Winning Amazon’s second headquarters isn’t all ‘seashells and balloons’ – Milwaukee Journal Sentinel
SAN FRANCISCO â Head coaches have set aside rivalries and one city offered to change its name. Others are taking the more traditional approaches of promising huge tax windfalls and new state-of-the-art transit systems. But history shows luring Amazon’s second headquarters may not be a slam dunk for the victorious city.Â
The deadline for cities to submitÂ bids to become Amazonâs second headquarters passed Thursday nightÂ for what many cities see as a once-in-a-lifetime chance to grab an economic golden ticket.
On the line: more than $5 billion in construction spending to build its second headquarters and high-paying tech jobs that will, in turn, generate tens of thousands of additional jobs and âtens of billions of dollarsâ in investment in the surrounding communities.
But it’s not all skittles and beer, or jobs and growth. Or, as the late Marquette University basketball coach Al McGuireÂ might say, winning Amazon’s headquarters isn’t all “seashells and balloons.”
Seattle offers a cautionary tale of both the good and the bad that can befall the home of one of Americaâs fastest-growing companies.
The good news is jobs, jobs and more jobs.Â Amazon’s Sept. 7 announcement promised more than 50,000 of them. But it’s more than that. It’s also the opportunity to attract a workforce that will stoke the local economy buying electric cars, artisanal bread and everything else they’ll need to build a life. And don’t forget all the other companies that will follow Amazon to wherever it lands.Â
âAmazon is magnetic to talent,â saidÂ JeffreyÂ Shulman, a marketing professor at the University of Washington who studies growth in Seattle.
But there’s a mixed blessing: Unless your town is extraordinarily full of tech workers already, many of those jobs will go to people moving in from elsewhere.
âYou have to think about how many of your residents are set up to fill some of those. Whatâs your education infrastructure? Do you have a strong STEM program in your city?â Shulman said.
If not, you could get the worst of both worlds âÂ local residents who donât have any hope of participating in the new economy but who see their housing costs balloon as hordes of tech workers floodÂ in.
Housing and traffic congestion are the two biggest pain points. Unless a city has an enormous reserve of unused housing, thereâs no way Amazon-created demand wonât push up costs and push out current residents.
The only way around it is to build lots more housing that’s accessible to public transit.Â That’s not always possible, said C.J. Gabbe, a professor of urban planning at Santa Clara University in Santa Clara, Calif.
Cities making a bid for Amazon’s HQ2 shouldn’t be bewitched by the idea of all those high-paying jobs, Shulman said.
âYour cityâs going to experience a lot of changes. In Seattle, some people feel positively about them, some feel like their community is vanishing,â he said.
On the plus side, unlike some of its tech industry peersÂ including Apple, Google and Microsoft, who built self-contained corporate campuses in the suburbs, AmazonÂ put its buildings in Seattleâs urban center. Employees in suburban campusesÂ arrive by car or corporate buses in the morning where they find everything they need âÂ free food, dry cleaning, barbers, sometimes even doctors. They never need to leave until they go home at night, resulting in little economic vibrancy in the surrounding area.
Amazon, on the other hand, purposefully doesnât build enough cafeteria or even coffee bar space for staff, so workers are forced to walk to area restaurants and shops.
âThat strategy is going to be a net positive,âÂ Gabbe said.Â âThe economic impacts of smarter, more compact growth are well known compared with more decentralized growth.â
While not all cities are showing their cards,Â dozens have indicated they plan to enter the fray.Â Amazon says it expects most to come via FedEx âÂ but there are at least eight flights that land at Sea-Tac airport in time to make a mad-dash drive downtown by the deadline. Amazon doesn’t expect to make a decision until sometime next year.
Milwaukee Mayor Tom Barrett and Waukesha County Executive Paul Farrow announced a regional bid on behalf of southeastern Wisconsin on Wednesday. They touted the resources available in the “Milwaukee-Madison-Chicago triangle.”
In Canada, Ontario, Toronto and Vancouver are in the mix. One of their selling points is anÂ immigration policy that makes it easier for tech talent to enter the country.Â Detroit is piggybackingÂ on that, noting that if Amazon were to locate there, Windsor inÂ Canada is just a two-mile drive away.
The requirements are sparse. Whatever area is chosen must be in North America, be a metro area of more than 1 million people, have local and regional talent, especially in software development and related fields, and be âa stable and business-friendlyâ environment. Proximity to a well-connected airport and walkability are also pluses as are being somewhere that can attract and retain workers â i.e. it’s got to be someplace hip millennials want to live.
For such a tempting prize, cities are giving it their all.
Tucson sent a 21-foot saguaro cactus to Amazon, which the company promptly sent back as a donation to the Arizona-Sonora Desert Museum, saying in a tweet that it canât accept gifts, âeven really cool ones.â
The growing town of Frisco, Texas, just 30 minutes away from Dallas, hopes that Amazon will catch the “Frisco flu,” with Mayor Jeff Cheney saying it will âbuild to suitâ andÂ posting a video saying the town was “primed” for Amazon, a cheeky reference to the company’s Prime membership offering.
Birmingham, Ala., constructed giant Amazon boxes and placed them around town, then asked residents to tweet out photos of themselves talking about how wonderful a place it is.
In a clever move,Â KansasÂ City Mayor Sly James bought 1,000 products on Amazon and used the review of each to tout his cityâs benefits.
Moody’s AnalyticsÂ put Austin at the top of its list for the win, followed by Atlanta, Philadelphia and Rochester, N.Y.
ForbesÂ put Philadelphia at the top,Â The New York TimesÂ chose Denver andÂ Geekwire pickedÂ Toronto.
Martin Pupil, president of U.S. Brokerage at the global commercial real estate agency Colliers International, thinks anything in the same time zone as Seattle is out. While Denverâs got a good package, he thinks itâs still too close to Seattle.Â Miami seemed like a good bet early on, but the recent hurricanes may have made many reconsider, he thinks.
While Chicagoâs got much of what Amazon wants, its state economy is a mess, making it, too, dangerous a play.
Detroit is a contender because it hasÂ great universities, a strong airport hub, lots of cheap housing and comes with its own âmission statement in terms of helping rebuildÂ one of Americaâs great cities,âÂ Pupil said.
In the end, whether Amazon is a net positive may or may not matter.
âCities may be viewing this as a loss leader. Even if itâs a break-even proposition in the shorter term, they see it as an opportunity for more medium- and long-term economic development,âÂ Gabbe said.
âI donât think any city is going to turn down the opportunity to host Amazon.â
Journal Sentinel staff contributed to this report