Q2 2012 Suburban Virginia, Virginia Commercial Real Estate Economy

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Q2 2012 Suburban Virginia, Virginia Commercial Real Estate Economy

Northern Virginia’s economy has held up well so far in 2012. Employment is good, the local economy is active, but looming over the entire region is the specter of “Sequestration:” automatic spending cuts that will be enacted if the government reaches a budget impasse. “Virginia stands to lose 207,464 jobs and $10.63 billion in labor income by the end of fiscal 2013 if $1.2 trillion in federal cuts take place in January as planned,” the Washington Business Journal reported in July. “Virginia would suffer the biggest job loss next to California,” according to a report conducted by George Mason University economist Stephen Fuller and commissioned by the Aerospace Industries Association. It should be noted, however, that these dire predictions come at a time of generally good employment in the Northern Virginia region. According to Current Employment Survey data (CES) from the U.S. Bureau of Labor Statistics, (BLS), total non-farm employment increased by 28,800 jobs (2.1%) in the 12 months ending June 2012. The number of employed persons living in the Northern Virginia area, according to household-based data from the BLS, increased by 32,247, or 2.1% from June 2011 to June 2012. This number is important in a region as large as Northern Virginia, where many people make considerable commutes, often by car, to the various employment centers in the area. This number includes the self-employed and those who commute to other areas, such as Washington, D.C. Unemployment is much lower than the U.S. average here.

Government comprises 18.0% of the employment picture in Northern Virginia, and has increased by 4,300 (1.8%) in the 12 months ending in June, according to CES data. This number is from increases at the state, local, and federal level. After several years of loss, it appears that Government employment is back on the rise. And at the other end of the spectrum, Private employment has increased as well, by 24,500 jobs (2.2%). Construction continues to lag, losing 300 jobs (0.4%), while Manufacturing employment has increased by 300 jobs (1.3%). Retail Trade employment is up 1,100 jobs (0.8%), while Wholesale Trade recorded a minor loss of 400 jobs. Moving to the more white-collar part of the employment picture, Financial Activities employment increased by 4,400 (6.7%) in the 12 months ending in June, and Professional and Business Services increased as well, by 4,700 jobs (1.3%). Within that sector, employment in the Computer Systems Design and Related Services industry increased by a remarkable 7,300 jobs (6.2%). The Northern Virginia area has traditionally had a large high-technology presence.

In terms of Real Estate, the picture is a little more mixed. A senior economist with Grubb & Ellis, speaking at an event held by the Virginia Commonwealth University Real Estate Circle of Excellence, stated that “economists are expecting slow, steady growth in the U. S over the next two years, with low inflation, which means the commercial real estate recovery will remain sluggish,” Virginia Business reported earlier in 2012. This source pointed out “the labor market is recovering more quickly in Northern Virginia,” although those gains might be reduced when government budget deficit reductions began to kick in. All in all, Northern Virginia has recovered 100 percent from job losses since the recession, while the rest of the United States has recovered only about one-third of the jobs.

More improvement in the regional job picture came in the form of a study released by the Bureau of Labor Statistics in August and reported by the Washington Business Journal. The entire Capital region, the District of Columbia, Maryland, and Virginia, added jobs in 2012. “Virginia ranked No. 20 in the U.S. for its jobs growth in that period, growing from 3,675,000 jobs in June 2011 to 3,724,400 in June of this year, a 1.34% bump,” the Business Journal reported. And on a more local level, the Oakton Patch reported in July that “the Metropolitan Washington Airports Authority has begun the process of selecting a design-build contractor for Phase 2 of the Dulles Corridor Metrorail Project.” The Metropolitan Washington Airports Authority (MWAA) is constructing a 23-mile extension of the existing Metrorail system. The extension will serve Tysons Corner, Virginia’s largest employment center, and the Reston Herndon area, the state’s second largest employment concentration.