Greater Washington: Capital Opportunities

Washington, D.C., sits at the heart of a region whose economy is remarkably diverse and highly resilient--and whose potential for steady, enduring growth is luring businesses of all sizes from around the country.

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The Greater Washington area is set to become one of the nation's most innovative and successful business incubators--and not just because it stands to benefit greatly from the $787 billion stimulus plan passed by Congress in February. Over the past decade, Greater Washington, enfolding swaths of Virginia and Maryland as well as the nation's capital, has diversified its economic base, becoming a hub for industries ranging from high tech and hospitality to green energy and financial services. Small and mid-sized firms in particular have seen impressive growth. In fact, year after year, Greater Washington is home to more of the Inc. 500 fastest-growing companies than any other region.

"If we've learned one thing in the last two decades, it's that we live in an increasingly flat world," says Virginia Senator Mark Warner. "Highly skilled workers and growth businesses can locate anywhere they want."

An increasing number of fast-growing firms are choosing the area for a variety of reasons. "The Greater Washington region is home to a tremendous number of resources-- first-rate institutions of higher learning, prominent businesses, a highly educated workforce, a diverse economy, and the federal government and its multitude of world-class science and research facilities," says Maryland Governor Martin O'Malley. "Through a number of collaborative efforts, Maryland, Virginia, and Washington, D.C., have been working together to maximize these assets to effectively compete in the global economy, attract jobs to the region, and further strengthen our quality of life."

Businessman Seth Goldman, co-founder of organic-drinks firm Honest Tea--which he launched from his kitchen in Bethesda, Maryland--puts it simply: "The Greater Washington area has everything we've needed to build our business."

Dynamic, Diverse--and Resilient

Greater Washington has grown into the country's fourth largest regional economy, adding more jobs, both public and private, between 1998 and 2008--a whopping 643,000 positions--than anyplace else, including New York and Los Angeles. "Over the last 30 years, the diversification of the economy has been impressive," says Matt Erskine, executive director of the Greater Washington Initiative (GWI), which researches and promotes economic development in the region. "The share of our workforce hired directly by the federal government has shifted from 35 percent to 11 percent. Our fastest-growing sector is professional and business services--it accounts for nearly a quarter of all jobs. And we're second in the country in terms of tech jobs."

Powerhouse firms in a wide range of sectors--like Marriott, Lockheed Martin, General Dynamics, Mars, and Capital One--have long-time headquarters there. Recently, they've been joined by such major players as Volkswagen and Computer Sciences Corp.; Hilton Hotels has announced it's moving there, too. The $2 billion National Harbor waterfront development has drawn investors like Disney, which plans to build a hotel. "It's a hub for the hospitality sector," says Fred Malek, CEO of TIG Global, an Internet marketing services firm in Chevy Chase, Maryland.

It's also a growing financial-services and banking center, with companies like Pittsburgh-headquartered PNC Financial Services acquiring local banks, while firms such as Annapolis's High Street Partners offer international services. In fact, Greater Washington ranks first in the nation in terms of the share of its workforce engaged in finance and business. It's also first in the percentage of jobs related to computer science, math, and other sciences; and second in those focused on the arts, media, sports, and entertainment.

Thanks to such diversity, Greater Washington is No. 1 in the nation in terms of GDP per capita: $53,335 in 2008, ahead of San Francisco, Boston, and New York. The region is also recession-resistant. In May, as national unemployment climbed to 9.4 percent, Greater Washington's was 6.2 percent; in the last five recessions, its unemployment rate has been several points below the nation's. "It's a very healthy employment market," says Greg Diamond, managing partner of IT-focused HR firm Clovis in Bethesda.

The federal government, which spends more there than anywhere--$66.5 billion for goods and services in 2008--is a major contributor to the region's steady-as-you-go growth, which has averaged 3.7 percent annually over the past two decades. "I've been in the capital area for 10 years. It's remarkably resilient," says Samuel Schreiber, regional executive for D.C., Virginia, and Maryland of financial-services firm Wachovia and chair of the GWI board. "When the country's having economic problems, it lags those problems. When the economy's robust, it's slightly above the norm. D.C., Maryland, and Virginia bring distinctive strengths, and we have the federal government as a backstop. It's the world's capital and a highly dynamic environment."

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