to get a “firsthand look” at what the com- pany wanted and needed. Detroit created a powerhouse team headed by Quicken Loans founder and CEO Dan Gilbert to bring a number of Michigan cities in on the action and make the extended Detroit area the new home of HQ2. At the same time, however, some skeptics are voicing concern that HQ2 is not the economic boon Amazon would like it cracked up to be. Miami Today op-ed contributor Michael Lewis advised caution. “We should be wary of whether actually winning would overwhelm us,” he wrote, noting that if Miami-Dade won the bid it would have committed to pro- viding one-seventh of all existing office space in the city to Amazon, “including not just giant new towers, but every tiny office. This would be the tail that wags our
community’s dog,” he wrote. Texas Monthly writer-at-large Leif Reigstad cautioned that “nearly every metro area in Texas [that] jumped at the opportunity” should “think twice” about whether they really want it. Frisco, Texas, offered to literally build its city around HQ2 since “it’s only about 60 percent built out [meaning]…we can build to suit.” Reigstad recommended taking a step back, calling “the quality of those 50,000 jobs questionable” and citing “skyrock- eting housing prices and an increase in traffic congestion” as reasons some metros might choose to back away slowly. Looking at the numbers alone, howev- er, real estate investors will certainly see the potential for profit and record-setting returns if they predict the HQ2 selection correctly. In the end, however, Miami’s
Lewis may be right when he observes that making the bid itself will be a win even if his city loses. Simply participat- ing in the process will garner each city, state, and region wonderful publicity for its advantages and unique offerings, just as Amazon is currently garnering for itself via its self-laudatory RFP and the subsequent obsequious social media tags and posts from cities around the country. The amount of economic analysis, job market cultivation, housing policy insight, and growth potential that this contest will spawn may end up dwarfing the effects of HQ2 itself. •
stop or station in or next to the campus), be within 45 minutes of an international airport, and be able to build within two miles of a major highway or arterial road. The company also stated it would need “evidence of fiber optic internet connec- tions,” strong cellular phone service, low traffic congestion, lots of universities, and a highly qualified, diverse population to fill a projected 50,000 new positions. “We expect to invest over $5 billion in construction and grow this second headquarters…to be a full equal of our current campus in Seattle,” read the official Request for Proposals (RFP) on the Amazon website. The company also claimed credit for $38 billion in growth in the Seattle economy between 2010 and 2016 and implied that it might fund local charities by describing involve- ment with a Seattle homeless shelter called Mary’s Place, which is receiving “more than 47,000 square feet of space in one of our newest buildings.” Real estate investors spend a great deal of time analyzing market economies in an attempt to purchase property in areas that are likely to experience increased demand and subsequent appreciation in the near future. This strategy is sometimes called “buying in the path of progress” and plays a role in forced appreciation strategies, which rely on improving existing proper- ty management practices and upgrading existing properties in order to add value to an investment. Amazon’s HQ2, according to Am- azon, could turn the path of progress “THE PATH OF PROGRESS” BECOMES A HIGHWAY
into a roaring highway. The RFP throws out numbers with more “billions” than “millions” and speculates the company might build in three or more phases if the project is successful. As if the 50,000 new jobs and $5 billion investment were not enough to get local governing officials salivating, there will certainly be plenty of associated economic and population growth in the area where HQ2 lands. An investor who correctly predicts the eventual location of the headquarters could stand to benefit whether they hope to buy and hold, flip to retail buyers, or invest in new devel- opments or the commercial sector. COMPETITIVE SIGNS Amazon has been quite specific about what it wants in its new location, and the company is clearly eager to see what bidders offer for the privilege of hosting its headquarters. Investors hoping to identify markets that might be relatively more competitive should first identify areas where the company’s nonnegotiable requirements are met: • Proximity to an international airport • Proximity to an arterial road or major highway • A population of one million or more • Access to mass transit Note: Amazon does not just want to be located in a city with a bus or rail system. It appears to require its own personal station either inside HQ2 or immediately adjacent. It will be particularly important to eval-
uate whether there is undeveloped or oth- erwise available commercial land for the headquarters in the appropriate location to meet the requirements. For example, a major metro area that has an established rail system might seem like an ideal fit for the company, but not if there is nowhere to build a designated access point for the company’s headquarters. Similarly, simply boasting an international airport may not be enough unless there is land available within the designated radius that Amazon can develop or improve. Vaguer requirements, such as diversi- ty, the implied necessity of an educated workforce, and a “welcoming atmo- sphere” can be largely evaluated based on the willingness of the city or state to offer economic incentives, tax breaks, and subsidies to the company in exchange for the HQ2 award. Diversity and education likely mean very different things to dif- ferent people, so it may be safer to solely evaluate based on physical factors and only factor in the intangibles if there is a glaring issue. When the initial furor died down after the initial HQ2 announcement, cities got to work creating offer packages, viral videos, and pools of resources to attract Amazon’s attention even before their offers were submitted. Gary, Indiana, bought an ad in the New York Times and published an open letter to Bezos that be- gan, “How are you? My name is Gary and I am a legacy city in the northwest corner of Indiana.” Chicago sent a 10-person del- egation to Amazon’s existing headquarters DOES THEWINNER REALLY SCORE?
Carole VanSickle Ellis is the editor of Think Realty Magazine. She can be reached at cellis@thinkrealty.com.
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