Economists Say Loudoun Economy Will Get Worse Before It Gets Better

That was the message delivered by economists speaking at the fourth annual Virtual Realty Tour on Oct. 23, sponsored by the Loudoun County Chamber of Commerce. Casting Loudoun as the “Land of Opportunity,” economists compared the rate of development and costs of rent in Loudoun with neighboring communities and the nation as a whole. They also predicted the rate of development in the coming months and years – expecting to see the next 18 months continuing a dismal path, but prospects looking up by 2012.

Loudoun County has been the third fastest growing jurisdiction in the last decade, noted Chamber president Tony Howard. With two million square feet of available office space for companies to rent, Howard emphasized the advantages of having employees work closer to where they live, and reducing the length of their commutes.

The county boasts one of the most highly educated workforces in the country, according to Kevin Thorpe of Cassidy & Pinkard Colliers. He said that this leads him to believe that the economy in the Washington metro area is likely heading in a checkmark shape, with a sharp decline followed by a drastic increase. This is partly due to the federal government being one of the only sectors adding jobs, he said.

While the housing market across the country has taken a hit, home sales are rising in the D.C. metro area, up 17 percent from a year ago, said Thorpe. Unemployment in the area is also lower than the national average – 6 percent in the Washington area, compared with 9.8 percent nationwide.

For every unemployed person, there are six available jobs in the area -- a statistic not present other places in the country. However, there is a disconnect when it comes to skill sets. For example, a person who had worked in the construction industry may not be suited for a job in the Department of Energy, according to Thorpe.

While the unemployment rate is significantly lower in the Washington metro area, the economy will decline before it gets better, Thorpe said, with Northern Virginia to cut 13,000 jobs in 2009.

Another downturn Loudoun County is greater vacancy in its office spaces. Less demand causes rents to decrease, which, economists hope could draw businesses to move to Loudoun from the thriving Tyson’s Corner area, which is rife with traffic and congestion problems.

The average asking cost for rent in the Reston and Herndon area this year has been $29.55, said Bert Harrell, a senior vice president with Cassidy & Pinkard Colliers. Comparatively, in the Leesburg area, average asking costs of rent have been $24.83, which could prompt companies looking to scale back to relocate.

Thorpe predicted that 177,000 new jobs will be created between now and 2012, nearly 50,000 of which stemming from the federal stimulus. This translates to 18 million square feet of demand of office space, Thorpe said, in a time when Loudoun County is rapidly developing.

The economists were very confident that as development continues around the Dulles International Airport, it will lead to more growth and activity in Loudoun County.