Netplex Expands to Loudoun County

Demand for greater space and lower costs among high-tech companies is awakening a once sleepy region of Virginia.

The migrating tech companies join a region that has already had success in attracting a cluster of biotechnology and defense aerospace firms. Loudoun County's new director of economic development, Larry Rosenstrauch, said he expects the region's high-tech population to expand with both small and large firms.

"The 'America Onlines' are big engines but also serve as incubators for smaller entrepreneurs," said Rosenstrauch, explaining how larger high-tech firms often act as springboards for regional start-ups.

With an annual budget of $750,000, the county's economic development unit offers no tax breaks and doesn't write any incentive checks, according to Rosenstrauch.

"It's not as sexy, but it's a lot smarter," said Rosenstrauch. "We're lucky because we don't have to write checks here. This is a great region and a place to make money."

Instead, companies are attracted to the county's abundance of space, lower taxes and availability of housing, Rosenstrauch said.

Suzanne Bakewell, a spokesperson for Telos Corp., which recently located to Ashburn, Va., says Loudoun County offered the systems integrator space and land that Fairfax County could not accommodate."We never had such a well-connected relationship in Fairfax County," said Bakewell. "In Loudoun County, we're a large fish in a large pond."

In May 1995 the company moved from a 135,000-square-foot facility in Herndon, Va., to a 199,000-square-foot facility in Ashburn, Va., which was one-third larger than the size of its previous facility. Bakewell attributes the move to an increase in the company's manufacturing division and its systems integration work. She says the 350-employee company quadrupled its backlog of contracts in the past year and needed more space.

Telos moved into a building previously occupied by Magnavox Electronic Systems Co., a large source of revenue for Loudoun County in the 1980s. When the company was bought by Philips Consumer Electronics, Knoxville, Tenn., in 1992, the electronics manufacturer moved out. The building was vacant for four years until Telos moved in this month.

Bakewell says the county did not offer Telos special incentives to move into the area, but economic development officials were "very responsive and willing to talk to employees [about quality of life in Loudoun County] and provide the company with relocation packages."

Telos, along with Alcatel and America Online, will be one of the largest high-tech companies in Loudoun County. According to Loudoun County Economic Development, Alcatel and America Online, the seventh and eighth largest employers in Loudoun County, each employ approximately 450 people in their new offices so far.

Rosenstrauch says his strategy is to not recognize the boundaries between the surrounding counties. To him, the growth of high-tech companies in the county is a benefit to the whole metropolitan region. The commission is not solely focusing on technology companies but plans to direct most of its efforts there.

High-tech growth in Loudoun County started in the early 1990s as people yearned for a higher quality of life and had an interest in being close to an international airport. The fastest growing towns of Loudoun include Sterling, Leesburg, Bluemont, Ashville, Purcellville, Hamilton, Middleburg, Lovettsville and Waterford.

The area holds high-tech giants such as Orbital Sciences Corp., which moved to Loudoun County in 1982, and Comsat RSI Inc., which moved in 1994. The county also holds the Virginia campus of George Washington University, which established itself in Ashburn in 1991. The university is forming partnerships with high-tech companies surrounding the campus. The university has already formed partnerships with the Center for Innovative Technology, Herndon, Va., to provide companies in Virginia with access to the university's business resources.

Many high-tech companies are located near large universities to attract personnel to the area, as well as recruit graduates. That was one of the reasons that Alcatel, a $30 billion French communications company that is a joint venture with Sprint, moved its 450 employees from Reston in Fairfax County to Ashburn. Katie Sheldon Hammler, a spokeswoman for Alcatel, also credited the area's lower housing costs, the acreage to grow and expand, and lower taxes.

"We moved to Loudoun County because it's an extension of the high-tech corridor that extends from Fairfax," said Hammler.

Stephen Fuller, a professor of public policy at George Mason University and an economic forecaster, says Northern Virginia is currently experiencing growth in residential and high-tech. The drive behind Loudoun County's growth is the rapid growth of high-tech in general. The expansion to Loudoun County is a natural development.

"High-tech companies look for locations that help their image," said Fuller. "Counties like Loudoun become magnets for the assets they already have in place."

According to Fuller, Loudoun County's economy is projected to grow steadily four or five percent for the next 10 years.

Comparative Local Tax RateS (per $100 assessed value)

TaxLoudoun CountyAlexandriaArlington CountyFairfax CountyPrince William County

Real Property$1.03$1.07$.96$1.23$1.36

Sales or Use$4.50$4.50$4.50$4.50$4.50

Machinery &amp Tools$2.75$4.50$4.40$4.57$2.00

Personal Property$4.20$4.75$4.40$4.57$3.70

Source: Loudoun County Department of Economic Development

Average Cost of Commercial Space$16.24$20.98$25.21$17.42--

(cost per square foot, annually)

Source: Cushman &amp Wakefield of Virginia Inc.

Loudoun County's Major High-Tech Employers

Company Number of Employees

Alcatel Data Networks450

America Online450

Orbital Sciences Corp.354

Telos Corp.325

Cable &amp Wireless Communications Inc.210

Comsat RSI210

Dowty Aerospace Corp.174

BTG (Concept Automation)100

Source: Loudoun County Department of Economic Development

A Sampling of High-Tech Business in Loudoun County

CompanyLocationYear started

Defense and Aerospace Companies:

Dowdy Aerospace Aviation ServicesSterling, Va.1995

Dowdy USA Holdings Inc.Sterling, Va.1992

Orbital Sciences Corp.Sterling, Va.1982

Atlantic GroupSterling, Va.1990

Concept AutomationSterling, Va.1995

Fastcomm Communications Corp.Sterling, Va.1983

Healthcare Management SystemsSterling, Va.1984

Orbcomm Global LPSterling, Va.1995

Star Technologies Inc.Sterling, Va.1983

Total Quality Networks Inc.Sterling, Va.1994

Virtual Workgroup Tech. Corp.Ashburn, Va.1995

High-Tech Machinery and Instruments:

British Aerospace HoldingsSterling, Va.1994

Coherent CommunicationsLeesburg, Va.1994

Data Link Info SolutionsSterling, Va.1992

Flightmatic Inc.Sterling, Va.1991

Signal Design Corp.Leesburg, Va.1987

High-Tech Research:

Alpha Corp.Sterling, Va.1994

Austin Concepts Ltd.Hamilton, Va.1995

Global Engineering ServicesSterling, Va.1995

Phoenix Consulting Inc.Leesburg, Va.1990

Source: Dun and Bradstreet