INDUSTRIAL LAND IN A POST-INDUSTRIAL CITY District of ...

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District of Columbia Industrial Areas Study DC Office of Planning Prepared by Phillips Preiss Shapiro Associates, Inc. The other area of opportunity, the building trades, is scattered throughout DC’s industrial districts. A greater capture rate could likely be achieved through policies which emphasize security for businesses with open-air storage, such as in place industrial parks with shared security and perimeter fencing. In addition, any measure to assure that building trades businesses fully tap the government construction market will benefit the PDR districts. Most major construction contracts are awarded to prime contractors who then seek local contractors. Additional forums to match local building trades contractors with these primes would be beneficial. Despite the massive presence of the Federal government, this appears to be a limited market for the District’s PDR businesses. In most cases, businesses achieve no advantage in serving this market by locating in the District. Interviews suggest that a very small number of contracts specify a geographic distance from which a good or supply can be sourced. This has happened in the case of security related services and pest control but it is considered rare. The notable exception is construction in which the prime contractor needs to have a local presence; however, a local presence can be defined as a corporate office for the general contractor and does not necessarily translate into demand for space in the District’s industrial areas. In general, the Federal government has an intentionally national view in its sourcing and no preference is given to local vendors. Location or proximity can not be considered in evaluation of proposals; vendors are selected on the basis of technical and managerial merit, past performance, and price. The greatest opportunities for PDR businesses to access the Federal market depend on either getting certified as an 8(A) business or working on behalf of a prime contractor. Approximately 1,600 of the 8,000 8(A) businesses nationally are located in the District. While most of these businesses are IT-related, there are a couple hundred construction and building trades firms. While ample assistance is available to help businesses get certified as 8(A) contractors, interviews with the SBA suggest another barrier to securing government contracts: time and resources. Anecdotal information suggests that companies hoping to secure such contracts need to be able to devote a full time person to marketing to the government, a commitment that many District businesses may be unwilling to make. Finding work with primes has been made easier through the SBA’s introduction of Sub-Net, an electronic database of subcontracting opportunities, which should assist PDR businesses link to general contractors doing business with the Federal government. The District itself represents a significant market for PDR businesses. Particularly with the passage of legislation in July, implemented this past fall, which states that any procurement under $100,000 must be filled by an SBE on the DC Supply Schedule, opportunities for smaller District PDR businesses are abundant. City procurement officials estimate that 80 percent of the city’s transactions are for under $100,000. Further study should be given to what support PDR businesses need to become part of the DC Supply Schedule. - 33 -
District of Columbia Industrial Areas Study DC Office of Planning Prepared by Phillips Preiss Shapiro Associates, Inc. 2.1.5 CONCLUSIONS These findings collectively paint an interesting picture. PDR sectors in DC are underrepresented as a share of District employment, a fact which should come as no surprise. Yet, these sectors play an important role in supporting other larger sectors in the economy. Contractors support the local construction and rehabilitation boom that is transforming downtown and neighborhoods; and specialty food wholesalers play an important role in supplying the hospitality industry and ethnic markets and restaurants. Media companies whose operations involve an industrial-component (studios, satellite dish farms, etc.) also find a home in DC’s industrial zones. Linkages between PDR businesses and purchasing sectors are strong. Providing support for these sectors to continue operations in the District is therefore a legitimate public policy goal. 2.2 NEED FOR PDR JOBS The District of Columbia has no shortage of jobs—total employment exceeds the resident labor force by more than a factor of two! Yet, the District continues to be beset by high unemployment rates exceeding those of the region by a significant margin. As an example, the 2004 unemployment rate in the District was 8.2 percent, compared with 3.7 percent for the Metropolitan Statistical Area (MSA). Further, the 2004 unemployment rate was at a seven-year high, coming off a five year period in which the average unemployment rate grew every year, even as total employment in the district also grew (see Chart 2.2). Intuitively, there is a mismatch between the types of new jobs being created in the District, and the skill sets of many of DC’s unemployed, and underemployed, residents. This mismatch can be seen in the most recent occupational projections prepared by the Department of Employment Services. These projections, summarized by major occupational group, are shown in Table 2.8. They cover the period of 2002 to 2012, and are based upon employment projections by industry converted into occupational projections through the use of the Occupational Staffing Matrix published by the Bureau of Labor Statistics. The table shows that the base majority of the job growth projected for the District will occur in skilled, white-collar occupations. A full 65 percent of the growth will be for management occupations and professional services (attorneys, consultants, etc.). The major source of entrylevel jobs will be in services and sales, which together account for 25 percent of new jobs. However, these occupations tend to pay wages at or below the accepted living wage threshold for DC, as shown in a subsequent table. PDR-related occupations are highlighted in bold text. These occupations are projected to account for less than 5 percent of future job growth. By far the biggest gains will be in construction-related jobs, due to the local and regional boom in residential and commercial construction. - 34 -
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