G R E AT E R WA S H I N G T O N

BUSINESS
CONFIDENCE
SURVEY

A DV E RT I S I N G S U P P L E M E N T TO WA S H I N G TO N B U S I N E S S J O U R N A L
ABOUT THIS SECTION
W T
e are pleased to present the results of the first
WBJ /Colliers Greater Washington Business
Confidence Survey.
We embarked on this project for a simple reason: Since
sequestration hit the region several years ago, our economy
has struggled to find its way. Business and civic leaders have
stressed the need to diversify, and while that continues to be
a priority, it wont happen overnight.
The change in the White House creates more uncertainty.
While President Donald Trump wants to boost military
spending, he is calling for unprecendented cuts to federal
agencies and the civilian workforce. If Congress follows
through with even some of those cuts, experts agree,
Greater Washingtons economy would suffer. That would hit
commercial real estate and the housing market hard.
Our survey, conducted by brand consultant McGinn and
Co. and market research company REPASS, aims to alleviate
some of that uncertainty by providing a window into the
minds of local business executives. About 160 C-level
executives at organizations with more than $5 million in
revenue completed our online questionnaire in February. As
youll see on the following pages, they are optimistic about
our regions future while sharing a good dose of trepidation.
Business Journal readers are always looking for valuable
information to help them grow their businesses, and we
think the results are a good indication of opportunities and
challenges we will face in the next year.
For those of you who took the time to complete the
survey, thank you. For those of you who would like
to comment on the results, please email me directly at
jmacgregor@bizjournals.com.
I look forward to hearing from you.
JAMES MACGREGOR
Publisher and Market President
Washington Business Journal
2 | Greater Washington Business Confidence Survey
he Washington Business Journals decision
to launch the inaugural Business Confidence
Survey reinforces its role in our community to
inform, engage and stimulate dialogue about the things
that matter most to the companies and organizations in
our region. The enclosed summary illuminates a number
of factors that will inform the strategic decision making
process related to capital and operating budgets, business
investments, and workforce. Colliers International is
proud to sponsor this important analysis of sentiment
that will shape our regional economy in the coming year.
Our decision to fund the study reflects our corporate
commitment to leveraging analytical tools to increase
the quality of information used by our clients every
day. Underlying the commitment is a belief that better
solutions are achieved when one understands the choices
and trends that define future events. Our daily experience
in markets as diverse as Singapore, London, Toronto and
Sydney serves to affirm the value realized by our clients
because of this investment philosophy.
The survey findings provide insights into federal
outlays to the contracting sector, corporate growth
decisions, and the relative confidence of lenders and
investors, all of which will shape the real estate cost
and risk landscape for the rest of 2017 and into 2018.
After human capital, real estate is the largest expense for
businesses.
The value of this Business Confidence Survey resides in
how it enables us to make business decisions with an eye
to the future. At Colliers International, we are proud to
have partnered with the Washington Business Journal to
provide this evocative report.
DAVID PARKER
Regional Managing Director,
Colliers International, Washington, DC Region
Impact of New Administration
Other 3% No comment 2%
Too early to tell 4%

None 6%

Minimal 6%
QUESTION:
What do you Positive
think the impact 44%
of the Trump
Unknown administration
15% will be on your
business?

Negative
20%

EXECUTIVE SUMMARY SURVEY QUOTES

A large portion Only 20% Respondents CEOs and I think they will shake
of DC area foresee a from government respondents things up, so at first, it
business leaders negative contractors and from privately- may seem messy, but they
anticipate that effect, while the smallest held firms are are working on fixing some
the new Trump others organizations most likely to problems.
administration will believe its by revenue and think its too
have a positive too early to headcount are early to tell.
Uncertainty in government
effect on their tell. most worried
contracting/funding -
organizations. about the Trump
Major distraction for
effect.
government clients
OBSERVATIONS - uncertainty and
anxiousness in labor pool -
b Although a large portion of DC area business leaders anticipate a positive impact from the Trump administration,
small businesses and government contractors are less optimistic. disruption in business due
to regulatory and other
b While 50% of those not involved in b These sentiments do not align with popular wisdom which
government contract work have a positive predicts that policies proposed by the Trump administration uncertainties.
outlook on the new administration, only (i.e., increase in defense spending, tax reform and aggressive
38% of those involved have a similarly deregulations, etc.) will be more favorable for small businesses and
positive outlook. government contractors; yet many government contractors remain Could be positive if the
Government contractors are the largest skeptical.
user segment of office space in the Consumer confidence increased in February and remains at a
Feds loosen the reins on
DC metro area, with the top 20 firms 15-year high. DC (e.g., continue to
occupying more than 12.6 million Dow and NASDAQ surged to an all time high in February. allow budget autonomy;
square feet.
Sequestration was a period of
Despite an improving spending environment, contractors transfer more federal land
remain less than positive about the outlook. 27% of the
uncertainty for many government respondents who perform government contract work project in DC to District control)
contractors and based on survey results that the Trump administration will have a negative impact but could have a negative
much uncertainty continues into the on their business and 19% were unsure or that it was too early
early days of the Trump administration. to tell.
effect if tourists, and
Federal contract spending in Greater This uncertainty has kept government contractors from nonprofit conventions and
Washington, DC area office market engaging the real estate market. meetings purposely choose
dipped more than 9% to $67.1 billion
Even with these sentiments, nearly 72% believe that business NOT to come to DC in
in 2013.
conditions in the DC area are better than those in other parts of
the country. protest of Trump.

Greater Washington Business Confidence Survey | 3

business conditions
QUESTION: What is your assessment QUESTION: What is
of current business conditions? your assessment of your
organizations current
CURRENTLY GOOD
business environment?
CURRENTLY GOOD

48% 72%
68%

National DC Area

QUESTION: What do you project business QUESTION: What do you

conditions to be in 6 months? project your organizations
BETTER IN FUTURE
business environment to be
in 6 months?
BETTER IN FUTURE

56% 53%
57%

National DC Area

EXECUTIVE SUMMARY

Respondents say current Predictions for the future However, the outlook In general,
business conditions for are optimistic, with over for the future is less the largest
their organizations and half of respondents saying positive than current organizations are
the DC area organizations conditions will be better conditions in the DC most positive about
are better than the rest 6 months from now, area and for respondent the outlook for
of the nation. regardless of geography. companies. business conditions.

OBSERVATIONS

b 72% of respondents report that regional business conditions are better when compared to the rest of the country, but only b 66% believe their
53% report that the regional business conditions will be better than the rest of the county over the next 6 months. According to organizations success is
Moodys Analytics, gross metropolitan product for the DC region is expected to grow 36 basis points this year. Even though there more closely linked to the
are a number of indicators that would yield a positive outlook, respondents are less optimistic about the future business conditions. local economy.

4 | Greater Washington Business Confidence Survey

employment outlook
QUESTION: How strong is the current employment market? EXECUTIVE SUMMARY

JOBS PLENTIFUL NOW Respondents are more

positive about current
employment conditions
in the DC area than
across the nation.

As with business
conditions, respondents
see a similar outlook
50% 69% for future employment
regardless of region.

Organizations with higher

revenues are more
optimistic than smaller
companies about future
employment prospects.

National DC Area

QUESTION: How strong will the employment market be in 6 months?

MORE JOBS IN THE FUTURE

45% 44% 48%

National DC Area Your organization

OBSERVATIONS

b 69% of respondents believe jobs are plentiful in the Greater Washington area while only 50% believe jobs are b According to the Bureau of Labor
plentiful nationally. When asked about their 6 month outlook, respondents believed that overall jobs will be Statistics, unemployment in the DC
less plentiful nationally and regionally. Interestingly, despite this fact, the same respondents trust that their own region is currently 3.9%, which is
organizations will outperform the market. below the national average of 4.9%.
Further job creation may lead to
The belief that Some of the most significant office-using growth was see in the following industries wage increases that could lead to
the employment Industries Total Jobs Added % Job Growth faster inflation growth and ultimately
growth will slow inform the Federal Reserve on future
Credit Unions 2,207 64.1%
over the next interest rates hikes.
few months Credit Card Issuing 643 29.7%
Historically, an increase to interest
falls in line with Investment Portfolio Management 513 24.0%
rates affects property values as
economic forecasts. Interior Design Services 166 18.1%
investors are required to finance debt
According to Political Organizations 212 15.8% at a higher cost. While the recent
Moodys Analytics, Payroll Services 526 15.7% rate hikes by the Federal Reserve
total employment Civic and Social Organizations 973 14.3% have been absorbed with little
in the DC Metro Commercial Banking 1,405 12.3% impact on pricing for most property
area increased by types, investors are very mindful of
Marketing Research and Public Opinion Polling 245 11.0%
2.1% in 2016 the potential impact that future rate
Research and Development in Biotechnology 388 7.3%
but, they expect increases will have on their exit /
employment Administrative management Consulting Services 2,931 5.9%
residual value analysis.
growth will fall to Engineering Services 880 2.9%
1.4% in 2017. SOURCE: Bureau of Labor Statistics Quarterly Census of Employment & Wages

Greater Washington Business Confidence Survey | 5

outlook for organizations
QUESTION: What is your organizations outlook on revenue, profit and capital expenditure
over the next 6 months?
ANSWERED VERY POSITIVE OR SOMEWHAT POSITIVE

Revenue growth 37%

Profit growth 27%

Capital
expenditures
19%

EXECUTIVE SUMMARY

Looking at various measures of financial The outlook CEOs are more optimistic than other senior
fitness, respondents are most positive about for capital managers about the outlook on these
their potential revenue growth, followed by expenditures is key measures, as are respondents from
profit growth. more guarded. privately-held organizations.

OBSERVATIONS

b 79% of respondents are somewhat positive that they will grow revenue in the next six months and an b Despite uncertainty with Trump, 92%
additional 17% believe they will at least maintain current levels. This positive response conflicts with the less of respondents feel that National business
than optimistic outlook on the impact of the Trump administration. conditions are either good or normal.

PLANNED POSITION ADDITIONS/CUTS

QUESTION: What kinds of jobs do you think your organization will be adding/eliminating
over the next 6 months? Mark all that apply.
78 OF 161 RESPONDENTS PLAN TO ADD JOBS Of the 161 respondents, 48.4% are
Job type, by percentage of respondents adding jobs adding jobs, 44.7% are expected to
maintain current levels, while only
Office support 39% 6.8% are planning on eliminating jobs.

Sales 36% 6.8%

cutting
jobs
Business/financial 32%

Service 27%
44.7% 48.4%
Construction/maintenance 26% keep adding
current jobs
levels
Mangers (non-STEM) 24%

Computer workers 23%

Engineers 21%

EXECUTIVE SUMMARY

Respondents plan Smaller-revenue Not-for-profits Larger companies are most likely to be

to add more types firms are most likely and energy sector adding computer workers and non-STEM
of jobs than they to be adding office companies are also managers. They are also most likely to
plan to eliminate. support and sales likely to be adding consider eliminating office support and
positions. office staff. business/financial positions.

6 | Greater Washington Business Confidence Survey

talent recruitment & retention
QUESTION: Besides offering competitive pay and insurance, what are the three things your
organization has found to be most effective in attracting and keeping top talent?
Advancement/growth/development/training 26%

Flexible schedule/hours 22%

Positive work place/environment 21%

Company culture 14%

Challenging work/assignments/problem solving 14%

Interaction/teamwork 8%

Social/group activities 7%

Quality of service 6%

Ability to work remotely 5%

EXECUTIVE SUMMARY

Besides competitive pay and insurance, the most Regardless of size, Small-to-medium sized
effective methods to attract and keep top talent most organizations organizations are most likely to
include opportunities for advancement, flexible find these measures engage in these practices than
schedule and a positive work environment. are effective. larger firms.

OBSERVATIONS

b 21% of respondents report that a positive work place / environment is important
to attracting and retaining talent. Another 14% report that company culture is
important. Based on these responses, it would be expected that demand for new,
high-end, well located office product will continue to grow, despite rising rental
rates.
b Building amenities, collaborative spaces and workplace design also
contribute to a positive workplace / environment. This supports the trend
we are seeing that tenants are demanding amenity-rich environments with
close proximity to the Metro, while landlords and investors race to deliver
these features in their office buildings.

space management practices

QUESTION: Over the next year, how much does your organization plan to use of each
of the following practices to manage headcount and work space?
EXECUTIVE SUMMARY ANSWERED USE A LOT MORE
Work from home 31%
A majority of respondents expect to continue using
the HR and space planning practices they have used
in the past. Remote/satellite locations 30%

OBSERVATIONS Update space planning guidelines 29%

b In recent years, the implementation of a number of workplace strategies
has led to office users needing less space per employee. While 30% of Lease vs buy 29%
respondents report they will increase their reliance on remote / satellite
locations, the continued implementation and expansion of teleworking,
hoteling, as well as the shift to open floorplans, will offset demand for new Open office, assign stations 25%
office space.

Hire part-time EEs 25%

Greater Washington Business Confidence Survey | 7

8 | Greater Washington Business Confidence Survey