Last week’s surprise announcement that Seattle will respond to Amazon’s request for proposals for its second North American headquarters raised big questions for residents of the tech giant’s hometown. Does Seattle have space for the additional 8 million square feet of offices and 50,000 more employees required by the company? How will this affect other Washington cities’ chances? What would a Seattle pitch even look like?
GeekWire spoke with real estate experts and civic leaders to answer some of those questions and envision how Seattle might respond to the news that one of its biggest employers is ready to see other cities.
First, a reality check: It seems unlikely that Amazon will abandon its wanderlust and double down in its first hometown after making such a big public fuss about collecting proposals from other cities. In that way, the city’s response could end up being mostly symbolic.
But if Seattle defies the odds and wins Amazon’s heart, it would likely require extensive changes to local zoning codes, experts said, and greater cooperation between the city and development community.
Where would it go?
One of the biggest obstacles to a second Amazon headquarters in Seattle is space. As any local will tell you, there isn’t a lot of it. Office space around town is filling up, roads are clogged and developers are struggling to build enough housing to match the demand from the thousands of new people coming to Seattle all the time, many for jobs at Amazon.
Matthew Gardner, chief economist at Windermere, said 5.3 million square feet of office space is under construction in and around downtown Seattle — though 3.2 million of that is already spoken for — with another 6.4 million square feet proposed.
“Given these numbers, one could argue that we have the space, just, given current availability and what is planned,” Gardner said. “That said, I believe that it would be a struggle as it essentially means that Amazon would have to take all of the space currently proposed and all the availability in projects currently being built.”
These projects are also spread all over downtown and the surrounding neighborhoods, and according to Amazon’s RFP it would prefer a site with facilities “in proximity to each other to foster a sense of place and be pedestrian-friendly.” HQ2 in another city could look something like Amazon’s Denny Triangle campus, with several full blocks sporting high rises and other buildings.
One of the most promising landing spots could be just south of downtown, near the stadiums that host the Seattle Mariners and Seahawks. Hedge fund investor Chris Hansen has been piecing together land to build an NBA arena down there for years, but the City Council has seemingly pushed that proposal aside in favor of a Key Arena redevelopment process.
There are likely to be some hurt feelings there, but landing one of the biggest headquarters projects in recent history — and surely a huge payday for Hansen — would be a pretty good consolation prize.
Greg Smith, a Seattle real estate developer with holdings in the Sodo neighborhood, agreed that Hansen’s properties make sense as a major part of a Seattle pitch. Hansen’s properties are close to downtown, major freeways, transportation and entertainment options. Smith said his holdings, combined with Hansen’s properties, could bring several million square feet of future office space to the table.
We reached out to Hansen’s team about this idea but didn’t hear back. The city is open to the idea, sources say, and office buildings are allowed near the stadiums, though the property would likely require zoning changes before it could become the site of a big Amazon office complex.
Much of the area is zoned only for industrial buildings. In order for Sodo to work, the city would have to undergo a major rezone of the area, allowing for taller office towers as well as nearby housing, encouraging something of a South Lake Union Part II around there.
“If the city is going to continue to grow and we don’t want sprawl, then we need to upzone the city center to take advantage of the investments we’ve made in public transit down here,” Smith said.
A major zoning change south of downtown could upset the Port of Seattle, which has opposed Hansen’s arena project and argues that it will bring a new crush of traffic to the area. If the port worries about 20,000 people coming in a couple times a week for a basketball game, imagine what an influx of 50,000 people daily might do to the neighborhood.
Is there room for that many newcomers?
Even if Seattle manages to find the space for Amazon, what will it do with the 50,000 people Amazon promises to employ at HQ2, many of whom could come from out of town? Seattle is already struggling with skyrocketing rents and home prices due to the huge demand from natives and newcomers alike.
Smith recommends upzoning property around the city’s transit hubs to encourage more building in those areas. That way, the city can pack more people in, while encouraging new residents to keep cars off the road.
Rebecca Lovell, acting director of the Office of Economic Development, which is leading the city’s response to the RFP, says Seattle is already bracing for extreme growth.
“The Seattle 2035 Comprehensive plan already anticipates 120,000 new residents, 115,000 new jobs, and 70,000 new housing units, and the city is actively working to balance these pressures with our commitment to diversity (both in our residents and our economy), and shared prosperity,” she said in an email to GeekWire. “The Amazon RFP prioritizes transit and mobility, education and workforce, housing and livability — issues in which the public and private sector are already deeply engaged; an expansion of this magnitude by Amazon or any other company would significantly impact such ongoing efforts.”
Gardner, the economist, believes that the development community would be able to pick up the slack should Amazon commit to building a second headquarters in Seattle.
“Housing developers do one thing: Build housing,” Gardner said. “So, given ‘guaranteed’ demand from more Amazon employees, they would be able to keep up.”
What does Amazon want?
In addition to plum real estate, Amazon laid out a number of factors the company will consider when selecting the location for HQ2, including tax credits and exemptions, relocation and workforce grants, utility incentives, and fee reductions.
Previously: A race to the bottom? Amazon stirs debate by soliciting tax credits for second headquarters
“A stable and business-friendly environment and tax structure will be high-priority considerations for the Project,” the RFP says. “Incentives offered by the state/province and local communities to offset initial capital outlay and ongoing operational costs will be significant factors in the decision-making process.”
That public call for incentives has ignited criticism across the country, with several civic leaders questioning whether a company valued at $474 billion should be soliciting tax breaks and government incentives from cities hungry for jobs. Lawmakers in Amazon’s backyard have accused the company of using the RFP as leverage to negotiate better terms in the company’s hometown.
“Amazon’s quest for a second massive corporate base is reminiscent of Boeing’s ongoing efforts to ship jobs out of the Seattle area and hold us hostage,” said Seattle City Councilmember Kshama Sawant in a past statement. “For decades, Boeing executives and billionaire shareholders have carried out systematic economic extortion by pitting cities and states against one another, forcing a race to the bottom for the living standards of workers, and crushing labor unions. Amazon has similarly been using its monopoly power to gobble up swathes of prime Seattle real estate, and extract plum deals from the city’s Democratic establishment.”
Amazon has declined to comment on the RFP process beyond its initial public statements. Seattle officials didn’t respond to our questions on whether the city will include tax breaks or other financial incentives in its response to the RFP.
Will it really be in Seattle?
It’s also possible that Seattle will throw its weight behind a pitch for Amazon’s HQ2 in a neighboring community. The language of the executive order calling for Seattle to respond to the RFP promotes a regional response, which is in tune with Amazon’s invitation for “states, provinces and metro areas, to coordinate with relevant jurisdictions to submit one” headquarters proposal.
The executive order instructs Seattle’s Office of Economic Development to create a taskforce to respond to the RFP with input from “additional jurisdictions, associate development organizations, and the Washington State Department of Commerce.”
Tacoma, Seattle’s neighbor to the south, has selected a site in its downtown neighborhood and is planning to submit a pitch to Amazon. Tacoma’s economic development director, Ricardo Noguera, confirmed that his office is still planning to submit a proposal even after Harrell issued the executive order mandating a Seattle response.
“Since the announcement, our office has been coordinating across agencies (additional jurisdictions, the Economic Development Council of Seattle and King County, the Washington State Department of Commerce to name a few), as well as business, labor, and community leaders to coordinate a regional response,” said Lovell. “To that end, we are jointly working to identify the best existing and future sites in King, Snohomish, and Pierce Counties that are a fit with Amazon’s needs.”
The clock is ticking: Amazon’s deadline for proposals for HQ2 is Oct. 19.
[Editor’s Note: Rebecca Lovell was previously GeekWire’s chief business officer.]