Nestlé Move A Rare Corporate HQ Win For Region, But More Could Follow

When Arlington Economic Development director Victor Hoskins was celebrating the news of Nestlé moving its U.S. HQ from California to Rosslyn, he thought about how rare it is to lure a major corporation from across the country. 

"It was monumental," said Hoskins, who has previously served as a top economic development official in DC and Prince George's County. "We’ve been talking internally about it, we have a lot of Millennials on our team and I've been telling them 'this is a once in a lifetime opportunity, they don’t usually go like this.'" 

Landing Nestlé, a big, recognizable, non-government-related corporation, to move its HQ to occupy more than 200k SF in Rosslyn was a big win for Arlington. These types of wins have been few and far between for the DC area.

The most recent was German grocer Lidl, which, in 2015 decided to open a regional HQ and fill 217k SF in Arlington's National Gateway.

In 2007, Volkswagen moved its U.S. HQ and 400 jobs to Herndon. In January 2009, Hilton made a similar move when it moved its corporate HQ to roughly 100k SF in Tysons. The District got a win in 2011 when Siemens moved its U.S. HQ to a 21k SF Capitol Hill office. 

"We’ve got to cooperate as a region if we’re going to have these wins more frequently," NGKF senior managing director Greg Leisch said. "Six significant wins in a 10-year period, for a region of our size, that is not very impressive. If we were cooperating as a region, we should have a win like that every six or nine months."

Leisch said wins like Nestlé benefit the whole region because its employees will live and pay taxes in multiple jurisdictions, and will create more demand for services like Metro. Because of this, he said, competing states, cities and counties hurt their cause when they compete against each other rather than working together.

“I believe [lack of cooperation] is the primary factor,” Leisch said. “You can pick on things like schools or the Metro system or crowded highways, but every major, desirable metro area has similar disadvantages, and yet they are attracting world-class tenants when they cooperate as a region. That’s our primary obstacle to success in that regard.”  

Arlington Economic Development director of business investment Christina Winn said these types of moves have become much more rare, in part because of how expensive it has become to relocate.

"Often when a company is relocating, the area is smaller, they’re just moving within a region or the same state," Winn said. "This is really rare, but we were lucky." 

Longtime DC-area developer Bob Buchanan leads a group of business leaders, called the 2030 Group, who aim to improve regional cooperation. He said competing jurisdictions need to market themselves as a region to lure more companies like Nestlé. 

"There is a lot of energy here that we haven’t touted as much as we should, because the perception is we're a government town, and we’re far more than that," Buchanan said. "The Nestlés of the world are a huge part of how we can diversify ourselves so we ... are not so dependent on the feds."

He expressed optimism about the region landing more tenants like Nestlé, adding that it could be a catalyst for other big companies to move to the area.

"With Nestlé, you could say they came because of talent and quality of life, but also accessibility and location," Buchanan said. "That may get a couple of other industry leaders that we don’t associate with to say, 'Hey, Nestlé has a good idea there.'"  

When Hilton moved from Southern California in 2009, the company saw other hotel giants like Marriott and Host Hotels in the area and decided to join them, creating a hub for the hospitality industry.

As Nestlé joins Lidl and McLean-based Mars Inc., Hoskins said he could see the area becoming a hub for food companies the same way it did for hospitality. He said he was in separate talks with one of Nestlé's distributors about a potential move to Arlington before the announcement, and now that the food giant is making the move he expects the county's appeal will increase for this vendor and other companies that do business with Nestlé. 

"When you start to look in the region when you have Mars and other players, is that going to now start to be a draw, especially if Nestlé is positioning itself around health and wellness," Hoskins said. "It’s interesting. I think we’re going to see more growth in this area that diversifies Arlington and the region."