The New York Times is reporting that Amazon has reached a decision about it’s new $5 billion headquarters and is planning to split its offices between two locations – Arlington, Va.’s Crystal City and .New York City. The announcement comes more than a year after Amazon requested proposals for the new site. While Washington, D.C. has always been in the running, many speculated Amazon would choose a suburb farther outside the city – such as Loudon – considering the company’s plans for a $5 billion, 8-million square foot campus.
The Arlington, Va. location places it just over the Potomac and in an area more dominated by defense contractors than hackers. Crystal City may have the office space. Just two years ago Arlington was lamenting a nearly 20 percent vacancy rate in available office space, and touting 8 million square feet of vacant office space (perhaps music to Amazon’s ears). The vacancies came after a number of military and defense clients vacated their offices, and government belt tightening during the sequestration years. The Mark Center, a government facility finished in 2013, was born out of the Base Realignment and Closure (BRAC) program, and meant to reduce the DoD’s dependence on commercial office space (like those offices in Crystal City). It was just one example of the government fleeing commercial office space for military facilities.
While the area may have available office space, there is one thing it doesn’t have in abundant supply – talent. There is clearly demand for tech talent across the country, but the tech skills talent shortage is even greater in the Washington metro. The LinkedIn Workforce Report shows a 212,838 person shortage of software engineers in Washington, D.C. Why such a skills shortage in the nation’s capital? Just like every other region, everyone needs tech talent. In Washington, you have not just the demand for health, finance, and commercial tech, you also need skilled professionals to keep the defense industry and Intelligence Community in business.
Amazon and the Tech Talent Shortage
What effect will the Amazon headquarters have on Northern Virginia‘s tech community? The competition for cleared talent will grow even greater, and some defense professionals may flee the area from hassles like traffic and higher rent. (Traffic rants lasting for years after the construction of the Mark Center – which housed just 6500).
“It is much more economical to bring in the resident work force (no relocation costs) than to import workers to the D.C. area,” said Christopher Burgess, a security professional, CIA veteran and regular ClearanceJobs contributor. “The beltway defense and intelligence contractors can expect pressure to be put on their executive workforce. If employers haven’t shown their cleared executives the love they deserve, there will be opportunities on the horizon when Amazon arrives. The cascade effect will be interesting to watch, as poaching creates vacancies which creates requirements to fill, so I would expect a bit of lateral churn to also occur.”
College students majoring in engineering select Amazon as a top 10 employer. Computer science majors put it in the top three. Defense employers also rank, but they generally can’t compete with the major Silicon Valley companies for salaries and stock options. The current cleared workforce shortage is born largely out of the 30% reduction in the number of individuals with clearances, as well as the one-to-two year wait for new clearance determinations. But the strength of the commercial sector has also been a factor. Just a few years ago the defense budget was plummeting, Lowest-Cost-Technically-Acceptable contracts were the norm, and salaries were stagnant. While defense budgets are growing and salaries are rising, the defense industry is still in its rebound years.
Amazon will likely add to the current hiring trend of poaching for great technical talent, and it will be able to offer both competitive salaries and stock options. And commercial sector positions won’t face the issues of continuous evaluation or government data breaches.
There’s no doubt the Amazon move is a good one for area real estate agents. But for a defense workforce already facing massive pressure and personnel shortages, the instant need for 25,000 new employees in the shadow of the nation’s capital could be the personnel shortage that breaks the camel’s back.