000 square feet of wet lab and office space as a hub for early-stage life sciences and biotech companies.
A “wet lab” is a laboratory fully equipped for hands-on scientific research and experimentation.
The Northern Virginia BioScience Center, the first wet lab of its kind for the region, will provide space for companies graduating from the park’s Science Accelerator, according to Prince William County Executive Director Christina Winn. Innovation Park is next to George Mason University’s STEM campus.
Nearly a dozen companies are in the accelerator, many working on COVID-related projects. “The challenge has been that when they are ready to move on, we haven’t had a space for them. There’s nowhere in Northern Virginia,” Winn says. Now, “we’re creating a life science ecosystem.”
Bioscience has been a bright spot during the pandemic, in addition to data and distribution centers, Winn says. “Luckily, Prince William County is diverse in terms of its economic base. In 2020 the county closed [deals on] 11 projects — 191 jobs, $1.7 million in investment, 2 million square feet.”
In July, International Gourmet Foods Inc., a wholesale distributor of gourmet specialty products, announced that it would invest $15.6 million to establish a new 130,000-square-foot headquarters in the county, which will bring 169 new jobs. Also, Amazon announced it will build two distribution facilities in Prince William.
North Old Town Alexandria will be getting a substantial makeover, with Hilco Redevelopment Partners’ purchase of the Potomac River Generating Station (PRGS), an approximately 20-acre industrial site directly on the Potomac River.
The sale of the decommissioned 71-year-old power plant, announced in November, “is top of everyone’s mind now,” says Stephanie Landrum, president and CEO of the Alexandria Economic Development Partnership. “This opportunity with views of downtown D.C. is about as unique as it gets. As a community we have been focused on recovering this asset.”
A development company with a history of transforming obsolete facilities, “Hilco gives us a partner who has experience in these projects,” Landrum says. The sale amount was not disclosed.
Melissa Schrock, Hilco’s senior vice president of mixed-use development, says the former industrial site will be “re-envisioned” for “new uses such as housing, commercial office, dining and retail, and public open space along the Potomac River.”
Another milestone for the city last year was Inova Health Systems’ announcement in late December of a $1 billion medical campus on the 51-acre site of the former Landmark Mall. It will anchor a 4-million-square-foot mixed-use development that includes residential, commercial, retail and entertainment.
Inova HealthPlex will be part of a redeveloped Alexandria neighborhood across from Potomac Yard, near Virginia Tech’s Innovation Campus and Amazon’s HQ2. Inova signed a deal with Carras Partners and Stonebridge Associates, which will oversee the development, expected to begin construction this year. The project includes two multifamily residential buildings with 577 units and 55,000 square feet of retail space.
One surprising bright spot in 2020, Winn says, is that coworking spaces, shut down at the beginning of the pandemic, later saw an uptick in Alexandria. “There was interest from corporations and individuals to have a space to work rather than downtown. It’s an unexpected positive.”
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