Amazon's Wandering Eye

What Does HQ2 Mean for Seattle?

Amazon is being wooed by cities across the country, and it’s giving us a case of Boeing deja vu.

By Ciara O'Rourke February 14, 2018 Published in the March 2018 issue of Seattle Met

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When Amazon announced in September 2017 that it would open a second headquarters—but hadn’t decided where—an economic development group in Tucson sent the tech giant a 21-foot saguaro cactus. Over in Kansas City, the mayor courted the company by leaving 1,000 five-star product reviews on the retailer’s website that plugged the Missouri town. Stonecrest, Georgia, offered to rename itself Amazon, Georgia. 

Watching our most high-profile homegrown company solicit proposals from other cities for where to locate “HQ2”—not a satellite office but a full equal to the local campus—disconcerted Seattle leadership. And watching the same company dangle 50,000 well-paying jobs and a more than $5 billion investment in whatever new home it picks, left that leadership outright discombobulated.

A majority of Seattle City Council members signed a letter in October that asked Amazon to “hit the refresh button” if its HQ2 move was based on “feeling unwelcome in Seattle.” Never mind that, since Amazon launched in Seattle in 1994, complaining about its impact on affordable housing and traffic has become something of a Puget Sound pastime.  

Fascinated by the public solicitation for HQ2 bids, Simon Stevenson, director of the Runstad Center for Real Estate Studies at the University of Washington, wondered if Amazon had fired a warning shot at its hometown. Other tech companies have expanded much more quietly, Stevenson notes. Amazon’s tack is more like a sports franchise relocating a pro team. 

Nearly 240 communities from across the United States, Mexico, and Canada threw their hats in the ring for HQ2. In January 2017, Amazon announced it had whittled the potential host cities down to 20 finalists, including Atlanta, Boston, and Nashville. 

The company declined to comment for this story but sent Seattle Met a statement that claims it anticipates growth here too. “We love Seattle and the state of Washington—it’s a wonderful place to work and live,” the statement says. “Our current real estate projects in the city are expected to add two million square feet of new office space and we currently have more than 3,000 positions open in the city.”

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With 40,000 employees in more than eight million square feet of office space in Seattle, Amazon is the largest employer in the city.

But consultant Jim Renzas, who helps companies during corporate relocations, speculated Amazon could be seeking a site with a low tax rate, hedging its bets in case Seattle moves to tax it more. Still, Renzas doesn’t think the faraway second headquarters will hobble population growth here, or employment prospects.  

“Amazon scares a lot of companies away from Seattle because [it’s] growing so fast,” he says. Slowed expansion here could help improve job diversity in the city. Leaning too heavily on one company, after all, can leave a city vulnerable. Boeing was the largest employer in Puget Sound when its sales dwindled in the 1970s. About 43,000 workers were laid off within two years. Unemployment in the region soared to 17 percent; the suicide rate rose. Boeing sneezed and Seattle caught a cold. 

“Some cities will do just about anything to lure the Boeing company,” began a 2001 article in The New York Times about the “feverish” competition to land the aerospace manufacturer’s new headquarters. It was three decades after Boeing’s downturn infected Seattle, and the rush to woo the company was an early preview of the current HQ2 crisis. In Denver, one of three cities the company was considering, Boeing executives met football Hall of Famer John Elway and ate buffalo meat at the governor’s mansion. About 800 miles southeast, in Dallas, they were greeted by a mariachi band and a letter from another sports star: Alex Rodriguez, who’d recently left Seattle for Texas.

The company ultimately picked the Windy City, which promised big tax breaks (and treated execs to a fancy dinner at the Art Institute of Chicago while a string quartet warbled). Philip Condit, then the company’s chairman, said the decision to relocate the headquarters was strategic. But Boeing restoked fears a few years later when it issued a request for proposals for where to build the 787 Dreamliner assembly line. Everett won, only to see another Dreamliner factory open in South Carolina soon after. The Northwest clearly no longer owned Boeing.

Now it looks like Amazon is taking its foot off the accelerator here, says Jacob Vigdor, a public policy and governance professor at the University of Washington. That could relieve pressure on the housing market, he says, and help alleviate the traffic clogging Seattle streets. 

But as Amazon’s appetite for local construction lessens, some sectors of the economy could also slow down, according to Vigdor. How dramatically the city feels the effects of such change depends on external factors, like the national economy, as much as what’s happening inside Jeff Bezos’s office. If the car is cruising along at a healthy clip, it won’t matter much when Amazon eases off the gas. 

For now, Amazon has reportedly responded to the city council’s letter seeking to rekindle the relationship. The company suggested a meeting. To discuss “the challenges and opportunities ahead.”

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