Few Cities Could Accommodate Amazon's New Headquarters
bloomberg.com
bloomberg.com
Sorry..I couldn't resist using Dallas as an example considering it is American Football season.
Sources:
Cost of living (1) https://www.numbeo.com/cost-of-living/compare_cities.jsp?cou...
Cost of living (2) http://www.bestplaces.net/cost-of-living/dallas-tx/philadelp...
Population https://en.m.wikipedia.org/wiki/List_of_Metropolitan_Statist...
It's probably still a win for Philly though.
These are the American cities which you can fly to and from Shanghai nonstop: Chicago, Dallas, LA, NYC (+Newark), San Francisco (+San Jose), Detroit, Seattle, Boston. Atlanta starting next year. In Canada there's Toronto, Vancouver, and Montreal.
The Navy Yard literally ticks every box of their requirements:
30 Mile proximity to population center: It's IN the city.
45 Minute proximity to international airport: It's about 15 minutes drive from the airport, or you can take mass transit.
1-2 Miles from Major highways: It sits basically ON I-95 Close to Major arterial roads: Within 10 minutes of 295, NJ Turnpike, I-76
Access to mass transit at site: Bus routes to site, subway stop a 5 minute shuttle ride from site
500,000 sqft of development space: Currently prepped for 4,000,000 sqft of office development, shovel ready
Up to 8,000,000 Sq Ft of Development space beyond 2027: 13.5 Million square feet of space at full build out.
Literally every box ticked, in a tax haven. The city could justify a BSL expansion to the Navy Yard with this sort of development, so they could throw that in as a deal sweetener.
There is also the Schuylkill Yards district in planning which would involve capping the train yard next to 30th street station. Both Schuylkill Yards and the Navy Yard have master plans in place, and the Navy Yard is ready for this basically day one. Both are Keystone Opportunity Zones and have abatements on almost all state and local taxes.
Philly really is a perfect fit.
The city has advertised for bids multiple times to develop new properties, and only one or two people will bid. When someone does bid, it is for ten times the cost of other similar private development, and with many fewer available units than needed. And of course, there is already no parking, and parking garages are being demolished regularly in center city to be replaced with high priced rental units.
Assuming you got the space for your HQ and finished construction within a few years, where are your young tech people going to live? Out in the suburbs on regional rail, away from the amenities in the city? Gentrify a few more neighborhoods and build more ugly cubic-modern apartments? I just don't see where they'd put all those new people.
What I'm most interested in, however, is how you get around some of these problems. The article points out a number of issues:
Can even Amazon afford to pay 50,000 people on a New York or SF salary? That's going to be (almost) prohibitively expensive. They certainly can pay for a Michigan salary or an Alabama salary, but is the job market there in those places? The Philadelphia example from the beginning points out that while the city is large enough, the job growth hasn't been there for quite some time, implying that there might not be enough people to fill the needed jobs.
Could a city like Birmingham, AL or Gary, IN or Lincoln, NE support 50,000 new jobs? Are there enough available homes to house all those people? Parking spaces? What about the support jobs? For every N employees, you need M doctors or dentists or accountants or fast food workers or maids or auto mechanics to support the growing population. Are those jobs there? Are there people qualified to take those jobs? Can the new traffic be handled smoothly? I think the answer is "yes" to the above in the long term, but is Amazon going to put their HQ in an up-and-coming town and just deal with the growing pains in the short term? Or would they rather go to a larger city and skip those problems?
What about international airports? That limits it to a dozen or so cities around the country. Can Amazon survive in a place like Nashville, TN? Why or why not? Are there ways to mitigate potential problems of not being able to fly to London or Paris direct?
IMO, the potential cities themselves are much less important and much less interesting than the problems that moving a 50,000 person HQ to almost any city would cause.
Low Taxes. Low Cost of Living. International Airport. Major Port. Plenty of Housing. Universities.
Better weather, higher elevation, significantly lower cost of living, and more people.
Sources: https://www.numbeo.com/cost-of-living/compare_cities.jsp?cou...
https://en.m.wikipedia.org/wiki/List_of_Metropolitan_Statist...
Some of that 50,000 is likely to be transfers and lower wage employees.
Even a janitor or desk assistant is paid more in SF and NYC than they are in Charleston, SC, so the principle applies even for low wage workers.
(Now obviously, the criteria is more than just salary, so the above is an oversimplification.)
That overlooks another aspect: what happens to a city when 50,000 new people show up likely making more than the average of that city? Do we get inflation? Do we have a housing crisis where all the nice houses are bought up and even the mediocre neighborhood property values skyrocket? Does gentrification become a problem? If you think "it's just 50,000 people and it's just one company," you'd be right -- but don't you think whatever city Amazon chooses is going to have a tech boom? There will be more tech jobs generated, leading to higher salaries and more expensive houses and... and... and...
I think the peripheral side effects of such a move are much more interesting than the move itself. The salary thing, sure, you're right. It's only 6% of their income. But what happens if the move causes unimaginable traffic congestion or significantly increases the homeless population or puts a strain on local preschools. Fifty thousand people? Let's say a third of them have 1 kid -- that's ~17,000 to add to the local school systems! We need more teachers! We need more buses! We need more textbooks! Instant crisis!
(I exaggerate, but still...)
That's the kind of stuff I find to be fascinating.
Denver also has an excellent craft brewery scene. Denver / Boulder are already tech hubs in their own right as well.
They still don't have much of a tech scene or high impact industries. And the same calculus that has prevented a mass migration of tech companies to Boise or Waco is the same calculus that will prevent Amazon from moving there either.
My bet is Boulder; the Research Triangle; or Philly.
Boulder is almost as bad as the bay in terms of vested interests obstructing construction and development.
Denver or one of its suburbs would be a decent choice, but not Boulder.
But they've got lots of cheap land, and both an international airport and an international border as well as three world class universities within an hours drive. Not to mention a metro area with a population of 4.5 million.
If I were Amazon, I'd stay clear of such a place.
- 3.5M metro area population
- Very high education levels
- Diverse population protected by strong civil rights
- Major international airport (Delta hub; 16th largest in the US)
- Very affordable
- Large business community already (Cargill, Target, Best Buy, major Wells Fargo office, etc.)
On the negatives, it is growing slower than other metros and the weather will be a turn off.
Honestly, I think Amazon has a pretty good idea of where they want their new HQ to be. They are using this process to extract concessions.
Wow, one of the few cities that competes poorly with Seattle weather.
For those that don't know Minneapolis like the parent commenter and I do:
- Amazon already has an engineering office in Minneapolis. Check out some of the jobs here.
- Amazon has a fulfillment center in Shakopee, MN -- a third ring suburb ~30 miles away from Minneapolis.
- This is mostly anecdotal on my part, but it's pretty typical for top computer science students at the University of Minnesota to go to Amazon / Microsoft in Seattle. Silicon Valley doesn't seem to bother recruiting in Minnesota, but Seattle-based companies seem to have good luck recruiting out of Minnesota -- where the weather is even worse.
- Minneapolis has the headquarters of some of Amazon's biggest "old retail" competitors -- Target and Best Buy. A large Amazon presence in Minneapolis would go a long way to poaching the top 10% of talent at both companies.
- Minneapolis also has a small but promising tech community. BuzzFeed and a few other tech companies have an engineering office in Minneapolis.
Not everyone is a 20 something who has no family obligations and is willing to go work anywhere in the country. Furthermore, in minneapolis we have very high salaries relative to cost of living. If you make 120k here you're basically rich and can save an enormous amount per month. This kind of salary to cost of living ratio allows an ambitious person to save tons of money each month and invest it how they please.
Anyhow, I don't think minneapolis is a long shot. We have a very good economy and infrastructure and lots of people doing smart/ambitious things.
A lot of people put up with some really stupid crap "because money"
The health software company or the peeps who make Unreal?
They continue along because, like most other places that aren't major tech hubs like SF, Seattle, NY, or Chicago, software developers who decide to settle there simply don't have many alternatives.
One only has to look at Orlando Florida and Walt Disney World as an example of what can happen to a region over time.
[1] By a publication looking for page views.
But I'm just weirded out by how the article discounts Chicago based on assumptions about, what, tax policy? Where is this coming from? The Rahm is lobbying hard, and he's very pro-bigcorp, as McDonald's new 500,000 sqft world headquarters in West Loop can attest to.
Regardless of where Amazon lands (and I don't really have a horse in that race), Bloomberg's weird hang-up about Chicago are no more than a distraction. It's bad enough that Michael Bloomberg is personally spending $millions on TV ads to support the Cook Cty soda tax in a state where he doesn't even reside. Ugh.
Plus it's really tough to attract out of state talent in Utah.
I think Salt Lake would be a very hard sell compared to what Amazon could easily get with Denver.
Including SLC and Utah counties both: 2+ million
University of Utah, Brigham Young University, Utah Valley University
Substantial tech talent, startup scene. Adobe, EA, Ebay, Microsoft, Oracle all have a presence. And don't forget the NSA.
International airport connects to Canada, France, Mexico, Netherlands, UK... but will take two hops to get anywhere else. https://www.slcairport.com/assets/pdfDocuments/Flight-Schedu...
Meetingplace of I-15, I-80, I-84
Culture almost the complete opposite of Seattle's.
Mountain Time Zone
Killer cost of living
Government willing to make substantial concessions to tech companies
But... I'm guessing it's just not quite connected enough to be seriously considered.
As a ballpark number, if Amazon wants to hire 50k people, I'd imagine they'd need at least 20k Canadians. So I suspect they'll need to convince Canadian programmers to move there.
I can't pretend to speak for all Canadian citizens, but given the choice:
1. Move to the most expensive real estate market in the country, where the raise in wages wouldn't account for the price difference in housing costs. To work for an employer with Amazon's reputation towards employees... (that's the most polite way I could put that)
2. Immigrate to SV under a TN visa, with the chance of working on interesting valley projects.
Despite both options having a crazy housing market, #2 is much more attractive. The value proposition can be changed though. I'd move in a heartbeat if the same wages were available in Montreal. Same for any Canadian city other than Vancouver and Toronto.
Or maybe I am one of the jerks.
Also, the "I'm not quite going to snow, so have some 35-degree rain" or "Hey, how about an ice storm?" winter weather.
Never really had much of a problem finding a gig down there.
Obtaining the land would probably be the easy part, issues such as gentrification might prove harder to solve.
The various counties comprising the ATL metro might themselves spark a bidding war to lure AMZN but I have no idea how that would take shape.
But I think it could be a good pick since its still under development. The only major tenant I've read about is Serta moving their HQ there.
The only downside I can think of is this is not in the city center, but that is on their nice to have list on the RFP.
There are three other areas I could see if Atlanta was to be considered. (There are likely more but to me these stand out).
First, the Downtown area. I think development there could get the most tax credits and their is a surprising amount of vacant or under utilized land. I don't know enough detail but I would assume that "The Gulch" area and/or "Underground Atlanta" area could be potential sites since they are both up for redevelopment currently.
Second, Midtown could be a good contender. There seems to be potential for redevelopment around North Ave and Civic Center stations. I think the Civic Center is vacant currently and could be a large enough site, but doesn't have direct access to the rail station.
Third, Sandy Springs/Dunwoody. Looking at the area around the Dunwoody Marta station specifically. I know I've seen some master plans for that area online and they could fit the bill. The new State Farms HQ there was able to get direct access to the Marta station (I think). The site where AJC is or the shopping centers with Best Buy would work. It seems that Mercedes Benz was able to get a good deal for moving to this area. There are already a lot of large companies with HQs in this area and its close to desirable areas for executives. (similar to Assembly Yards its not in the city center)
My personal pick would be for Midtown, since I think that the most desirable area and employees would like it better, but the more I think about it, I think Downtown makes more sense for what Amazon is looking for and COA would likely be willing to make a better deal for a major development there.
The thing about Atlanta is inside of the perimeter is almost just like any other multi-cultural and socially-liberal coastal metropolitan area.
Except for being unwilling/unable to offer very high tax breaks, Chicago would be right up there too. But I have to imagine that's going to be a very significant factor.
Other long shot, but still plausible, cities are: Las Vegas, Charlotte, Detroit, and Minneapolis.
Atlanta has been proposed several times.
Seattle has been taking Amazon for granted, suddenly the Mayor is taking an interest in Amazon:
'“My office will immediately begin conversations with Amazon around their needs with today’s announcement and the company’s long-term plans for Seattle,” Seattle Mayor Ed Murray said in statement Thursday.'
http://www.seattletimes.com/business/amazon/amazons-announce...
The Triangle is also in a sweet spot between beaches to the east, within about a 1.5 hour to 2.5 hour drive, and mountains to the west, within about 4-5 hours. And locally we have lots of outdoor green spaces with plenty of trails for running, hiking, mountain biking, etc.
We have major league sports (the NHL Carolina Hurricanes) and minor league baseball (Durham Bulls) and soccer (NC Football Club, formerly the Carolina Railhawks).
The local airport has direct flights to Seattle, San Francisco, Los Angeles, London, Paris, New York, Chicago, Atlanta, DC, and Toronto among others.
There's a nice nightlife scene here with each of the three "points" of the Triangle being a "college town" (Duke, UNC Chapel Hill, and North Carolina State being the major universities). And if you like music, you can get everything from jazz at Beyu Cafe, to the NC Symphony Orchestra at Meymandi Hall in Raleigh, to black metal / death metal / metalcore / etc. at The Maywood in Raleigh, and all sorts of eclectic shit at the Cat's Cradle in Carrboro. And Trans-Siberian Orchestra always has a stop here at PNC Arena on their winter tour. And that's not even mentioning Motorco and the Durham Performing Arts Center in Durham, or Lincoln Theater or Walnut Creek Ampitheatre in Raleigh.
There's plenty of good food to be had here, although admittedly not quite the variety found in Seattle, Chicago, New York or San Francisco, etc. But still you can find a very nice range of options here. Lots of good Thai food in particular.
All in all, despite the embarrassing fuckups by our state government over the past couple of years that have made the national news, this really is a nice place to live and work. And the Triangle metro area is really a different world from the rural parts of NC. Yeah, if you go looking, you can find some pretty backwards, uneducated, ignorant people in NC, but the area here is very diverse, educated, cultured, etc.
[1]: https://www.bizjournals.com/triangle/morning_call/2015/01/fo...