Along the muddy Monongahela River in Pittsburgh sits a massive stretch of undeveloped land fertile with possibility.
This gritty brownfield is the former J&L Steel mill, once so critical to U.S. interests that the nearby Hot Metal Bridge was among the nation’s most heavily-guarded pieces of infrastructure. A rare swath of undeveloped real estate in an urban region, the 178-acre property is a 15-minute drive from downtown Pittsburgh and just down the hill from the prestigious Carnegie Mellon University, but still remote enough that on a visit this weekend, white-tailed deer were seen bounding across the grassy landscape.
The property, known today as Hazelwood Green, is now ready for its next chapter.
A consortium of philanthropies, city officials, and developers plans to turn this relic of the steel area into a complex of offices, housing, and public spaces, all built to environmentally sustainable standards. The site has already attracted the attention of one tech giant, as home to Uber’s self-driving car track. The Advanced Robotics for Manufacturing Institute plans to move into a former steel mill building to be renovated on the site.
Could this historic swath of land become Amazon HQ2?
Hazelwood Green meets Amazon’s core requirements for its second corporate headquarters, perhaps the biggest economic development contest in modern U.S. history. The Seattle-based tech giant plans to announce its HQ2 choice this year, picking from among 20 finalists, including Pittsburgh, to create a $5 billion home for 50,000 workers.
“Many people here in Pittsburgh feel that the Hazelwood Green site would be ideal for Amazon, given the proximity to Oakland’s universities, the space to grow, and the ability to develop new innovations along the riverfront that might involve anything from drones to water-based transit to things we can’t even imagine,” said Stephan Bontrager of Pittsburgh’s Riverlife organization.
The property shows how this one-time industrial boomtown, which fell on tough times in the 1980s as steel mills closed and the population plunged, has the capacity to accommodate a massive new entrant.
Even so, this proud city of just over 300,000 residents seems like a dark horse in the race to woo Amazon, which as of Monday was valued at $675 billion. In a recent analysis by The Wall Street Journal, Pittsburgh ranked near the bottom of those contenders for HQ2.
But Pittsburgh could be a stronger candidate than outsiders believe.
Home to companies such as Heinz, PPG Industries and Dick’s Sporting Goods, the Steel City reinvented itself long ago as a center of technology research and development. Thanks to educational institutions such as Carnegie Mellon and the University of Pittsburgh, the city has a pipeline of tech talent, despite an overall labor shortage in the region. Tech giants such as Apple, Facebook, Google and Uber established outposts in Pittsburgh in recent years to mine the talent. Amazon itself opened an engineering office in Pittsburgh last year, with more than 60 staffers and openings in roles such as machine learning scientist and language engineer.
Pittsburgh also has homegrown tech success stories, from language learning startup Duolingo to artificial intelligence upstart Petuum.
The city’s riverfront Strip District — which is being reframed as Robotics Row — has been dubbed Pittsburgh’s “mini Silicon Valley.” The city’s leadership in autonomous vehicle technology received national recognition when Uber selected Pittsburgh to begin testing self-driving cars, which are frequently seen buzzing around the streets of Pittsburgh (with drivers behind the wheel, just in case).
Pittsburgh is on the cutting edge of many of the technologies of the future — autonomous vehicles, machine learning, robotics, and voice-controlled assistants. Two of Amazon’s top executives, Amazon Consumer CEO Jeff Wilke and CFO Brian Olsavsky, have deep Pittsburgh roots.
And, at least one high-tech Pittsburgh native and reality TV star thinks Pittsburgh could win the competition. Shark Tank star and Dallas Mavericks’ owner Mark Cuban told GeekWire that he wouldn’t be shocked if Pittsburgh “won the Amazon HQ2 battle.” Dallas also is among the top 20 finalists vying for the Amazon’s second headquarters.
Related: Ranking Amazon’s HQ2 short list: Analysis of the top 20, and which one has the best shot at the top prize
Despite all of those factors, Pittsburgh is hardly a shoo-in for Amazon HQ2.
Pittsburgh is up against the D.C. metro area, Austin, Boston, Atlanta, New York, and 12 other top cities, each with its own list of pros, many offering juicy incentives packages. And even though officials in Pittsburgh and Allegheny County are pushing hard for HQ2, not everyone in the community is ready to welcome Amazon with open arms.
“I don’t think (Amazon’s HQ2) would benefit the people of Pittsburgh, actually,” said Emily Pontarelli, who moved to Pittsburgh six years ago and lives in the Polish Hill neighborhood. “I think a lot of people would move in from out of town, and I don’t know that it would be good for the people who currently live here.”
Many Pittsburgh residents are already expressing concerns about the impact on housing affordability and congestion, seeing the impact Amazon has had in its hometown, Seattle. Over the past decade, as the economy has recovered and Amazon and other tech giants have expanded in Seattle, the city’s median home price has risen 54 percent, from $486,000 to about $750,000. The population has climbed about 19 percent, to 704,000 people.
Pittsburgh’s median home price sits at $130,400, and the city’s population has been in decline.
Last week an investor purchased 18 properties in Hazelwood, near the site considered the HQ2 favorite. Hazelwood neighborhood advocate Dave Brewton told the Pittsburgh Post-Gazette that he believed the investor overpaid for the properties, and expressed concerns about real estate speculation as a result of the Amazon rumors.
Regardless, city leaders are plowing ahead with their efforts to court Amazon. Government officials even plan to appeal a ruling by the state Office of Open Records that compels them to release Pittsburgh’s HQ2 proposal to the public. Its efforts to keep things private could work to Pittsburgh’s advantage, as Amazon puts a premium on discretion. The lack of details of its pitch to Amazon make it difficult to evaluate what Pittsburgh is offering in terms of tax benefits or other financial incentives, one of Amazon’s key considerations in its search.
But this city’s chances boil down to two questions: How many of Amazon’s boxes does Pittsburgh’s proposal check, and how does it compare to the competition?
Continue reading for our assessment, evaluating Pittsburgh’s traits against the preferences outlined in Amazon’s RFP.
Prime location: Amazon is looking for a site that’s at least 100 acres, within 30 miles from the city’s population center, no more than a 45-minute drive to the airport and close to transit. The company has a strong preference for a development-ready site so that it can break ground HQ2 by next year. The language of the RFP suggests the location each city proposes will have an outsized impact on Amazon’s decision. The company says it will “prioritize certified or shovel-ready greenfield sites and infill opportunities with appropriate infrastructure and ability to meet the Project’s timeline and development demands.” Amazon also has a preference for environmentally sustainable development.
Pittsburgh’s government is being almost as secretive as Amazon itself when it comes to the HQ2 bid, so we don’t know, definitively, which site was proposed.
However, many have noted that Hazelwood Green makes perfect sense for the project. Its owners already have a sustainable building master plan and will seek LEED certification. The property can support 10.5 million square feet of office space, easily exceeding the 8 million Amazon says it will need in the long-term. Amazon is also looking for sites with utility infrastructure in place. This year, Hazelwood Green is building its own utilities, separate from those that serve broader Pittsburgh, to create a “micro-district.”
Previously: Pittsburgh forges a new future, remaking iconic steel town into a modern innovation factory
“To be able to have a site like this gives us a real competitive advantage,” Allegheny County Executive Rich Fitzgerald told The Pittsburgh Tribune-Review.
Other sites floated as possibilities include the 28-acre former Civic Arena location in Pittsburgh’s lower Hill District, but for its sheer size and potential, Hazelwood Green is unique.
Business climate: Amazon is seeking a “stable and business-friendly environment and tax structure” in the city it chooses for its second home.
MarketWatch’s recent study of the most business-friendly cities in America puts Pittsburgh at 27 out of the nation’s 50 most populous metros. The study scores cities on 23 data points, including business environment, company performance, and economic outcome. Those metrics are admittedly vague but give a general sense of how Pittsburgh compares to its competitors. Seven cities on Amazon’s list of 20 outrank Pittsburgh — Dallas, Raleigh, Denver, Boston, Austin, Nashville, and Indianapolis.
Pennsylvania has a personal income tax rate of 3 percent and a corporate net income tax of 9.99 percent. Pittsburgh also has a municipal income tax and a payroll expense tax. Those taxes could put Pittsburgh at a disadvantage.
Taxes have long been a key issue for the company. CEO Jeff Bezos selected Seattle, in part, because its relatively small population would mean fewer Amazon sales would be taxed, according to The Seattle Times. Amazon was only collecting sales tax in its home state and a handful of others at the time, although that has since changed. Washington state also has no personal income tax. In the HQ2 search, this issue could work to the advantage of Austin or Dallas, because Texas also has no personal income tax.
Then again, we don’t know what types of tax breaks or incentives Pittsburgh is offering Amazon since the city is keeping such a tight lid on its proposal.
Talent: Amazon is looking for a city “with the potential to attract and retain strong technical talent.” Despite the solid talent pipeline from Pittsburgh’s universities, the city ranked 30th out of the 50 top metros for tech talent in a 2017 study by CBRE. The HQ2 contenders outranking Pittsburgh on the list are New York, D.C. Atlanta, Toronto, Raleigh, Austin, Boston, Dallas, Denver, Newark, Chicago, Philadelphia, Los Angeles, and Columbus.
However, The Economist named Pittsburgh the most livable city in the U.S. in 2005, 2009, and 2011 and Apartment List ranked Pittsburgh as the top U.S. city for millennials based on jobs, affordability, and livability. Those are strong considerations for attracting and retaining talent in the long-term.
There is another, little-noticed factor that could boost Pittsburgh’s talent points. FedEx Ground is headquartered in the suburbs of Pittsburgh. Home to thousands of employees with deep expertise in shipping and logistics, FedEx Ground represents a poaching goldmine as Amazon continues to build out its delivery network. Amazon is reportedly experimenting with a new delivery service for third-party merchants that would compete directly with FedEx, and the company has been steadily expanding its own delivery network for years.
“Amazon covets FedEx Ground employees,” a former FedEx Ground executive, who asked not to be named, told GeekWire.
“Many have been poached at a high level, but by locating in Pittsburgh, Amazon would have access to thousands of current and former FedEx Ground employees at all levels and in all disciplines – especially engineering,” he said.
Travel: Amazon says that “travel time to an international airport with daily direct flights to Seattle, New York, San Francisco/Bay Area, and Washington, D.C. is also an important consideration” for HQ2. This is a weakness for Pittsburgh, one that GeekWire felt acutely when planning flights for our own HQ2 project.
Pittsburgh has daily direct flights to New York and Washington, D.C. but isn’t currently operating non-stops to San Francisco or Seattle. That being said, United will be resuming a daily non-stop to San Francisco in March, and Alaska Airlines is adding a direct flight to Seattle in September. Still, Pittsburgh’s airport is not on par with some of its competitors, like Chicago, Denver, and Atlanta.
Size: The Pittsburgh metropolitan region’s 2016 population was an estimated 2.3 million people, according to U.S. Census data. That’s comfortably above Amazon’s minimum of 1 million, but the region’s population has been declining in recent years. Pittsburgh is definitely on the smaller side of cities in the top 20. The Washington D.C. region has a little over 6 million people and Boston 4.6 million.
So does Pittsburgh have enough strengths to take home the (black and) gold? Our answer is a resounding maybe.
The Steel City is up against bigger, richer competitors, but it does have a unique mix of strengths, including some little-noticed advantages, that make it a notable entrant in this race, not to be overlooked. Perhaps those pros, combined with whatever Pittsburgh is keeping so tightly concealed in its bid, could allow this underdog to surprise the skeptics and win it all.
With reporting by GeekWire’s John Cook, Todd Bishop and Taylor Soper in Pittsburgh.
