Every now and then cities experience events that serve as a clear line of demarcation between “then” and “now.” In the case of Amazon's search for a home for their new HQ2, the 20 finalists’ regional leaderships are actively seeking a major event that will change their area’s landscape for decades to come. As part of the process to attract and win the opportunity to host HQ2, the decision-makers and influencers involved in each region’s bids are putting plenty of thought into preparing for the changes facing their communities should Amazon choose their location as the winner. Fortunately, they all can look at Seattle as a living laboratory and business case to get a good idea of how life in their region is going to be impacted. Based on lessons learned to date from Seattle there are four major areas that most likely be at the forefront of the conversations surrounding the unique changes that will face the region hosting HQ2, as follows:
1. Rapid and Specific Demographic Population Growth
Based on the population changes in Seattle - the city was the fastest growing metropolitan area in the nation twice in the past decade - we can assume that HQ2 will bring with it rapid population growth. And, continuing to use Seattle as a guide, it is also safe to assume that the population growth at HQ2 may be disproportionately made up of young (30-39 year old) professionals.
With HQ2 serving as a strong attraction, professional young adults will relocate to and settle in the winning region. So, what does this mean for the community? Improved transportation, the creation of more urban “green” spaces, and a rise in the types of commercial enterprises that cater to this specific demographic, such as customized exercise studios, boutique eateries, higher-end daycare establishments, etc, all seem par for the course. This will be good news for most of the area’s residents, especially those that can use the improved urban experience to lure highly qualified employees in their own sector, or if they run one of the businesses in high demand by this demographic.
2. Improved Infrastructure and Attendant Costs
Amazon was clear that efficient and reliable modern public transportation and urban green spaces are “must-haves” for any metropolitan area hoping to land HQ2. Plus, even if Amazon wasn’t specifically asking for these features, infrastructure improvements would likely be required to help accommodate a rapidly growing population.
In the long run, this change will likely be great for whatever region lands HQ2. The recent coming together of Maryland, Virginia, and the District of Columbia to finally agree and pass the desperately needed funding to improve and modernize the regional metro system is an example of the region changing to attract HQ2. But, while this decision is a response to HQ2 specifically, the resulting improvements could also lead to other companies who are looking to develop additional major campuses (for example, Apple) to prioritize this region ahead of others going forward. After all, improved infrastructure benefits everyone and is a very attractive characteristic for any company considering new office locations.
Updating or creating infrastructure, regardless of the necessity, is almost certainly an expensive undertaking, and current residents will most likely be asked to shoulder most of, if not all of, the improvements through increased taxes. Although Amazon has been clear that they aren’t interested in subsidizing these types improvements through taxes, this likely won’t be as significant a factor for whatever area wins HQ2 as it has been for Seattle. Washington state does not currently benefit from having an individual income tax, so Seattle has not been the recipient of the rise in income tax revenue corresponding with the rise in highly skilled (and highly paid) residents, who work for Amazon as well as for the other large employers in the area. With the exception of four finalists (Miami, Austin, Dallas, and Nashville), every potential new home being considered on the short list for HQ2 does have a state-level personal income tax to help defray the necessary infrastructure costs.
3. State, Local and City Policies Become More “Pro-Business”
The job growth, population boom, and improved local economic activity that accompanied the meteoric rise of Amazon have served to underline just how essential Amazon has become to the city of Seattle. As a result, the local, city, and state governments in Seattle and Washington state are very aware of Amazon’s requirements as well as likes and dislikes. In the case of Seattle, Amazon has successfully displayed that the organization’s and Seattle’s best interests are frequently aligned, and has successfully leveraged their position as a large and growing employer to work to widen the city’s pro-business policies and influence their local environment to work in their favor by governing tax breaks and incentives.
Most recently, after the Seattle city council proposed a “head” tax on Seattle-based companies making more than $20 million in revenue annually, for the purpose of funding programs aimed at addressing homelessness as well as to help create more affordable housing, Amazon (and other large local employers) strongly balked at the initiative for a variety of reasons. In response, Amazon halted construction on their new 17-story office tower and threatened to sublease space in its downtown campus. They also accelerated their search for their new HQ2 site.
When it comes to HQ2, regional business leaders will benefit from Amazon’s ability to unite and rally both the local business community and all relevant government entities, establishing an environment that is very “pro-business”, and possibly attracting even more large business headquarters in the process. After all, the notable and very public objection from Amazon, along with other leading voices in the business community, did not fall on deaf ears in Seattle. The Seattle City Council didn’t abandon the tax entirely, but they did make an effort to involve Amazon and other business leaders in the conversation and approved a moderated and more business-friendly version of the head tax. Amazon has resumed construction on its downtown projects, however, they have made it known publicly that they are still keeping the option of subleasing its office space on the table.
4. Increased Unpredictability
As unbelievable as it seems now, Amazon got its start in Jeff Bezos’s garage as an online bookstore. Now as a multi-billion dollar conglomerate it is hard to predict exactly which market segments and offerings Amazon will be moving into, and dominating, by the time the new HQ2 is complete. And if it’s hard to predict what Amazon will look like in a year two, it’s almost impossible to predict where Amazon will be focusing in a decade. As an organization, Amazon is continuously growing, developing, and pushing past established norms to create new ones, making wherever their HQ2 lands an attractive and energetic place for that region. And while Amazon’s unpredictability is undeniably exciting, it also requires its host region to plan for and attempt to predict the infrastructure, cultural changes, and challenges that will follow. As Amazon dives further into the autonomous revolution as an innovator and expands into other major verticals, such as healthcare and pharmaceuticals, the rapid shift caused by their innovations in these areas will first cause ripples into whichever local communities are affected. The bottom line: although we many not be able to predict exactly how the organization grows, we know (based on past years results) that it does grow, and the area surrounding HQ2 will benefit from this growth in turn.