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Bisnow Exclusive: Why DC-Area Governments Are Finally Collaborating

Despite persistently high vacancy rates in certain parts of the region, DC-area officials claim that 2016 may see the best collaboration ever among the various governing entities.

Bisnow Exclusive: Why DC-Area Governments Are Finally Collaborating

For starters, DC Mayor Muriel Bowser, Virginia commerce secretary Maurice Jones and representatives from Montgomery and Prince George’s counties in Maryland, among others, will travel to Cuba Feb. 20-24 on a joint trade mission, at the mayor's invitation. The visit is being coordinated by the Greater DC Hispanic Chamber of Commerce.

Later this year, Bowser and the governors from Maryland and Virginia plan a similar trip to the region’s biggest trading partner, Canada.

“I must commend the mayor for pushing efforts like the Cuba trip,” says Jim Dinegar, president/CEO of the Greater Washington Board of Trade. “When we compete as a region, it’s a recognition that we don’t need to care where a company locates as long as it’s in the greater DC area. We still all benefit economically. And if we don’t cooperate, we may not be successful at all.”

The localities’ new spirit of cooperation shows they realize that selling themselves as a region, rather than individually, allows them to compete more effectively with the likes of Boston, Silicon Valley and Austin as a destination when it comes to the fight for companies and talent.

Walter Reed

“When the region wins, each one of us may not win in direct tax dollars from the company, but what’s the value of 1,000 new jobs moving into the area?” asks Gerald Gordon, president/CEO of the Fairfax County Economic Development Authority. ”Well, it’s enormous.”

Among the projects that inspired this collaborative sentiment was the 1M SF MGM National Harbor Resort project, which promises to bring as many as 3,600 jobs to the region, and the 66-acre, 3.1M SF Parks at Walter Reed redevelopment project (above), which is slated to include housing, retail, medical office and a bioscience incubator in its massive footprint.

“These kinds of projects mean thousands of good jobs for people all across the region,” says DC deputy mayor for planning and economic development Brian Kenner. “There’s a healthy level of competition over where projects like these settle, but I think no one can deny these kinds of things are a win-win for every locality in the DC region, no matter where they pay taxes.”

Bisnow Exclusive: Why DC-Area Governments Are Finally Collaborating

The effort comes none too soon as officials like Gerald admit they sense “economic development competition is heating up” across the region and the nation. And the DC area has already seen its share of the kind of internecine warfare endemic to most efforts by cities and counties to lure taxpaying corporate tenants.

Last year, Bowser offered a $60M incentive to The Advisory Board Co to remain in the city in which it was founded and nurtured. The Advisory Board looked outside the region and talked seriously with Virginia about a possible move. Gov. Terry McAuliffe offered an attractive incentive package to lure the firm across the river.

Bisnow Exclusive: Why DC-Area Governments Are Finally Collaborating

“When you’re not seeing growth, all you’re doing is going around and trying to poach,” says John Shooshan, founder of Arlington development firm The Shooshan Co. “If you’re willing to spend $60M to get the Advisory Board, I don’t know where it ends.

It’s one thing if a locality is able to attract a company from another region, John says. Then, the DC area would be seeing a new influx of jobs and economic activity. But this was the case of a company threatening to move “across the river…one mile away and still able to game that much.”

Bisnow Exclusive: Why DC-Area Governments Are Finally Collaborating

Jim agrees. “The incentives game is an escalation battle that no one wins, except the company,” he says. And despite head-to-head battles over companies like these, Jim and other area officials contend there is no real poaching. (That's Jim on the left up there, snapped with PNC's Wayne Hunley and Board of Trade chair and Akin Gump attorney Tony Pierce.)

“Within the region, it’s not cutthroat,” Gerald says, who notes that his locality doesn’t offer incentives and won’t. “We have a loose agreement not to poach, and that’s respected generally. Sure, we’re going to talk to companies interested in coming our way, but the theme in the region is far more collaborative than adversarial at this point.”

And the municipalities may have some new targets soon. Both Kenner and Dinegar see the anticipated move by General Electric from its longtime home in suburban Connecticut to Boston’s burgeoning South Boston waterfront as just the start of a wave of corporate relocations to places that attract the tech-savvy Millennials companies need.

“Companies now are chasing human capital when they decide where to locate,” Brian says. “And the [GE move] is just the first wave of old-school companies starting to ask themselves where they should be located to find the right kind of talent they need to make their businesses grow.”

The GE decision brings with it the promise of close to 800 jobs for the Boston area. But the win didn’t come cheap; GE was given about $145M in incentives amid intense competition from New York, Georgia, Rhode Island and Texas. DC spoke with GE as well, Brian says.

Although it wasn’t successful with GE, the Washington area can be competitive in the search for young talent. Last year it was named as one of America’s five most “future-ready” cities at the 2015 Strategic Innovation Summit. Additionally, the city’s “cool factor" has been rising exponentially, Jim says, noting the explosion of trendy restaurants and the opening of new neighborhoods that offer the kind of diverse urban lifestyle Millennials, in particular, seek.

“These kinds of environments," Jim says, "are catnip to employers."