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Boosted By Federal Spending Hike, Eastern Foundry Looks To Open Third Location In Tysons

The federal budget with hundreds of millions of dollars in new spending Congress agreed to and President Donald Trump signed last week will broadly boost the D.C.-area economy, but one company in particular stands to benefit greatly from the spending hikes. 

Boosted By Federal Spending Hike, Eastern Foundry Looks To Open Third Location In Tysons

Eastern Foundry, the Arlington-based co-working space and incubator for government contractors, is already seeing its members hiring more people and taking larger footprints in anticipation of a spike in federal contracts. 

"Our small and large companies are all breathing a sigh of relief," Chang said. "Several are already looking to expand because their headcount is going to get larger. The floodgates are opening."

To accomodate this growth, Eastern Foundry plans to open its third location, and its first outside of Arlington County, in Tysons. The incubator is working with JLL Senior Vice President Andy O'Brien to tour spaces.

"If the right deal presents itself, I would do something tomorrow," Chang said. "That's how Rosslyn happened. We were looking and then Monday Properties brought us a deal and we took it right away." 

Boosted By Federal Spending Hike, Eastern Foundry Looks To Open Third Location In Tysons

Eastern Foundry's Rosslyn location opened in February 2017 at Monday's 1100 Wilson Blvd. The 20K SF space it leased is now fully occupied, Chang said. In August, Eastern Foundry expanded its original Crystal City location, taking another 6K SF to bring its footprint to 27K SF. Chang said that new space filled up in one week. 

The company is on the hunt for 20K to 25K SF in Tysons. Chang said it is leaning toward the area around the Tysons Corner Center Metro station, given its proximity to the two malls and a host of government contracting companies. 

"Tysons is always booming for government business," Chang said. "They're like a little bubble that doesn't get affected like Crystal City. Crystal City is like a roller coaster. It will boom and die down depending on the budget, but Tysons is always stable." 

Chang said he had also been considering Reston and Quantico before landing on Tysons. He said Eastern Foundry would likely look at those submarkets again when searching for a future fourth location, and he is also interested in a Maryland expansion, potentially in Bethesda or the Fort Meade area. 

Andy O'Brien, Mark Warner, Geoff Orazem and Mitchell Schear at the Eastern Foundry ribbon-cutting
JLL's Andy O'Brien, Virginia Sen. Mark Warner, Eastern Foundry's Geoff Orazem and Vornado's Mitchell Schear at the opening of Eastern Foundry's Crystal City location

Most of Eastern Foundry's members contract for the government, but it has recently gotten two government agencies to join. AFWERX, the Air Force's innovation office, and MD5, the Department of Defense's national security technology accelerator, both recently opened offices in Eastern Foundry's Crystal City expansion space. Chang said he has also received interest from large prime government contractors such as General Electric looking to take 10K SF, but has not had enough space to accommodate them. 

"When we first started in 2014 our original vision was small businesses and startups, innovation offices from agencies and innovation offices from prime [government contractors], all clustered together to work as a team to create the best product and the best service," Chang said. 

While the defense spending increases will broadly help government contractors, Chang said Eastern Foundry's members are keeping a close eye on where exactly the money is appropriated, which Congress still has to decide. Given that his members are focused on technology and innovation, he said it is important to them that money go toward those areas. 

One Eastern Foundry member focusing on tech innovation is Deep Learning Analytics, an artificial intelligence data analytics company. John Kaufhold, who formerly worked at contractors General Electric and SAIC and at the National Institutes of Health, founded the company in 2013.

The company consisted only of Kaufhold when he got his first contract in May 2014, but it has now grown to 12 employees and earned over $1.5M in revenue last year, more than triple what it made in 2015. He moved from Eastern Foundry's Crystal City location to its Rosslyn location to support that growth, and he is currently hiring to continue that expansion. He said the defense spending increases could help his company if they are targeted toward artificial intelligence initiatives, and he is excited to see the overall growth of Eastern Foundry and its members.

"The big win that's going to be felt by the team is that Eastern Foundry should turn into an even more lively mix of companies," Kaufhold said. 

Government agencies and large contractors have plenty of tech-savvy employees who could potentially start their own companies and open in Eastern Foundry, Kaufhold said, further boosting the incubator's growth.

"There are a lot of people like me in those big companies that might be able to do a better job helping the government and its mission if they had a more nimble organization, and that means a smaller business," Kaufhold said. "It's an idea that should flourish here, I think we're uniquely suited regionally."