Greater Greater Washington

CEOs want faster commutes... for whom?

When business leaders of the Federal City Council say traffic congestion might affect their decisions to move companies out of DC, how much are they thinking about the needs of employees, and how much is it mostly about the congestion on their own personal drives to work?


Photo by bankbryan on Flickr.

There's a long history of research showing that a very large element of business location decisions is what's most convenient for the CEO. Joel Garreau talks about this in the seminal urban planning book Edge City, and cites some earlier research from William Whyte:

Whyte, in his book City, has a great map showing that of thirty-eight companies that moved out of New York City in one period "to better meet the quality-of-life needs of their employees," thirty-one moved to the Edge City around Greenwich and Stamford, Connecticut. ...

The average distance from the CEO's home: eight miles.

Compare that to the Federal City Council's release:

When weighing a business relocation, over one-third (36 percent) of business, professional and civic leaders say they would consider moving out of the District with 12 percent who say they would strongly consider.

Relocation decisions are based on many factors including employee commuting experience. Nearly all (98 percent) say workforce commuters who travel by car are important to their business-location decisions, with 71 percent saying they are "very" important.

That's why businesses locate on the west side of our region

Certainly traffic impacts people beyond just the head of a business, but one can't help but wonder how much the concern over congestion really stems from a personal reaction: if the business owner faces a lot of traffic, it's frustrating, and he might want to move the company somewhere closer to his house.

This is important when what business leaders want and what their workforces need or want aren't quite the same. CEOs are much more likely to live in McLean, Great Falls, and Potomac than their lower-level workers. It's little surprise that Tysons, the Dulles corridor, Bethesda, and the I-270 corridor have won more businesses than eastern Montgomery, Richmond Highway, or Prince George's County.

When Montgomery County was planning the Great Seneca Science Corridor (also known as "Science City") near Gaithersburg, one major factor tipping the scales (besides the fact that Johns Hopkins owned a farm there) was the convenient drive biotech company owners might have. That gives the site an advantage over the White Oak Science Gateway on the east side of the county. Prince George's faces the same challenges in getting businesses to its Metro stations.

CEO convenience leads some businesses to choose suburban office parks

This split also applies to locating in walkable urban versus suburban office park locations. When organizations like the Greater Washington Board of Trade talk about what DC needs to compete, you hear a lot about what's attractive about Tysons, or Route 50 and the Beltway (where Northrop Grumman put its headquarters). There's a lot of driving infrastructure there, low taxes, and so on.

The view that the center city needs to out-suburb the suburbs drove transportation decisions for much of the 20th century. It's what led many cities to decimate their downtowns with freeways that ultimately sapped the vitality of the places themselves while drawing people and their money away except from 9 to 5.

The other view is that some businesses will be in suburban office parks no matter what, while other businesses want to be in creative places like DC, Arlington, and Bethesda. Those businesses want to attract workers who want to live in dynamic walkable urban places, who prioritize being able to take Metro (if they can't walk or bike) to the office. They also might want to be accessible for workers who can't afford cars as well.

One obstacle, though, is when the CEOs and presidents who decide where to locate their businesses have different preferences. For tech startups like LivingSocial, the leaders want the creative, urban atmosphere too, but not necessarily for a defense contractor.

Without pricing, faster driving won't really help CEOs for long

It's important to note that DC does not go around making it hard to drive into the District. Most of the road spending of recent years has gone to bridges in and out of downtown. There are large freeways in from Virginia, and major arterials whose design prioritizes car flow at rush hours.

Nevertheless, as the region has grown, so has traffic. The big question we're considering in the MoveDC citywide planning process is, should another huge chunk of future capital now go toward doing even more to bring even more cars even faster into the District?

Induced demand tells us that any effort to do this might alleviate congestion in the short term, but any new lane, or any road timed to move more cars, will soon fill up and become congested once more. The limiting factor in how much people drive is how much traffic they're willing to tolerate, not the actual roadway itself.

So the Federal City Council's recommendations won't really help the business leaders for long. As we discussed yesterday, congestion pricing would, if it could go through. That's an especially efficient solution, because the CEOs could pay for the fast commute they want while funding transit for many other workers.

The Federal City Council's survey of their members tells us something, but it's not that businesses need more driving capacity. It's that the experience driving into DC definitely matters to Federal City Council CEOs and presidents. That's nothing to ignore, of course, but important to put in its proper context.

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David Alpert is the founder and editor-in-chief of Greater Greater Washington. He worked as a Product Manager for Google for six years and has lived in the Boston, San Francisco, and New York metro areas in addition to Washington, DC. He now lives with his wife and daughter in Dupont Circle. 

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CEOs are much more likely to live in McLean, Great Falls, and Potomac than their lower-level workers.

...It's that the experience driving into DC definitely matters to Federal City Council CEOs and presidents.

So if we want more businesses in DC, should we build a metro line to McLean?

by goldfish on Jun 21, 2013 12:51 pm • linkreport

Sure, David, all those "creative" businesses locating in the core of DC, like law firms, lobbying shops, law firms, and, um, lobbying shops. (Oh, and Living Social, the only other example anyone can ever think of.) The GGW commentariat will keep pushing to move all the federal jobs out to brand-new suburban office parks (because the baby boomers working at the agencies will be there until the end of time) so the downtown can keep filling up with more lawyers who can afford the rent.

by iaom on Jun 21, 2013 12:53 pm • linkreport

The GGW commentariat will keep pushing to move all the federal jobs out to brand-new suburban office parks

What are you talking about?

by JustMe on Jun 21, 2013 1:02 pm • linkreport

er, mathematica? NPR? BET? Sirius/XM?

they aren't creative?

"So if we want more businesses in DC, should we build a metro line to McLean?"

Er, http://en.wikipedia.org/wiki/McLean_(WMATA_station)

But you will probably have to go browbeat Sharon Bulova and the FFX BOS to build parking there.

by AWalkerInTheCity on Jun 21, 2013 1:05 pm • linkreport

JustMe

clearly we have not discussed the FBI enough.

by AWalkerInTheCity on Jun 21, 2013 1:06 pm • linkreport

Volkswagen chose the location on the Dulles toll road in part because they wanted to attract top level CEOs

by Richard Bourne on Jun 21, 2013 1:09 pm • linkreport

CEO only lanes created via congestion pricing?

by JeffB on Jun 21, 2013 1:22 pm • linkreport

By definition, VW's decision making is shaped by automobile centricity and access.

I remember another study similar to Garreau's about why Boca Raton was getting businesses to relocate there.

But yes, DC will have to better understand what are the qualities that help it retain the businesses it wants to keep and nurture and grow.

by Richard Layman on Jun 21, 2013 1:24 pm • linkreport

I fear that the lesson from this is for jurisdictions to start offering free homes/land to CEO's in order to entice them to live there.

by drumz on Jun 21, 2013 1:26 pm • linkreport

The first draft of this post had a mostly tongue-in-cheek suggestion to build "CEO lanes" specifically for the CEOs so their traffic can be not so bad. I took it out, though, since it was sort of a distraction, but maybe I should have left it in.

by David Alpert on Jun 21, 2013 1:28 pm • linkreport

Lexus lanes baby!

Or more helicopter landing pads downtown.

by MLD on Jun 21, 2013 1:30 pm • linkreport

There are plenty of good reasons to have HOT lanes anyway, and this (semi-seriously) adds another.

Unfortunately if its true that the relevant CEOs mostly live in McLean/Great Falls, the place for those HOT lanes would be the GWNP and then the TR bridge, and perhaps the main roads from the TR bridge to DC employment centers. I don't think HOT lanes on NPS property is feasible.

by AWalkerInTheCity on Jun 21, 2013 1:37 pm • linkreport

I thought it was the CEO's that where so influential in building the Silver Line?

by Thayer-D on Jun 21, 2013 1:42 pm • linkreport

If you really want to attract CEOs, offer them the right to join any country club of their choice in the state immediately, bypassing waiting lists and without regard to admissions committees and sponsorship. It would be a much more effective incentive than the money we now throw at them, and wouldn't cost the taxpayers anything.

If the country club doesn't want to cooperate, it should lose the real estate tax exemption that golf clubs now have in Maryland.

by Ben Ross on Jun 21, 2013 1:45 pm • linkreport

So you talk about the distance improvement from the CEO's residence, but nothing on the commuting benefits for the workers. Personally, I live beyond McLean into Virginia. I can get more space and a quieter life for the same price. I use public transportation and bicycles to the detriment of my car health. It would be a great and welcome improvement on my commute should businesses relocate to McLean, Vienna, or any of the other 'ritzy fritzy' cities of green. VW by the toll road? I presume that means also on/near the W&OD trail. which I would love as a location. Bike to work would be a whole lot easier!

by Cephas on Jun 21, 2013 1:53 pm • linkreport

@Richard Layman
Obviously they are going to want a primarily car accessible HQ, but note that GM HQ is in downtown Detroit, on the water served by Detroit mass transit.

I more wanted to point out that they chose to put it own in the west of the city, rather than south or east in MD somewhere.

by Richard Bourne on Jun 21, 2013 2:05 pm • linkreport

"You must earn this much $X,XXX,XXX to travel in this lane. Thank you."

by Alan B. on Jun 21, 2013 2:55 pm • linkreport

Watch out, or we'll get dangerously close to this:
http://www.brt.cl/delhi-row-over-bus-lane-reveals-class-divide/

"You cannot keep a commander-in-chief waiting in traffic while his army is waiting for his orders. How does it matter if a peon reaches office five minute before time?" Mr Sharan asks.

by MLD on Jun 21, 2013 3:05 pm • linkreport

Thayer-D, that's part of it, but I think it was more real estate profits than wanting mass transit that was the motivating factor there. Of course that's the tradeoff we often accept to get our mass transit built.

by Alan B. on Jun 21, 2013 3:08 pm • linkreport

Alan B., I agree, and that's some of the logic pro-transit advocates should persue. Transit is where the money, so why not align interests to make it more possible to get progress? To say this is a "trade off" puts us at a disadvantage when negotiating for more transit becasue it's like we aren't aware of the realities on the ground.

by Thayer-D on Jun 21, 2013 3:32 pm • linkreport

There are so many legacy issues concerning why GM is located where they are which makes it impossible to compare what they did and VW's choice to locate in Northern Virginia and where they located (although the VW decision is comparable to how for awhile Ford relocated their Lincoln Mercury headquarters to Irvine, California).

You'd have to look at decades of intra-Detroit business promotion (New Detroit Inc. etc.), the creation of the New Center district where GM was originally headquartered, and the history of the creation of the Renaissance Center originally (by Ford) after the riots, and GM's later acquisition of it, when Ford decided to unload it (because they had financial problems before GM, which didn't see Ford's problems as a future indicator of problems of their own).

GM has two headquarters anyway, one in NYC where the finance dept. is located, and one in Detroit. The New Center district was created originally to avoid "congestion" that was present "Downtown."

DC has much bigger problems to worry about than what this article covers. The big issue is that NoVA developers and jurisdictions continue to advocate "right sizing" business organization of their space between the functions that really need to be in DC vs. the functions that don't necessarily need to be in DC, but are, for legacy reasons, and are paying higher rents.

It's one reason why the DC Bar needs to keep restrictions on reciprocity. So much pressure is put on DC-based law firms to stick goodly portions of their business in space in Rosslyn and elsewhere in Northern Virginia.

by Richard Layman on Jun 21, 2013 3:42 pm • linkreport

Richard: What restrictions are you referring to? My understanding is the DC Bar is one of the most lenient on reciprocity, that a lawyer can waive into the DC bar if you have passed the bar in any state. Is there a different reciprocity restriction?

by David Alpert on Jun 21, 2013 4:45 pm • linkreport

David, I believe he's referring to restrictions to reciprocating into Virginia. But that comes from the place to which, not from which. Perhaps he's being ironic?

by Cephas on Jun 21, 2013 4:51 pm • linkreport

VW's decision to locate where they did probably had as much to do with proximity to an international airport than a lot of other factors.

by spookiness on Jun 21, 2013 5:18 pm • linkreport

I'm not sure exactly what the restriction is, but there is something that hinders dc-based law firms from splitting up the footprint of their practices. If you go to real estate conferences in NoVA there are oblique references to the issue by various developers. But Cephas might be right (not about irony) that the issue is more on the VA side of the water.

Rosslyn and Crystal City are heavily marketed as locations that while in VA provide quick access to DC (irrespecting those pesky bridge connections). at an event last fall...

One of the developers referred to their proposed development in Rosslyn as "the most convenient extension of the center city. The new business center of the Nation's Capital."

by Richard Layman on Jun 21, 2013 5:59 pm • linkreport

Greetings from the land of Costco. Just want to suggest it is not only owners.

So why should there be an expectation, or anything done to support long distance commutes into DC by anyone? As someone who lived in the city, and patronized LOCALLY owned businesses for 15 years, while being inspected by the police when visiting friends, and when someone was murdered every 15 hours, I think I have a little bit of history. But, that stuff did not make me want to leave.

What tore my connection to DC was, after 10 years of living and working in the city, my employer thought it fine for me to spend 2 hours commuting each way to my new job location. I first decided to just work out of town and then moved to a place where Growth Management and optimizing local (as in right in the neighborhood) businesses is valued.

Not perfect, and actually people still have some of the higher commute times in the country, but as far as living in the urban core, work and life are all close and the city government works hard to enable through development policies that the people working in the city can live locally.

I personally decided, and was able, to live 4 miles from where I work. I DID give up some opportunities that would have meant struggling with the bridges, but I value that I can live and work near where I live. And, NO paucity of food near work (smile). And, form the folks I have talked to who own those businesses, both they and the workers live close in.

It's economic development and business development for the people in the city that will make the difference. I know that well because I live in what is a developing area of my new home town and we protect our long term locals. if DC has been cleared of the old timers, and now the big businesses that mallified the city are not willing to commute then maybe it is time for some investment in innovators and business people in the city.

by Escapee from the DC area on Jun 22, 2013 8:28 am • linkreport

Folks, lets be honest here shall we?

NOVA, and to a lesser extent (Mont Co) gets to claim business because they compete for it. They offer tax breaks and subsidies that cost money in the short term, but provide windfall benefits in the mid to long term.

Taking the choice of where the workers prefer to live out of the discussion, NOVA is far more business friendly than the District.

Businesses don't move to PG because, well they have nothing to offer. No money, no cache (like DC of being downtown), no transit etc.

And thinking that CEO's get to simply decide where to locate the office because of where he happens to live is ridiculous. The CEO of VW America lives in Potomac MD, giving him a ridiculous commute to his new Herndon office building? Why is it in FFX? Because FFX County put their money where their mouth was and went after it.

What does DC do? Offers up tens of millions of dollars to a failing coupon company who by all accounts will be out of business within the next 12 to 18 months.

by Nova on Jun 22, 2013 10:54 am • linkreport

Whyte actually did the research to establish where CEOs lived and how that influenced corporate relocations. Sounds like Garreau simply quoted Whyte (or did he do research of his own)? And quoting Garreau quoting Whyte hardly establishes a long history of research that pre-empts the need to prove the central premise of the article.

At any rate, CEO seems too narrow a category -- certainly corporate relocations pay some attention to nearby communities whose housing, schools, and amenities will attract or retain other executives (without requiring major salary increases). And, of course, not all of the businesses the Federal City Council represents have CEOs based in the DC area anyway (cf the airport access point made earlier). Corporations also pay attention to local labor pools (lots of employees no doubt fall into the you-can-be-replaced category and the assumption isn't always that they'll follow the job but that the new location will provide a comparable (or better) workforce within reasonable proximity. And, of course, taxes, regulations, incentives, services, salaries, and rents are all in the mix -- as is proximity to power/clients.

DC's problem is that, in many cases, it doesn't compete well (against other local jurisdictions) in most of these categories.

by BTDT on Jun 22, 2013 11:11 am • linkreport

BTDT is spot on. I live in DC but work in the 'burbs, and was involved in my company's relocation decision a few years ago. Unfortunately we didn't look seriously at DC, but there was no reason to. Saying it comes down to CEO preference is an oversimplification. The big drivers are taxes, business environment and where the existing work force lives. Schools can matter a lot, but less so in the Washington metropolitan area where workers have a choice of school districts (and jurisdictions). Where the existing work force lives matters more than you think because companies take very seriously employee dis/satisfaction and commuting times when making relo decisions. The fact is, unlike law firms, lobbyist shops and many trade associations, there is no compelling reason for companies to locate downtown. Plus, with the possible exception of PG County, DC has the reputation among companies for being too bureaucratic, non-transparent and... corrupt. I wish it were otherwise.

DC needs to concentrate on retaining the big employers that it has, like the FBI. I think that the loss of Intelsat to Tysons was a real blow.

by Axel on Jun 24, 2013 8:18 am • linkreport

Saying it comes down to CEO preference is an oversimplification.

I never took the articles to say that this was the driving reason. But rather that this is a factor and one that is fairly unacknowledged at that.

by drumz on Jun 24, 2013 8:45 am • linkreport

FWIW, this isn't correct: "The CEO of VW America lives in Potomac MD, giving him a ridiculous commute to his new Herndon office building." Actually, I met Mr Browning on a bike ride once; he lives in Rosslyn and bicycles to Herndon via the Custis and W&OD trails.

by Payton on Jun 24, 2013 12:52 pm • linkreport

The fact is, unlike law firms, lobbyist shops and many trade associations, there is no compelling reason for companies to locate downtown.

Depends. If you're in an industry with a glut of potential employees, you're right. If you're an employer in a very competitive market, it might be worth it to choose a close-in location in order to compete for younger workers who can afford to be choosy.

My previous employer didn't even consider DC (or Alexandria, or Arlington) because he could get dirt-cheap space in Springfield. This is turning out to be kind of a false economy as a large number of his employees are actively looking to leave for jobs in more desirable locations.

DC is still the central location for the region, and so you have a greater pool of potential employees. If you're in one of the "knowledge" industries getting access to human capital is more important than saving a few bucks per square foot in rent.

And frankly, the perceived "corruption" of DC government is a complete non-issue to most non-service industry business owners.

by oboe on Jun 24, 2013 12:57 pm • linkreport

the center of the region (downtown DC) has superior labor force access for an employer needing to hire from across the entire region - not only because its central but because it has transit access in all directions. While downtown may lack easy auto access, a place like Tysons does not have good auto access OR transit access to someplace like PG county.

However, IF an employer is looking at a smaller subset of the regional labor market - the highly educated tech labor force that is heavily present in northern FFX and in Loudoun, then locating in the tech corrdor may give greater labor force access. From the labor force POV there is a tradeoff in moving west on the tech corridor from Tysons - greater access to cheaper SFHs - but slightly worse access to employees from around the beltway.

access spefically to millenials strongly preferring WUPS may strengthen DC, or North Arlington - or new WUPS like RTC and Tysons may serve adequately.

This is one reason the height limit in DC is such an important issue - locations in DC with more limited transit access - Navy Yard, Poplar Pt, etc - will not have the same locational advantages over the tech corridor that downtown DC has.

by AWalkerInTheCity on Jun 24, 2013 1:08 pm • linkreport

a place like Tysons does not have good auto access OR transit access to someplace like PG county.

That will change in a few months with Silver Line Phase I. For $5.75 each way ($3.50 off peak), you can have a single seat commute from Largo to Tysons. That will be a game changer.

To some extent, the 11th ST bridge project makes it feasible to drive between PG and Tysons.

by Falls Church on Jun 24, 2013 2:17 pm • linkreport

leaving aside issues with the length of the ride, thats a one seat ride from the four PG stations on the Largo branch. And a two seat ride, with a relatively easy transfer, for the lines on the branch to New Carrolton.

Compare to downtown DC, which in addition to such access, has access to parts of PG served by the northern and southern Green lines, and to places served by MARC. As for I695, that may be a better choice than going all around the beltway, but its still a pretty long drive.

Fortunately for the future of Tysons the PG labor force probably isnt a huge driver of locational decisions.

It would certainly help Tysons significantly to have better access from MoCo though (IE at least some form of BRT over the Legion bridge) and to have both improved connectivity to DC (for reverse commuters from DC as well as those elusive PG to Tysons commuters)

For locations south along I95 I suppose commuter bus access via the hotlines will be as good as similar service plus VRE to downtown.

by AWalkerInTheCity on Jun 24, 2013 2:31 pm • linkreport

Intelsat loss was a blow, but ... if you're a business and you locate in DC because of the proximity to the govt., and then that proximity matters less. E.g., sure satellite broadcasting is heavily regulated, but much less than it was when Intelsat was created, then probably you will consider moving out of the city. Especially if the majority of your workers no longer live in the city.

I don't know enough about their business to know what the cluster benefits are. E.g., proximity to Discovery, BET, NPR, XM, etc., probably doesn't matter that much.

by Richard Layman on Jun 24, 2013 6:13 pm • linkreport

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