News that Amazon plans to move several thousand employees out of Seattle to nearby Bellevue, Wash., in the next five years raises big questions about the future of the Seattle region.
Amazon’s growth, along with the rest of the booming tech industry, led to skyrocketing housing prices and increased congestion in Seattle. Is Bellevue next?
After reporting the news this week, GeekWire spoke with leaders in tech, government, real estate, and academia for their perspective on the news that Amazon will move its Seattle-based worldwide operations team across Lake Washington. They diverged on how much the shift will impact the region in the short-term but agreed that if Amazon continues to double down on Bellevue, it could translate into big changes for the Seattle area.
Seattle City Councilmember Teresa Mosqueda sees the move as a sign that cities can’t make policy decisions based on Amazon’s word.
She noted that last year, Amazon threatened to slow its growth in Seattle if a tax on big businesses to fund affordable housing went forward. The Council ultimately repealed the tax. Despite that capitulation, Amazon still plans to sublease one of the buildings it threatened to abandon if the tax were implemented. That decision, coupled with news of the Bellevue move this week, sends a clear signal, Mosqueda says.
“We as cities, as public policymakers, from Seattle to New York to Nashville to Arlington, we have a responsibility to act proactively,” she said. “We cannot be in this reactionary position to constantly respond to whether or not Amazon is going to hold true to its threat or frankly, in our case, stay true to its promises.”
It’s a sentiment echoed by City Council candidate Shaun Scott and others in Seattle’s progressive political arm.
Some will say this is happening because of an "anti-business" climate. But we've given big business all the cradling they need, and they still relocate.
— Shaun Scott for District 4✊🏾🏙 (@ElectScott2019) April 3, 2019
Seattle Mayor Jenny Durkan dismissed concerns that the Amazon news sends a troubling message in an interview with Seattle radio station KUOW on Wednesday.
“It’s great news for the region,” she said. “The more jobs we have in the region and the more it’s diversified, the better it is for all of us. We’ve got a housing affordability crisis, not just in Seattle, but everywhere. Talent begets talent and I think that it is a good thing for Seattle, a good thing for Bellevue.”
It didn’t take long for the City of Bellevue to start celebrating. In an announcement Wednesday titled “Welcome home, Amazon,” Bellevue Mayor John Chelminiak said he is “excited by today’s announcement” and noted that “Amazon is a natural fit.”
“It’s also critical that these types of jobs stay in the region,” he added.
Real estate repercussions
Real estate professionals expect to see a slight uptick in competition for housing in Bellevue. One also noted that Amazon stands to benefit from Microsoft’s recent $500 million investment in affordable housing in the region.
“It is a very direct admonishment of Seattle government and our elected officials should all be taking a long, hard look at current policies,” said Windermere Chief Economist Matthew Gardner in an email Wednesday.
“As far as housing is concerned, it’s a double-edged sword,” he continued. “On the negative side, it will have impacts on the Seattle apartment market. Downtown apartments have flourished from job growth at Amazon and any contraction in demand will likely lead to slower rental rate growth … I would not be surprised to see the Bellevue apartment market grow at a faster than expected.”
Redfin Chief Economist Daryl Fairweather said that Amazon’s move will allow it to capitalize on investments that other tech companies on the Eastside have been making in areas like transportation and housing.
“It’s just the way it goes that when you make a place more attractive, it’s the people at the top who tend to benefit most,” she said.
Fairweather expects to see Seattle and Bellevue become analogous to the Silicon Valley tech hub, where San Francisco and San Jose are the pillars.
“Seattle is expanding to be a tech hub that’s going to start to look a lot more like the Bay Area, she said.
A growing tech hub
Fairweather also noted that Amazon’s Bellevue migration will likely have ripple effects, encouraging other tech companies to locate in the Eastside city.
“As soon as one tech company announces they’re moving somewhere … more tech companies follow suit really closely because they’re all competing for the same software engineers or research scientists,” she said.
That means Amazon’s Bellevue workforce could become more vulnerable to poaching in the near future.
“It’s really hard to get a worker to move cities initially,” Fairweather said. “You have to pay for the relocation and convince them to uproot their families. But once they move to a new city, it’s fairly easy to poach them away to your company.”
Heather Redman, a Seattle venture capitalist and outspoken supporter of the region’s tech industry, said, “what Amazon is doing it’s pretty clear to me.”
“They do not feel that they can predict the environment here in Seattle and that therefore they are opting to grow elsewhere and starting to move groups,” she said.
Redman expects Bellevue to benefit from Amazon’s decision to move this particular team, which oversees its package delivery and transportation business. “To me this is one of the most interesting groups in Amazon and if it had moved out of this region I would be devastated because all of the innovation around AI … and transportation and logistics is some of the really cutting edge stuff that will be impacting lots and lots of industries and will spin out a lot of interesting startups,” she said.
The outside perspective
Two years ago, news of Amazon relocating a team from Seattle to a nearby city probably wouldn’t have gotten national attention. But in the wake of the company’s highly public HQ2 competition, any big geographic decision feels significant and weighty with symbolism.
Amazon decided to relocate the worldwide operations team to Bellevue a year ago, when the company’s tax battle with Seattle officials was in full swing.
“I think Amazon has been trying to send a message to its hometown and that should be a message to communities across the country,” said Richard Florida, a leading urbanist who has written extensively about Amazon’s HQ2 search.
Amazon ultimately decided to split its second headquarters between Northern Virginia and New York City. But faced with similar pushback in New York to the opposition Amazon faces in Seattle, the tech giant pulled out of its project, leaving Northern Virginia as the only remaining HQ2.
“If you believed the worldwide operations team was going to come to your city, Northern Virginia, good luck, they’re not,” Florida said. “They’re going to Bellevue. It also indicates it was unlikely Amazon was going to move its crown jewels out of the Seattle area … that said, I don’t think this is a bad move … Bellevue’s a lovely suburb that’s really an example of how you densify.”