Victor Hoskins Is Trying To Bring His Amazon HQ2 Momentum To Fairfax County
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The former head of Arlington Economic Development, in an interview with Bisnow, cited post-Amazon fatigue as one of the reasons he decided to leave and take a new job as CEO of the Fairfax County Economic Development Authority.
Hoskins, who will speak Oct. 10 at Bisnow's Future of Fairfax County event, said he hopes to take the lessons he learned from the Amazon HQ2 search, such as the importance of talent and regional cooperation, to his new role in Fairfax County. He said the Amazon process was one of the reasons why 10 local jurisdictions, including Fairfax County, this week announced the formation of the Northern Virginia Economic Development Alliance.
"The thought process was it worked so well for attracting Amazon, it will probably work well for attracting others," Hoskins said of the new group.
Additionally, Hoskins said he expects Amazon HQ2 will lead to significant ripple effects in Fairfax County, from existing and new residents taking jobs with the tech giant to other companies relocating to Fairfax as the region becomes a larger technology hub.
But lessons and ripple effects from Amazon HQ2 are not the only point of focus for Hoskins in Fairfax County. He is also working on placemaking in areas like Tysons and Reston, on reviving some of the county's obsolete office parks, on attracting new companies and supporting more commercial real estate development that can increase the county's revenue.
Bisnow: Why did you decide to leave Arlington County and take this new role at Fairfax County EDA?
Hoskins: That’s a great question and of course I asked myself that question a few times before I decided to interview for the position. I was really looking for another challenge. To be honest with you, after we completed the Amazon opportunity, I would get to [the] office and I looked at what was in front of me and, though very interesting, it was a lot of the same cycle, and not that that’s bad. Frankly, one of my friends asked me, ‘Why would you leave after that? You should rest on it.' I’m just not a person who rests on a victory.
The team I worked with there was incredible, we were able to do something that hadn’t been done before. We worked so well with the state and the other counties in the process, and I felt like that was fantastic. But I was looking for what can I do next in my field for the region, and I ended up with Fairfax was the answer. You’ve seen the recent alliance that we formed, I think that’s kind of the beginning of what we can do in this region.
Bisnow: You’ve been in economic development in Maryland, D.C., Arlington and now in Fairfax. How has working on economic development throughout all those different parts of the region prepared you for Fairfax County and the perspective that you can bring to this new role?
Hoskins: In all of those positions, every one of those jurisdictions had a different set of laws, a different set of constraints, different types of economic structures. I think the differences actually allow me to think differently about problem-solving. So I bring all those experiences and all that knowledge of all those differences, and I can apply them to problems that are sitting in front of me. I think that diversity of experiences gives you a strength across the economic development spectrum. I have enjoyed learning in every one of those environments. In the Maryland environment, in the D.C. environment, in Arlington, all of them are very different. The tools at your disposal and the resources are different.
I remember when I was in the District of Columbia as deputy mayor, my budget was $1.3B, I had 1,300 employees under me, I had 12 agencies that I oversaw. In Arlington, I had a budget of $9M and 56 employees. It was so different. It’s just a different experience. It all really teaches you how to work with the resources you have and craft them to fit the strategy. For every one of those environments you needed a different strategy, and I’m developing a different strategy for Fairfax County which will lead to success.
Bisnow: Can you describe your strategy for Fairfax County? What are your main goals and the biggest issues you’re looking to tackle?
Hoskins: One of main things we’re going to tackle is the talent issue. The talent issue falls into four categories: talent retention; talent retraining — that’s retraining of employees that are already in the work environment to pursue different careers; growing talent — that’s from high schools, community colleges and universities; and attracting talent from other markets. All four of those are going to be important in our strategy going forward.
The Board of Supervisors has provided $1M, including $200K for research and development and $800K for program implementation, for a talent program to work with companies, to work with universities to really draw and retain talent in this region because that really is where a lot of this competition is right now.
The second thing that we will continue to do is something we’ve always done, which is work in the area of promoting commercial real estate and helping companies expand in our market and also attracting new companies to come to our market. That real estate side generates a lot of revenue for the county. As a matter of fact, a little over 19% of the revenues for the county come from commercial development. That will continue to be a very important part of what we do.
And then placemaking. Placemaking is an essential part of how economies function these days. Placemaking is something the planning department and also the economic initiatives group in the county have started to look at as part of strategy going forward. We would love to be supportive of that. If you think of it in terms of goals, there’s the talent goal, there’s a commercial real estate goal and there’s a placemaking goal, and we feel that all three of those are essential to the future of the county.
Bisnow: Are there any particular parts of the county you are focused on from a placemaking perspective where you think you can unlock new opportunities and generate economic growth?
Hoskins: Let me start with Tysons because that’s where I am right now. So the Tysons Partnership is working on a branding campaign, and they’ve worked for a few years with the planning department on developing an approach to create these more pedestrian-friendly, more human-scale relatable components of large-scale development. That is in motion already, and we will work with the county and Tysons Partnership to move that forward.
What they’re doing there is also part of what’s going on in Reston and we believe both Tysons and Reston are really natural places to work off the synergy of what’s already there. They have Metro stations. They already have a presence of commercial. They have residential capture already and the potential for additional residential capture. I think those two places come to mind first, but there definitely are others. Mosaic has been very successful.
We are also going to work with [the] county to see how we can collaborate on other areas like Mount Vernon, Route 1 and areas that traditionally have had difficult times generating commercial activity.
Bisnow: On Tysons, you mentioned things like walkability and more human-scaled development. Do you think getting people out of their cars and allowing people to walk from their offices to retail and multifamily is key to making Tysons an attractive place?
Hoskins: What they talk about in placemaking these days is the 20-20. The 20 feet out from a building and the 20 feet up, because that’s where humans experience buildings in the physical environment on that scale. That is part of what they’re trying to improve. Yes, walkability is certainly an important part of that. That 20-20 creates that human scale and to create that human focus you need to do a couple things.
One, you need to have it well-tenanted. The tenant mix can’t be just one tenant, it can’t be you see the same tenant in five different places. People are looking for more boutique, more experience, more variety. And then programming in the open spaces that are consumable by anybody, farmers markets, food festivals, all the kinds of things that make a place live and entertaining. And reducing the need on auto and increasing the ability to pick an alternative mode of transportation, whether that’s Metro or bus or scooter or bike or whatever your persuasion is.
You have to create physical spaces to be able to make transit by other modes safe. Transit is pretty straightforward, whether it’s Metro or bus, but when you get to things like bike and scooter, you really need to restrict spaces so you limit the amount of conflicts between cars and people. All of that is very important, less dependency on the car, more walkability and more ability to experience. A lot of this has been studied and there is a lot of data that proves what works. Those are things our developers are looking at doing, our planners are looking at promoting and we’re looking at supporting.
Bisnow: You mentioned Reston, and as it relates to transit, there are going to be new Silver Line stops opening next year past the Wiehle-Reston East station, which has experienced some success with development and office leasing, so do you see the Phase 2 stations beyond that as new opportunities to create hubs of activity?
Hoskins: Absolutely. If you look at what’s going on now with the Metro stations and where the new residential is being built and where the new commercial is being built, it’s within a half-mile or a mile of the station area, and we expect that trend to continue as these stations open up. In a way, being closer to the airport is going to create special opportunities because there are companies that need the airport a lot. With a lot of the international consulting companies, their staff fly so much to other markets, and often their clients fly to the market they’re in, so that whole exchange is going to be extremely important. That creates the opportunity for hotels and restaurants and supportive services.
Bisnow: Fairfax County also has plenty of areas that aren’t on the Metro and there are a lot of older office buildings of the traditional, suburban style that may not be as attractive with what tenants are looking for today, and the area still has relatively high vacancy in part because of those types of buildings. What do you see as the solution for some of those obsolete office buildings? Do you think you can bring in tenants to fill those, or should the county look at redevelopment opportunities and converting to other uses?
Hoskins: It’s interesting because I had this recent experience in Arlington where there was a lot of that. Whether for good or for bad, there was a lot of it. The fortunate thing is we learned some things in the process. You do all the things that you mentioned.
For some of them, you’re going to be able to find a tenant really looking for low-cost alternatives. I remember one building in Arlington where the owner knew they were going to tear the building down in three or four years, they had a site plan and had started the process, but they knew it was going to be three or four years before they started their project. And they were actually signing one-year, in some cases month to month, leases with small companies in suites they had constructed. They did pre-setup-suite construction with limited furniture and equipment, and they put a low number on the rent and they filled it up because they're getting all of these startups and companies trying to keep their costs low. That’s one reuse of an office building.
Another reuse is what’s happening with Amazon. If you get a big tenant that is looking for reasonable rent at the beginning of their experience. I don’t know if you saw the rents for those first buildings for Amazon, but they are the mid-$30s to upper-$30s [per SF]. That’s a pretty darn good deal for renovated buildings. That’s awesome. You can do that with an old structure that you may own outright or have almost no debt on it, and you haven’t done anything with it for a long time and you get a tenant that comes along that’s willing to sign a long-term lease, you can negotiate something like that in the beginning and rise it over time. By the way, $38/SF is low for Arlington, not necessarily for [Fairfax County's] market, but I was using that as an example.
And then on the redevelopment side, there are some buildings because of the opportunity that comes to them, they will skin the building and redo the whole building from the core. That’s a more extensive renovation than the one I just mentioned before. The last, which is the ultimate, is you knock [a] building down and start over. I think every one of those options are on the table for the various buildings that are out there. What will happen with each one of those options is they’ll be considered by the owners, and the owner will the make decision on which way it will go. In some cases they may be going for a zoning change. There is going to be a variation in outcomes but all of those are potential solutions.
Bisnow: Do you think there’s a role for the county to play in terms of incentivizing the redevelopment of older office buildings to help bring down the vacancy rate and bring more life to these properties? Is there some kind of incentive the county could give, in your view, to move that process along?
Hoskins: There are two perspectives on this. One, let’s take the perspective of the overall market. The overall market has a vacancy rate at about 14.5%, depending on how you look at the market, but it’s really still in a healthy range. What I mean by that is 15% is when you start to get unhealthy, so we’re really approaching that edge and we’re right on that edge. The challenge with situations like vacancy is you have a related rate, you have inventory coming in, inventory being leased, inventory being exited from a lease and inventory being demolished. You have all of these factors affecting the ultimate vacancy rate. But the vacancy rate for the county right now is still healthy. Keeping it healthy is the challenge.
The buildings you’re pointing out that are maybe 50% vacant, there may be some as high as 70% vacant, those buildings are really the ones that are prepared, if they don’t get a tenant soon, for a form of reuse. There are things the owners can do in terms of zoning and planning that aren’t in our purview, but in the zoning and planning department’s purview that they pursue. I wouldn’t call them incentives, I would just call them opportunities.
As far as the county’s concerned, we do infrastructure matches to incent transactions that companies commit to. Whether that’s an existing company or one that wants to expand, we have traditionally done that and will continue to do that. I look at that as our real contribution, whether that's sewer connection, water connection, streetscape, bikeways, improvements to parks or new parks, that is where the county invests. Those are usually for pretty substantial projects. I think that will continue to be the case.
I don’t see right now a necessity for an incentive structure on the vacant building side, because our market has found a way to correct itself when vacancy gets too high and we want to leave that up to the market. If it does get too high, that may be something that may be considered in the future.
Bisnow: Do you see any ripple effects of Amazon HQ2 that are going to reach Fairfax County in terms of other companies looking to relocate to the area? Are there opportunities to get more West Coast-based technology companies moving into Fairfax?
Hoskins: The short answer to that is yes. The longer answer to that question is we will see what will follow and how rapidly it will follow, but it’s something we think makes a lot of sense. It’s just logical. There was an interesting map done by the folks from JBG Smith. They drew a 1-mile circle around the Crystal City site and a 1-mile circle around the South Lake Union site in Seattle, and they mapped all the companies that are within 1 mile of the Amazon HQ1 in Seattle. They didn’t say this was going to happen, but they implied these are the likely companies to enter that environment, and I think that’s correct. It just made all the sense in the world.
It included Google, Hulu, Facebook, HBO and companies that you would go, ‘Yeah, that sounds like it makes a lot of sense.' I’m assuming that group are more likely to come to our market or are more likely to grow in our market. It’s about 30 or 40 tech companies. I don’t think they’re going to locate within a mile of Amazon, because I think the rents will be too high. But I certainly think they will locate within 3 or 4 miles, and when you get to 3 miles, you’re in our county.
So I think ripple effects will happen. If you think about it, Route 1 leads directly to Amazon and Route 1 comes into Fairfax County. I think in terms of a residential option for Amazon workers, it makes all the sense in the world. Any Metro line that leads to the Amazon station I think makes all the sense in the world as development opportunities. If 37,000 employees end up at HQ2, one-third of them will be living in Fairfax County, according to projections from Stephen Fuller. I’m really excited about the new residents, and also the locally serving commercial that will grow up around those new residents. All the restaurants, dry cleaners, dentists, the law offices, the tax preparers, because we all need those people to have our daily lives, and Amazon workers will be no different.
And by the way, a lot of those Amazon workers will be residents of Fairfax already, so we’re excited that all of our residents have new job opportunities. [Tuesday], Amazon is having a career fair in Arlington, and I heard there were 7,500 respondents to that career fair. They got a lot of applications, and I think some of those people are Fairfax residents, so that’s the immediate effect.
Bisnow: There was an announcement this week about the Northern Virginia Economic Development Alliance, and I understand you’re involved with that. Can you tell me about the thought process and the goals behind that alliance?
Hoskins: The thought process was it worked so well for attracting Amazon, it will probably work well for attracting others. Of course it was more complicated than that, but the state encouraged multiple jurisdictions to go after Amazon together, and Fairfax and Loudoun and Arlington and Alexandria decided to go after Amazon together. And the four counties and the state worked together to develop the overall Northern Virginia proposal, a 200-plus page proposal. We developed the brand, Alexandria, Arlington County, Loudoun County and Fairfax all contributed data to the analysis. We all worked on defining the brand and the brand ended up being ‘Innovation lives here.’ We’re going to continue to use that brand.
This process of going after Amazon got us working together, helped us understand each other better, really broke down a lot of inter-jurisdictional barriers. We ended up following the advice of Stephen Moret of the Virginia Economic Development Partnership in forming an alliance. We put the word out to other jurisdictions and asked them if they wanted to be a part of it, and every one of them said yes. We thought we were going to end up with eight and we ended up with 10. We think that's phenomenal.
It’s also that we can accrue additional benefits from the state. We will be invited to site-selector meetings that they organize in other markets. We’ll be able to sit down with site selectors and present Northern Virginia as a unit. We get to develop our own materials for Northern Virginia, expand the website, and do things for the whole region. When companies start coming in and getting more down in the details then the individual jurisdictions will take over. We’re really excited about that opportunity.
Bisnow: Do you also see opportunities for collaboration with the District of Columbia and the Suburban Maryland counties? Do you think Northern Virginia is going to be competing with those places for the next companies that are coming or do you see opportunities to make it a larger regional collaboration?
Hoskins: In the application process, this is what happened. All of us including the District of Columbia, Montgomery County and Northern Virginia all did the same thing. We all included all 65 universities from throughout the region, we all said there are 6 million people in this region and 3 million workers. We used all the same data. In a way, we’re already doing it. It’s just that we’re not doing what we're about to do with Northern Virginia, where we’re unifying the brand.
I think eventually D.C., Montgomery County, Prince George’s County, I’m an optimist, I’m the one that said six years ago we should work together. I started promoting this years ago and actually invited multiple jurisdictions to the events we were going to when I was in Arlington. I opened up the doors to SelectUSA and the Consumer Electronic Show and Collision and South by Southwest to my peers. Some of them said yes. Some of them said no. But we would have three, four or five jurisdictions at an event. I think the target has already softened, it’s just a matter of time.