Technology companies accounting for more jobs and leased space in D.C. area

October 27, 2013

The federal government may be Washington’s major employer, but it has a new rival: High Tech.

Government demand for technology services has boosted the local tech sector, especially the segment that focuses on cybersecurity. There’s been a boomlet of firms serving both government and commercial customers.

Over the past 10 years, employment in the region has grown by 1.1 percent per year, while high tech employment has increased by 1.7 percent per year. That translates into 40,000 more tech-related jobs, and that growth is a key reason why the D.C. area has one of the largest tech workforces in the country.

Fairfax County has had great success in landing and retaining major technology firms, and the Fairfax County Economic Development Authority boasts that more than 300 cyber-related tech firms have operations in the county. Among those with the largest office footprints are ICF International (155,000 square feet) and Science Applications International Corp. (300,000 square feet).

Some tech firms in the region are home-grown, while others are Silicon Valley firms that have set up offices here. Tysons Corner alone has accounted for more than 1.2 million square feet of leasing over the three past years.

Other areas in Northern Virginia have also benefited from cybersecurity. SRA International recently renewed its lease for 120,000 square feet in Virginia Square. The Rosslyn-Ballston corridor, though far less popular than Tysons with tech companies, has attracted more than a half million square feet of computer and data-processing companies during the same three-year period.

Risks abound, however, for Northern Virginia. Many of its cybersecurity companies depend heavily on government contracts and, as the government shutdown just proved, funding can be volatile.

On top of that, inter-state battles for these types of companies have begun. Maryland, now home to the U.S. Cyber Command at Fort Meade, and has seen the success of Northern Virginia and is now offering more than $3 million in tax breaks for cybersecurity start-ups that locate operations in the state, ensuring the battles over cybersecurity tenants won’t just be between landlords.

Walter Page is director of U.S. office research, Jeff Myers is a senior real estate economist and Connor Bevans is a real estate economist with CoStar Group. Visit www.costar.com for more information.

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