OPPTY Winter 2018

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n Y Faster Your Future Commute F PG 8 PG.

How to Win the War for o Talent e PG 12 PG.

Thee boo boon oof thee Tou Tourist s Boom oo PG 14 PG.

T IME T RAVEL

Rockets, Rob bots, Reenewable Energy & 6 more things that will transport Washinngton businesses into the future.

What youu need to know to join the journey.

pepco.com

POWERING BUSINESSES FOR

COMMUNITY GROWTH. We’re committed to providing safe, reliable and affordable energy that local businesses need to help our communities grow. © Pepco, 2018

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Contents PAG E

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Time Traveling / The Board of Trade’s 2017 Outlook conference participants provided insight into key opportunities available in the Greater Washington area. The next move is yours.

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Rockets / Space travel and satellites are becoming big business in the Washington region. How can you take advantage of the trends?

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Renewable Energy / The Washington area is quickly becoming the renewable energy capital of the country. That will change the way businesses get their power and how they pay for it.

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The Faster Future Commute / A magnetic train zipping between Washington and Baltimore and a new waterway transportation network move closer to reality.

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The Time of the Talent Wars / What will it take to stay competitive in the tightest job market in the country?

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Tomorrow’s Tourist Matters / The record number of visitors coming to the Washington region are critically important to businesses.

P H OTO G R A P H C O U R T E SY O F S PAC E X

Kim Horn, C H AI R Regional President, Mid-Atlantic States, Kaiser Permanente

Leading the business community in shaping and advancing a vibrant regional economy.

OPPTY provides members with information to help shape the future of this growing worldclass region’s unparalleled opportunities.

On the Cover: Photo-illustration by C.J. Burton

Tony Lewis, C H AI R-ELE CT Region Vice President, Mid Atlantic State Government Affairs, Verizon Jack McDougle, PRES I DENT & C E O Design & Content by Washingtonian Custom Media washingtoniancustommedia.com • 2 0 2 . 8 6 2 . 3 5 0 0

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Future Forward

The Board of Trade provides you with the insights into key opportunities available in the Greater Washington region.

The next move is yours.

Rockets, Robots, Renewable Energy (and more)

TIME TRAVEL IS NO THEORETICAL CONCEPT. IT’S REAL. IT’S

happening right now. Time is marching on, and Washington area businesses are more than keeping pace — in fact, they’re already ahead of the clock. Look at the future-forward things already happening in our region today.

A constellation of satellite companies is orbiting Greater Washington. They’ll do so for decades to come, providing the financial incentive to develop futuristic launch vehicles and connect people and things — the Internet of Things, actually — in ways few people would have dared to imagine until now.

A levitating, magnetic bullet train connecting Washington to Baltimore in 15 minutes is more than on the drawing board. The technology is proven. And the train line is in development now, promising to make one mega region out of what are now disparate major cities.

The same kind of clean energy that will power that magnetic train is already making the Washington region into the capital of renewable energy. Houston has its oil and gas companies. But we have the companies that are producing the power for the next 100 years.

An ambitious new plan to use water taxis and ferries in the Anacostia and Potomac Rivers, slashing commute times, is ready and waiting for leaders to build. Today.

Tomorrow, or at least in the next two years, millions more people will be on their way to visit this region.

We know that now because we know the power of the new attractions that will draw them here.

All of these futuristic developments emerged from our annual high-level event Outlook conference. The event brings thought leaders together and asks them to take a deep dive into the projects, events, and forces that will shape our region in the year ahead. This year’s Outlook did even better than that. It revealed key happenings that will shape our region in the years, indeed the decades, to come.

Gathering those kinds of visionaries together and presenting their stories here in OPPTY is one of the things the Greater Washington Board of Trade does.

And we hope, in the pages to come, you discover opportunities and insights that will help your organizations engage in your own time travels.

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CHARM CITY The Greater Washington Board of Trade brought its annual, high-level

P H OTO G R A P H S C O U R T E S Y O F T H E G R E AT E R WA S H I N G TO N B OA R D O F T R A D E

Outlook conference to the new Sagamore Pendry hotel in Baltimore’s Fell’s Point neighborhood.

Attendees (below right) heard Ric Edelman, executive chairman of Edelman Financial Services, discuss his new book, The Truth About Your Future, during a rooftop dinner. Other speakers at the two-day event included Arvind Manocha, CEO of Wolf Trap Foundation for the Performing Arts (bottom of page, left), Elliott Ferguson, CEO of Destination DC (below, left), and Deborah Rutter, president of the John F. Kennedy Center for the Performing Arts (below, right).

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Satellites are big business in the DC region.

What are the future trends, and how can you take advantage of them?

WINTER 2018

Future Forward

Rockets JUST BEFORE DAWN ON A CLEAR DAY LAST FALL, A FALCON 9

LAUNCH WINDOW Iridium and SpaceX have partnered to conduct eight different launches using the Falcon 9 rocket (below). That will put 75 satellites like the one seen on the opposite page into low-Earth orbit, creating a worldwide, always-on communications network.

rocket built by Elon Musk’s SpaceX company lit up the darkened sky as it blasted off from Space Launch Complex 4 at Vandenberg Air Force Base in Southern California. Ten small satellites made by McLean, Virginia-based Iridium Communications Inc. were packed into the tip of the rocket. A minute and 17 seconds into flight, mission controllers calmly called out, “Max Q,” a term describing the critical moment when the maximum amount of aerodynamic stress is bearing down on the rocket and its payload.

Matthew Desch, the 59-year-old CEO of Iridium, held his breath. Just four months before, a similar Falcon 9 had exploded on launch at Florida’s Cape Canaveral. “If you want to know what excitement is, you should be part of a company that has about $250 million of your assets at the top of a rocket that has just blown up,” Desch says. “That’s why I had people standing next to me — just in case I fell down.”

The Falcon 9 didn’t fail. Desch didn’t fall. Instead, he breathed a sigh of relief as the rocket successfully deployed 10 of what will be 75 satellites comprising the Iridium NEXT network. That’s the largest satellite constellation replacement ever attempted without interrupting current service. The $3 billion project began in 2009. If all goes well it will be completed in 2018.

So far so good for Iridium’s bold, nine-year-long initiative to replace its globe-encircling but aging satellite network with all new technology. SpaceX executed four successful satellite launches last year for the McLean company. And so far, it’s so good, too, for an expanding constellation of outer space businesses that have set up shop in the Greater Washington area. “The satellite industry is really based here in DC,” says Desch, who has been CEO of Iridium since 2009. “Everyone in the space industry has investments in the DC area, and even though some of the financing for space has moved to the West Coast, DC will be a hotbed of space activity over the next 10 to 20 years. Here, you can still be close to customers, like the Department of Defense and NASA, and you can be close to a lot of others who are in this industry. You have suppliers here, you have people who can design instruments and payloads for your systems here. This is where the industry is.”

And the industry is growing, too. Morgan Stanley estimates the space industry — currently valued at $261 billion in annual revenues — will be worth $1.1 trillion by 2040. Bank of America goes that number almost three times better, betting on a nearly $3 trillion commercial space market by that same time.

The Opportunity

Anyone in the Washington region who wants to do business with those who are doing business in outer space will have plenty of potential partners to choose from. Here are four things you’ll need to know about the industry first.

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REDUCE, REUSE, RECYCLE. The vehicles now being developed to get things and, eventually, people into space could not be more different. Virgin Orbit has a combination 747 and an attached rocket known as Cosmic Girl and LauncherOne. Boeing has a Space Shuttle-esque Phantom Express that carries a separate rocket on its back. And SpaceX has its Falcon line of rockets, which launch and then land using a flaming thrust. But all of those have one key component in common: They’re reusable.

“Reusability is going to help drive the resurgence of satellites being launched into space, because it is going to reduce the cost of getting to space,” Desch says. “It’s the linchpin of the industry’s future.”

P H OTO G R A P H O F FA LC O N 9 BY S PAC E X ; O F S AT E L L I T E BY I R I D I U M C O M M U N I C AT I O N S I N C .

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LAUNCHES WILL BE LOCAL. A rocket may blast off from the Mid-Atlantic Regional Spaceport on a daily basis in the not-too-distant future.

Located at NASA’s Wallops Island Flight Facility on the Eastern Shore of Virginia near Chincoteague and Assateague Islands, the site has been approved to offer launch facilities for commercial, government, scientific and academic users. The first blastoff there won’t happen until 2019. But its operator, Arizona-based Vector Space Systems, hopes that daily launches — of satellites and possibly space tourists — will follow soon after.

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THE FUTURE IS IN SMALLER SATELLITES, AND

PLENTY OF THEM. Iridium NEXT will comprise 75 satellites that provide instant communications to satellite phone users and digitally powered devices around the world. Iridium pioneered that type of mesh network approach to satellites at a time when satellites were the size of trucks.

Today’s satellites can be the size of a chair or even smaller. That is helping companies like Iridium and Arlington-based OneWeb conceive of massive constellations — from 75 satellites to nearly 700 satellites — that will provide continual connections to people and devices like commercial airplanes or tsunami-sensing ocean buoys. “Our satellites will move to you,” says Desch. “Every eight seconds a new one will be overhead.”

S O M E K E Y S PA C E P L AY E R S H AV E T HE IR O W N S PA C E S IN GR E AT E R WA S HING T ON .

Space, defense, and aviation-related systems developer with headquarters in Dulles, Virginia.

ILS Joint U.S.-Russian space mission management and launch services firm. U.S. operations based in Reston, Virginia.

HUGHES Satellite communications services provider with headquarters in Germantown, Maryland. (Subsidiary of California-based EchoStar.)

INTELSAT Luxembourg-based company operates its satellites from a command center in Tyson’s Corner.

ORBITAL ATK

NORTHRUP GRUMMAN, GENERAL DYNAMICS, LOCKHEED MARTIN

Major defense contractors, all playing major roles in Department of Defense satellite systems. General Dynamics’ SATCOM Technologies division is a leading firm in groundbased satellite communications arrays.

Headquarters in Falls Church, Virginia (Northrup Grumman and General Dynamics), and Bethesda, Maryland.

AIREON Developing a global air traffic surveillance system that will use the Iridium NEXT satellite network to track planes in real time, anywhere on the planet. Headquarters in McLean, Virginia.

ONEWEB Planning to launch a massive array of satellites — nearly 700 in all — to build a global, space-based broadband network.

Headquarters in Arlington.

AIRBUS & BOEING Commercial airplane manufacturers both working on space travel. Airbus headquarters for the Americas is in Dulles, Virginia. Boeing’s government operations office is in Arlington, Virginia.

NASA No longer launching manned space flights, but still the key governmental agency working with companies that want to get their products off the ground. Has headquarters near the U.S. Capitol and operates the Goddard Space Flight Center in Greenbelt, Maryland.

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WINTER 2018

Future Forward

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As power providers push cleaner methods of generation, and customers demand more control over the power they use, the Greater Washington region is quickly taking the lead in renewable energy.

Here are five future energy trends to watch.

The Capital Of Clean Energy

TWO MEGA-MERGERS have paved a path toward a cleaner energy future and a local leadership position. In 2016, local power company Pepco was acquired by power giant Excelon for $6.8 billion.

Then, in early 2017, WGL, the parent company of Washington Gas, announced it would be purchased by Calgary-based AltaGas for $4.6 billion. The combination, once it’s approved by regulators, will create a conglomerate with the ability to produce and distribute clean-burning natural gas from Western Canada to North Carolina.

“We have a clean-energy business,” says Terry McCallister, chairman and CEO of WGL Holdings. “We are in 19 states and the District of Columbia with commercial solar projects. We’ve spent nearly $1 billion on clean energy over the last eight years. AltaGas does wind, biogas, natural gas power generation, and batteries. So you now have a company that is going to be headquartered right here that is one of a few companies, if not the only, that offers that mix of clean energy. And I know that Pepco has been working on its own clean-energy projects.

“The Washington region isn’t going to become the energy capital of the world, McCallister continues.

"We’re not going to take oil and gas away from Houston any time soon. But I do think there is a real possibility that we can become the clean-energy capital of the United States. We have the real opportunity. We have the right kinds of policies, leadership, and companies in this region now to give us the lead in clean energy.”

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CUSTOMERS INCREASINGLY WANT CLEAN ENERGY

and control over their own power. “Climate change is real, and customers — both residential and commercial customers — are realizing that,” says David Velazquez, president and CEO of Pepco Holdings. “So our customers are demanding a different set of energy choices today, and we’re beginning to see the technology available to give them those choices at affordable prices.”

McCallister has seen the same trend. He says customers used to simply ask for the cheapest form of power.

Now they want to know how the power they are buying was generated. “They ask, is it clean, secure, sustainable?”

More customers also want to know the details of their carbon footprint and how it can be reduced.

Velazquez says that until recently only the biggest energy customers had systems that allowed them to collect that kind of detailed information on their energy consumption, and control energy use. “But now anyone can

go to Home Depot and buy a Nest thermostat with that same kind of technology in it. And smart appliances are regulating their energy use, too. Those are big shifts in the consumer’s ability to control their own usage.”

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P H OTO G R A P H O F P O W E R S U B P L A N T C O U R T E SY O F P E P C O ; O F T H E PA R K S AT WA LT E R R E E D C O U R T E SY O F H I N E S

POWER CUSTOMERS can now become power generators. The Parks at Walter Reed, a mixeduse, 66-acre redevelopment on the site of the former Walter Reed Army Medical Center in Washington, has worked with Washington Gas to develop its own energy microgrid. The development is using natural gas as the primary fuel source, but it has also set up solar panels and battery storage units that can capture and redistribute power on the site as needed. “They’ll be their own little miniature utility,” McCallister says.

That kind of customized control over power is now increasingly available to power customers in Washington and beyond. “I think you’re going to see more of this trend where you have energy that is generated right where it is going to be used. That’s very efficient.”

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WE’RE PAST PEAK ENERGY USE. Insulation is better. Appliances are better at efficiency.

LED bulbs are more popular. And customers have more control than ever over the power they use. That helps explain why the total consumption of natural gas in the U.S. has declined 17 it. Server farms and data centers have been sprouting percent in the past 25 years even though the number up in Loudon County since AOL was a leading comof customers has spiked by 40 percent. pany online. Today 70 percent of all Internet traffic in Something similar is also happening with elec- the world flows through Northern Virginia. tricity use locally. “We have seen a declining trend in “Big data centers are built where the power is cheap use since about 2004,” Velazquez says. “That was the — near transmission centers — and near where there peak usage per residential customer. Ever since then are few neighbors to complain about a big box buildit has been on a steady decline.” ing,” says John O’Brien, president of AltaGas Services.

“Those kinds of customers demand reliability.”

RELIABILITY IS ALL THE RAGE. It’s going to take So, too, do a new breed of smaller data center customseveral years, and it’s probably going to disrupt ers — ones who are setting up in small storefronts or in oftraffic from time to time. But when its com- fice spaces near residential areas to boost data signals and plete, a joint project between the DC govern- service to businesses and residents. “We’re seeing these ment and Pepco will boost the reliability of the city’s pow- small data centers pop up everywhere,” O’Brien says. er system by burying miles’ worth of power distribution Reliability is also why Pepco is building new distrilines. The project, called DC PLUG, will cost $500 million. bution substations in the District that will replace older It reflects a broader trend of companies and res- stations, one of which dates back more than a century. idential customers pushing for more reliable power “We all have more users now all over this area,” Velazquez service that is less vulnerable to the forces of nature. says. “The worst thing about economic development is The tech industry is pushing especially hard for when you don’t have the capacity available to serve custhat kind of reliability across this region. And it’s im- tomers, whether it is streets or water or power or gas. So portant not just here, but worldwide, that they receive we need to put in place a reliable backbone of power.”

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POWER UP Pepco’s Harvard

Street substation (opposite page) is getting a major upgrade. It was built in 1907 and is the oldest operational substation in Washington, DC. The Parks at Walter Reed (above), a 66-acre multi-use project on the site of a former hospital, is being outfitted with green roofs, solar panels, and gas-powered generators.

OPPTY

WINTER 2018

A magnetic train? A new waterway transportation system? Can these things really get us where we’re going faster than ever?

The Faster Future Commute FACT: THE NORTHEAST CORRIDOR IS THE MOST CONGESTED

HEY, TAXI The Potomac

RiverBoat Company is running a water taxi between Georgetown, Alexandria, and The Wharf that could someday be part of a broader network of taxis and ferries that would get commuters off the roads and onto the waterways.

transportation region in the nation. How long did it take you to get to work this morning? Sub-question: How much did it cost? The price tag of commuting might be more than you think.

A data firm called Inrix last year compiled a global traffic scorecard that placed the Washington area as the sixth worst in the world — the world — for traffic congestion. The study found that our region is even worse than Istanbul, a city that can at least blame geography — it bridges two continents, after all — for some of its woes.

It also found that $2.9 billion each year is spent here on fuel that’s wasted by idling cars, or on more invisible costs that are passed on to consumers for, say, trucks that have to sit in traffic instead of quickly delivering their goods to retailers and other businesses. That’s $1,700 annual for every driver on the road in this area. And that’s just counting the wasted money. The actual costs of driving or hopping a train or bus aren’t factored in.

And, about those trains: Some 2,200 trains carrying 750,000 passengers traverse the 457 miles of rail lines that comprise the Northeast Corridor each day.

That just so happens to be the most congested rail line in the country. But, then, you already knew that. The question is: Can anything be done about it?

Future Forward

The Opportunity

A new but proven transportation technology and a very old transportation technology — applied in a new way locally — could relieve a significant amount of stress on local roads and rails and, better yet, speed the commute for thousands of people. That is, if enough people line up behind these technologies.

The Northeast MAGLEV THE NEW TECHNOLOGY

THE PROMISE / A magnetic train that goes from DC to New York in one hour and DC to Baltimore in 15 minutes. Yes, really.

THE TESTING / MAGLEV train technology has been testing in Japan since 1998 along a line called Chuo Shinkansen. The train line began accepting revenue service in 2014 and the train is expected to get fully up to speed — 375 miles per hour at maximum — in the next two years.

HOW IT WORKS / The MAGLEV doesn’t run on rails.

It hovers above superconducting magnets. The magnets are contained within a U-shaped guideway and the guideway would be built either on top of a viaduct towering aboveground or inside a below-ground tunnel. “This is a train that will never run at grade,” says Jeff Hirschberg, the vice chairman of Baltimore-Washington Rapid Rail, the main organization behind the development of the Northeast MAGLEV. “It is literally impossible to derail, because there are no rails.”

WILL IT WORK HERE? / That’s the $27.8 million question.

Hirschberg’s group has already gotten that much in federal funding for an environmental impact study for a MAGLEV line that would run either along the Baltimore-Washington Parkway or alongside portions of Amtrak’s current Northeast Corridor lines. Initial plans are to run the train only between Washington and Baltimore. That would cost another $22 billion and would involve buying land and getting operational support from multiple jurisdictions. But Hirschberg says he is confident that, because the MAGLEV is a proven technology, with years of safe operation in Japan, the study will proceed smoothly and construction will commence in 2019. If so, the line could be carrying 15,000 people per day and transforming two cities into one by 2024.

THE HEAVY HITTERS / The Northeast MAGLEV has an advisory panel that suggests it means business. Included among the members are former governors Ed Rendell, Christine Todd Whitman, and George Pataki, as well as Under Armour founder Kevin Plank and former senator Tom Daschle.

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AND WHAT ABOUT THAT HYPERLOOP? / Elon Musk’s pro-

posed underground, vacuum-powered transportation tunnel has gotten local approval in Maryland for early-stage testing. It’s also gotten plenty of headlines. But Hirschberg isn’t concerned about the potential hightech competition. “I’m all for studying new technologies,” he says. “But we’re confident about what we are doing. Our infrastructure is broken and we can fix it.

And MAGLEV is ready, willing, and able to do that.”

Commuting by Boat A NEW APPLICATION

THE PROMISE / A system of water

taxis and ferries that would connect to ground transportation and move potentially millions of people in a fraction of the time it takes to drive. Michael Winstanley, principal with Michael Winstanley, Architects & Planners in Alexandria, has proposed a framework plan for this system that calls for building 31 different landing sites along DC’s waterways, including major potential hubs at Poplar Point, near the new DC United Stadium, or Buzzard Point, near Nationals Park.

THE TESTING / Winstanley’s plan has only had a few test runs between a couple of points to gauge the timing. But the results are impressive. “We did a test run between the Joint Base Anacostia–Bolling and the Pentagon,” Winstanley says. “It took us 12 minutes to get from one point to the other. There were brass on the boat telling us they

sometimes have to allow two hours on the road to make sure they are not late traveling between those two places.”

TYING INTO WATER TAXIS AND MORE / Water taxis operated by the Potomac Riverboat Co. are already running between Alexandria, National Harbor, Georgetown, Nationals Park, and the new DC Wharf. Winstanley thinks if those services are expanded and connected with commuter ferries, “some of the traffic congestion related to tourism would be relieved because the very act of getting on a boat is a tourist attraction in and of itself.” But the real connections that must be made are to bus lines and other ground transportation so commuters can easily go from the boats to the buses to their offices. “We can’t set up a water transportation network by itself and think it is going to survive,” he says. “We have to tie it into existing land-based transportation.”

THE BIG CHALLENGES AHEAD / “There is a lot of work to go,” Winstanley says. “This is a very complex situation with four different jurisdictions involved — Maryland, Virginia, Washington, DC, and the federal government.

But we think we have a very robust plan.”

WHAT COMES NOW / “The objective is to get people saying, ‘This is really cool. We have to find a way to get this done,’ Winstanley says. “And then we need to start talking to people to make that happen. Everyone knows that transportation in this region is a challenge.

We might as well look at how we can use the waterways. They’re just sitting there waiting for us.”

FRICTION FREE

The proposed Northeast MAGLEV train could reach 375 miles per hour.

It runs within a guideway, hovering above, and being propelled by superconducting magnets and electromagnetic coils.

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CAN AMAZON GET STUFF TO YOU FASTER, EVEN I N C O N G E S T E D WA S H I N G T O N ?

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1 Entrance and Drop Off 2 Reception Lobby 3 Premium Restaurant 4 Active Entertainment Center 5 Performance Retail Boutique 6 Premium Health Club 7 Branded Spa 8 Child Watch 9 Offices 10 Pool House Seating 11 Field House Seating 12 Climbing and Bouldering Wall 13 Ice House Seating

LIFT WEIGHTS & WA I T IN T R A F F IC L E S S A huge new sports and wellness complex puts the whole fit family under one roof

WHAT IS IT? The St. James, a 20-acre fitness destination in Springfield, Virginia, that has 430,000 square feet under its roof and potentially as many as 2 million visitors per year. The facility will have two ice rinks, six batting cages, a turf field for soccer, four basketball courts that can be converted into nine volleyball courts, a pool, seven golf simulators, a gymnastics training center, climbing walls, a 50,000-squarefoot cardio, strength, and agility center, a spa, a sports medicine center, and a 6,000-square-foot indoor water park with zip lines, trampolines, and a restaurant.

Among other things. Membership starts at $150 for an individual or $250 for a family.

WHY HERE? “There is a lack of supply for quality competition facilities in this area,” says Kendrick Ashton, a co-founder and managing partner of The St.

Robots on the Ground & in the Sky

James Group. “You can’t just get on a basketball court whenever you want or get on a soccer field.

Traditional providers of those assets — local governments — no longer have the resources to invest in them. We solve that issue and we do it by providing facilities that are of a very high quality and offer a hospitality experience. You can get a cup of coffee, Wi-Fi, childcare, and the fitness facilities.”

THE OPPORTUNITY: Not only could the facility keep you out of the car since the soccer players and the gymnasts in the family could potentially share the destination, Ashton and his co-founder, Craig Dixon, believe the St. James in the Washington region could be the first in a series of franchises. That makes it a business opportunity, too. Ashton and Dixon are already working with venture capital firms, hoping to expand their fitness palace to 20 cities nationally.

Robots do a lot of the thinking at Amazon. The company uses artificial intelligence to help decide, as your two-day Prime order is placed, which of Amazon’s hundreds of fulfillment centers has your product, and which of its hundreds of sort centers your product can be sent to before it is passed off to a third-party shipper, and then to you.

Robots also do a lot of the lugging of packages as the 50 million products available for shipping — enough to fill 350 big box Walmart stores — are moved around in Amazon’s fulfillment process.

And more robots may be on the way. The company is exploring use of automated vehicles that will do the driving for them, as well as drones that will take to the air to get packages under 5 pounds — that’s 85 percent of everything Amazon ships in two days or less — directly to customers. But if Amazon is going to get autonomous vehicles on the roads or drones in the skies of crowded Washington (or anywhere else in the country, for that matter), it will have to clear one big local roadblock first: The federal government. And that might take a while. “One thing I always tell policymakers,” says Blair Anderson, the Washington-based director of transportation public policy for Amazon, “is they need to consider the speed at which this technology develops. It often takes 6 to 8 years to approve new transportation regulations. With the way things are moving today, the technology may be obsolete before the regulations are in place.”

P H OTO G R A P H C O U R T E SY O F T H E S T JA M E S

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OPPTY

We live in the tightest job market in the country.

What will it take to stay competitive today and attract the best and brightest in the future?

WINTER 2018

Future Forward

RECRUIT, RETAIN

The University or Maryland designed a futuristic locker room (below) as part of an effort to attract top athletes.

Companies are doing the same kinds of things with their office spaces. The American Society of Interior Designers' new Washington headquarters (opposite page) leverages plants, natural light, and open spaces to keep workers healthy and happy.

IN 1997, MCKINSEY & COMPANY PUBLISHED A SEMINAL PAPER ington job market, the war for talent is neither over nor called “The War for Talent.” The paper projected that unwinnable. In fact, Washington says there are several over the following 20 years companies, to be successful, ways to start winning the war. For instance: would have to fight for the best workers, treating them KNOW YOUR EMPLOYEES and prepare to guide them. as critical cogs in the corporate success machine. Those “Make an employee profile that identifies each of your em20 years have now passed. So have we reached an armi- ployee’s aspirations,” Washington says. “Find out how they stice in the great war for workers? Hardly. want to be rewarded and find ways to match that.” She People matter now more than they ever have, and the advises organizations to focus on purpose-driven work fight for the top-of-the-line talent, from the front-line that clearly shows workers why the jobs they do matter. workers to the C-suite, has only gotten tougher. Or, to CREATE A PLAN for recruitment and retention and set some, impossible. One Fast Company story recently de- metrics for success. “You have metrics for your sales goals, clared, “The War for Talent is Over and Everyone Lost.” you have metrics for your revenue goals,” Washington DeLinda Washington, vice president of human says. “What are your metrics for retaining your top talresources for Kaiser Permanente Foundation Health ent?” She advises companies to create a specific, written Plan in Washington, might disagree. She says that even plan for recruitment and retention and make sure all dein the ultra-competitive, and very tight Greater Wash- partment leaders know it and are actively engaged in it.

PREPARE TO BE FLEXIBLE . “Workers today,” Washington says, “will tell you that, ‘If I do my best work from 11-9, why should I be at my desk from 9-5?’” Younger workers also may want an option to choose a benefits plan that doesn’t put money into retirement but instead helps them pay off student loans.

CREATE AN ONGOING PIPELINE of qualified candidates, leveraging Greater Washington’s educational institutions. “We have more than 50 universities in our area,” Washington says. “And yet each year, students graduate here with no idea where they’re going to get their first job. We have a great opportunity here to identify who is out there at the college level and to recruit them.”

SUBSIDIES MATTER. “Here in the Greater Washington area, the federal government pays top talent for tuition,” Washington says. That’s a competitive advantage other companies here are often asked to match. Less costly

P H OTO G R A P H O F U M D LO C K E R R O O M C O U R T E SY O F C A N N O N D E S I G N ; O F A S I D H E A D Q UA R T E R S C O U R T E SY O F T H E A M E R I C A N S O C I E T Y O F I N T E R I O R D E S I G N

The Time of the Talent Wars

13

OPPTY

Investment in various types of office space in the Washington metro area.

(In total dollars and percent change from the first three quarters of 2016 through the same period in 2017)

OFFICE $

6.8 BILLION +21%

$

1.2 BILLION -33%

$

2.6 BILLION + 181%

$

4.3 BILLION +11%

RETAIL

INDUSTRIAL

APARTMENT

UNDEVELOPED LAND $

600 MILLION -29%

DOWNTOWN DC $

4.7 BILLION +20% DC SUBURBS

$

11.9 BILLION + 13%

ONE IMP OR TA N T TREND

“Investors are saying they’d rather go further afield in secondary and tertiary markets — in the suburbs,” says Joe Stettinius, chief executive, Americas brokerage and capital markets at Cushman & Wakefield in Washington. “They believe the opportunities today are in the smaller markets. That is a fundamental shift in how intuitional investors see commercial real estate. It means that 2018 is going to be a suburban story. That’s the first time we’ve been able to say that in 25 years.”

subsidies include offering Metro farecards to workers.

“That can be a little thing financially,” Washington says.

“But it means a lot to your employees. And they know when other companies are providing it and you’re not.”

BE STRATEGIC, yes. But also, be flexible. “One size does not fit all,” in recruitment and retention, Washington says.

“So don’t be afraid to innovate when it comes to people.”

PAY CLOSE ATTENTION to the places where people work. “One key to retention is the SWAG that your facility can have,” Washington says.

Ken Wiseman, design principal with CannonDesign’s Washington office, agrees with that. He believes organizations today need to go all out — including remaking their physical spaces to attract the best workers. “The war for talent is more aggressive now than ever,” he says.

To help recruit and retain corporate talent, Wiseman’s firm has worked on dozens of offices around the country. They’ve opened physicians’ offices to natural surroundings and created hotel-style spaces for companies where many workers are frequently on the road and desks are often left empty.

They’ve also done a lot of work on campuses to help colleges recruit students and athletes. Wiseman’s firm is now building a new, high-tech locker room for the football team at the University of Maryland. There, lockers spiral around a central atrium that’s meant to evoke a turtle shell shape. Each locker has a video screen featuring the athlete who uses it. Multicolored LED lights on the ceiling guide players out from under the shell and onto the playing field.

Wiseman’s firm also worked on a revamp of the University of the District of Columbia’s student center, creating a building with open floorplans, soaring windows, and connected spaces that draw students together. The design charge, “was all about showing, we care about our people and we put our people first,” he says, adding that many colleges are making similar changes — and changing their students’ expectations in the process. “If you graduate from campuses like this,” Wiseman says, “what kind of office do you want to work in?”

The Opportunity

To win the ongoing war for talent, companies can create detailed programs for finding, cultivating, and retaining top talent. Companies can also recreate their physical spaces, building workplaces that foster creativity and better appeal to the workers of tomorrow.

14

OPPTY

WINTER 2018

Future Forward

SOME MAY REGARD THE TOURISTS WHO SWARM THE WASH-

The Washington area is poised to break records for visitation in the coming years. Businesses, local governments, and local attractions can begin to capitalize on tomorrow’s crowds today.

Tomorrow’s Tourist Matters

ington region year-round with mild annoyance (Stand right! Walk left!), others with mild amusement (Oh, those silly-looking Segway tours!). But what all those visitors represent is a critical and rapidly expanding revenue stream for the local economy.

In 2016, 22 million domestic and international visitors came to this region, spending $7.31 billion while they were here. Both of those numbers are all-time records.

Visitor revenues have increased by $600 million since 2013. Those revenues should continue to climb because the visitor head count to the Washington region is expected to top 25 million by 2020.

“Tourism is one of the parts of economic development that people don’t think is economic development, because tourism is fun,” says Elliott Ferguson, president and CEO of Destination DC, a private, non-profit corporation that is the official marketing organization for the Washington area. “But quite frankly, it affects a lot of people in the Washington region.”

That $7.31 billion in revenue, for instance, generates $700 million in local taxes and directly supports nearly 75,000 jobs. In total, jobs tied directly to travel and tourism account for $4 billion in annual area wages. “If this industry were to go away,” Ferguson says, “the city of Washington alone would have to spend $2,500 per resident to make up for the difference in taxes generated by visitors.”

The tourism industry here isn’t going away, but it does face some headwinds. International travel, for instance, has been affected by global political upheaval, terrorist incidents in the United States and Europe, and immigration policy changes. All of those things have led foreign tourists to rethink travel to the Washington area.

That poses a potential financial problem. International arrivals had been on a big incline — up 6.4 percent between 2015 and 2016 — and international visitors have made an outsize contribution to overall visitor revenues. Even though only 9 percent of all visitors to the Washington region came from overseas in 2016, they accounted for 28 percent of the total $7.31 billion in visitor spending in the area.

Still, even if foreign visitors don’t come to the area in the same numbers over the next couple of years, convention and business visitors could make up for the difference in the near term. In 2017 alone, 21 major conventions were held in the area. Those events will have

15

WATERFRONT PROPERTY

National Harbor (this page, left), boosted its visitor appeal by adding a new luxury resort and casino, the MGM. Meanwhile, The Wharf in Washington (below and oppostie page) has opened for business after a massive remake.

Where Visitor Money Goes in Greater Washington D.C. (2016)

LODGING

P H OTO S O F T H E W H A R F BY E V Y M AG E S ; O F N AT I O N A L H A R B O R BY GA RY TO G N O N I /G E T T Y

$

a $361 million economic impact — a record high. Cvent, an event-management company, now ranks Washington as the No. 6 city for business meetings.

“We’re not a destination that just relies on tourism and the leisure market,” Ferguson says. “That may be surprising to a lot of people. But we do very well with the convention market.”

The Greater Washington area also has a few other good things going for it these days when it comes to drawing more visitors. There’s the recent expansion of National Harbor; the remade Wharf in the District, which will have three new hotels, three live music venues, four public piers and 20 restaurants, as well as a new water taxi; and the upcoming MLB All-Star Week, which will take place in the Washington area from July 13-17, 2018. There is also one new major museum opening here in 2018: The National Law Enforcement Museum. It will be joined by the reopening of the International Spy Museum, which is moving in fall 2018 to a vastly expanded new site close to the Wharf.

In early 2019, the venerable Kennedy Center will near completion of its own massive expansion project. Conservative projections show those new museums, joined by the Museum of the Bible, which opened in 2017, will

2.51 BILLION

FOOD & BEVERAGE $

2.10 BILLION

ENTERTAINMENT $

1.21 BILLION SHOPPING

$

891 MILLION

TRANSPORTATION $

604 MILLION Source: IHS Markit

International Visitors to Washington D.C. RANKED BY COUNTRY (2016)

China UK Germany France India South Korea Australia Italy Spain Japan

304K 199K 145K 103K 100K 93K 81K 62K 62K 58K

Source: Destination DC

draw 2.5 million more museum visitors to Washington.

“You should care about museums,” says Tamara Christian, president and chief operating officer of the International Spy Museum. “Museums stimulate learning. They change lives. Museums are big business.

This matters, and it especially matters in Washington, because museums are vital to the tourism market.”

Performances are vital, too. And Greater Washington is seeing more of those than ever before. Sales at Wolf Trap, the only U.S. National Park dedicated to the performing arts, are up substantially in the past couple years, even as two major new performance venues — the MGM National Harbor and the Anthem at the Wharf — come online. “You’d think this is a very saturated market,” says Arvind Manocha, president and CEO of the Wolf Trap Foundation for the Performing Arts. “The amount of concert opportunities here is — outside of New York and Los Angeles — unparalleled. But we are still doing well and we are clearly attracting new audiences.”

The Opportunity

Spurred on by new museums and other attractions, the area’s upward tourist trend is likely to continue, providing businesses here a chance to capitalize on the capital city’s increasing appeal to visitors.

16

Future Forward

NEW ATTRACTION

A completely remade International Spy Museum Bigger, better: When it moves from the 19th-century, neoclassical building in Penn Quarter that it has occupied since 2002 to a newly built, modernist facility in L’Enfant Plaza, the International Spy Museum will gain new educational programming spaces, a theater, and event spaces that have views of the Capitol, the Washington Monument, and the nearby, newly redeveloped waterfront. That’s all contained in 450,000 square feet of space.

Secret streetscapes: The new exhibits promise to be more interactive, more immersive, and offer more informational takeaways.

One such new attraction is a recreation of a street in Cold War East Berlin. Visitors will enter the street either through Checkpoint Charlie or an underground tunnel and will have to walk past the Ministry for State Security, among other things.

Boosting the neighborhood: A free, fourstop shuttle bus will connect the remade Spy Museum to the L’Enfant Metro stop, the Hirshhorn Museum, and the Wharf. “We think this will drive more people to L’Enfant Plaza,” says Christian, the Spy Museum’s COO. NEW ATTRACTION

ago when we first had the idea of building a national law enforcement museum, we had no idea about the amount of attention that’s being focused on the law enforcement profession today,” says Craig Floyd, the National Law Enforcement Officers Memorial Fund’s president and chief executive. “But the public’s attention is now focused on law enforcement, some of it negative, some of it not. We think this museum, through its story and through the programming we’ll have, can help bring the public together with law enforcement and strengthen that bond between public and police.”

NEW ATTRACTION

A vastly expanded John F. Kennedy Memorial Center for the Performing Arts

The National Law Enforcement Museum

BIGGER, BETTER (From top of page) The International Spy Museum moves to bigger digs in L'Enfant Plaza, the National Law Enforcement Museum will stand guard in Judiciary Square, and the Kennedy Center's new, modern pavillions promise to bring art closer to patrons.

A living memorial: When it opens in fall 2018, this new, 57,000-square-foot space in Judiciary Square will occupy three levels, mostly underground. The project from the National Law Enforcement Officers Memorial Fund is located adjacent to the National Law Enforcement Officers Memorial. The museum traces the history of law enforcement from the Old West to Prohibition to the War on Terror up to today, telling real stories of real officers working in their communities.

An interactive ride along: The museum’s artifact collection includes Elliott Ness’ original credentials, costumes from the movie Robocop, the 1990 Chevrolet Caprice used by the Beltway Snipers, a cell block from the Lorton Corrections Complex, and immersive exhibits where users will have to make split-second decisions in an armed confrontation with hostage takers or study the forensic clues in crime investigations. There is also a café on site. Yes, it serves doughnuts.

A museum for this moment: “Twenty years

Flexible and fun: The Kennedy Center is undergoing the largest expansion project since its opening in 1971 — a $180 million project, all privately funded, that is set to be completed in the spring of 2019. It will add three new buildings to the center’s complex along the Potomac River. The pavilions will be informal, flexible spaces filled with natural light. The three new buildings could house classes, exhibitions, performances, or parties and other events — just depending on the day. Outdoor, elevated walkways will connect the buildings and join the site to the adjacent riverfront.

Connecting to the community: Deborah Rutter, president of the Kennedy Center, says the idea behind the project is to add new, more intimate spaces to a facility that already plays host to 2,000 performances and 2 million visitors per year. “Today’s audiences want to be more engaged and participatory,” Rutter says. “They want to engage with the artists and maybe make art themselves. These spaces can allow that. And that will allow us to have a more active, dynamic relationship with the community.”

R E N D E R I N G S O F T H E I N T E R N AT I O N A L S P Y M U S E U M C O U R T E S Y O F T H E I N T E R N AT I O N A L S P Y M U S E U M ; O F T H E N AT I O N A L L AW E N F O R E C E M E N T M U S E U M C O U R T E SY O F T H E N AT I O N A L L AW E N F O R E M C E N T O F F I C E R S M E M O R I A L F U N D ; O F T H E K E N N E DY C E N T E R E X PA N S I O N C O U R T E S Y O F S T E V E H O L L A R C H I T E C T S F O R T H E K E N N E DY C E N T E R

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D.C. Water Administrative Headquarters Building

American Geophysical Union

The Boro (Block C) at Tysons

First Street Tunnel

Lafayette Elementary School

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