Amazon Won’t be Coming to Dallas … Unless

Last week, Amazon announced they are seeking proposals from municipalities to build a second headquarters away from their original Seattle location.  They expect to spend $5 billion to fully build-out the campus that would house “as many as 50,000 high-paying jobs” and be the same size as the Seattle campus … over the next 15 to 17 years.  They also figure their gravitational pull will bring in “tens of thousands of additional jobs and tens of billions of dollars in additional investment in the surrounding community.” High-paying is defined as jobs exceeding $100,000 per year in salary.

The Amazon FAQ section had this (frequently asked) question and answer:

Why is Amazon choosing its second headquarters location via a public process?

We want to find a city that is excited to work with us and where our customers, employees, and the community can all benefit.

In this case, “excited” means, “How much free money in tax breaks and incentives can a city give to minimize Amazon’s expenditures?” A bidding war seems the best and bloodiest approach for Amazon to minimize their spend.  Or as I put it, how far can a city pull its pants down?

Amazon is well versed in minimizing spending on silly things like taxes.  Simply search “Amazon tax evasion” and a plethora of links appear. In fact, Amazon’s first choice for its original headquarters wasn’t Seattle, but an Indian reservation near San Francisco that would have resulted in dramatically lowered taxes. California put a stop to that and sent Amazon packing for Seattle.

Even though Amazon largely changed how they structure their European operations to avoid tax, any municipality researching their desire for Amazon’s HQ2 should really unpick the company’s approach to paying whatever taxes the “winner” might be getting.

Mixed Blessing

Another consideration are the implications for the local economy.  It’s the old “good news, bad news” effect. In the bad news column, injecting 50,000 high-paying jobs into Dallas would result in higher-cost real estate for everyone. The tens of thousands of adjacent jobs Amazon claims would be created will make that burden even heavier for lower-paid jobs outside the Amazon bubble.  Certainly they’ve helped put Seattle on the unaffordability map.

Amazon’s Desires

While Amazon’s current HQ is in an urban setting, the company said HQ2 can be either urban or suburban. From a Dallas perspective, the type of urban environment Amazon would want doesn’t exist here.  There simply isn’t enough housing, public transportation, or vibrancy in downtown Dallas. The patchwork of Deep Ellum, Bishop Arts, Design District, Uptown, and Downtown just wouldn’t cut it without Amazon expecting to some serious heavy lifting from the City of Dallas (unlikely).

There’s the potential for them to look at Dallas Midtown, but that would again mean bootstrapping a neighborhood even less vibrant than downtown Dallas (they haven’t even begun building yet).  Of course there’s recent corporate favorite Legacy West if the boonies are an option.

Where all Texas locations fail is in the public transportation and political arenas.  We have way too little public transit, and Amazon’s workforce would seemingly be of the generation not wanting to drive everywhere and sit in traffic.

Amazon is also not a fan Texas politics.  In fact most of the tech sector isn’t a fan. Texas’ bathroom bill saw many companies, including Amazon, publicly speak out against the measure.  I can’t imagine them selling out those beliefs so quickly to locate in Texas. In fact, it’s more likely they’d move Whole Foods out of Texas first.

On the upside, I don’t see northern cities making the cut either.  Amazon plans to let workers fluidly transfer between HQs and I don’t see harsh winters being a draw over sunshine for dreary-weathered Seattleites.

Not Dallas — Austin

While I doubt Texas has a chance of landing HQ2, Austin is the best, slim bet.  Amazon purchased Whole Foods in August for $13.7 billion and so will already have a major presence in the city.  Additionally, even without Whole Foods, if any Texas city had a shot at landing Amazon, it’s Austin (remote as that may be). It’s the state’s tech-savvy epicenter with 425,000 university students churning out graduates into an area that defines Texas vibrancy. It remains to be seen if Austin, already creaking under the weight of its rapid growth, congestion, and escalating housing costs, will want Amazon.

But that’s assuming decisions might be made impartially, without the quantity of pants pulling-down that is guaranteed to swing this bid to the city performing the most lucrative naked chicken dance.

And Dallas?  Dallas can’t even pull its pants down far enough to get the Rangers or the Dallas Cowboys into Dallas.

 

Remember:  High-rises, HOAs and renovation are my beat. But I also appreciate modern and historical architecture balanced against the YIMBY movement.  If you’re interested in hosting a Candysdirt.com Staff Meeting event, I’m your guy. In 2016 and 2017, the National Association of Real Estate Editors has recognized my writing with two Bronze (2016, 2017) and two Silver (2016, 2017) awards.  Have a story to tell or a marriage proposal to make?  Shoot me an email sharewithjon@candysdirt.com.

13 Comment

  • Dallas is a public transportation paradise compared to Austin

  • Austin won’t get it either cause tech scene isn’t big enough. DFW has almost 70,000 employed in the technology sector Amazon could pull from. Austin on the other hand only has some 20,000 employed in that tech sector. Companies don’t move to cities where they have to move the dial. They move to cities where the dial is already pretty damn high. Dallas has the employees to pull from and a large selection of them. Austin is still playing catchup and Amazon isn’t trying to be the sail for the Austin boat. The Dallas boat is already sailing across the ocean smoothly and Amazon could simply jump on board.

    Austin transit is bad. They have a good bus system and yes they have bike trails. That’s where the good ends though. Dallas is getting better and DART while nowhere near perfect is seeing some positive change and already has a better coverage than Austin’s transit system.

    The smaller downtown Austin market is cool but its super pricey already compared to Dallas. The advantage with Dallas is it is so close to Austin and has all the business and logistics hubs in place. You can dominate in Dallas and still run Austin from a short drive away.

    Also, Amazon has stated they require an International Airport already in motion. DFW is a very busy international hub and Austin isn’t. Dallas also has the high-speed rail coming that connects it with the Houston Port and has allocated significant funds to the Riverfront Blvd areas from North of the CBD down to the Cedars. Bike lanes, parks, and trails are already being built and expanded in these areas. Mathews Southwest now owns significant blank land near the Trinity south of the CBD perfect for a quick build. He has already done plans for the land he owns and it comes pretty close to the acreage they have requested as well. The zoning is already in place in many cases as well.

    Believe me, I get it Austin is a fun town but it isn’t Dallas as much as it’s fun to make fun of my hometown because it’s lack of cool and hipness. If we are gonna pick on Dallas about something I would focus on our failed Trinity Park implementation and the DISD school system. Amazon may not pick Dallas but it won’t pick Austin.

    • mm

      True. As I said, I don’t see Texas having any chance at all, regardless. Certainly our politics don’t jive with a progressive company like Amazon who was one of MANY who protested our “bathroom bill”.
      .
      Austin gets the nod mostly from Whole Foods and vibe that’s more similar to Seattle.

    • mm

      Great points. But Austin has UT. Hell, how about Waco? Maybe the Amazon CEO’s like Chip and Joanna Gaines, and it’s right in the middle!

  • Could the Amazon announcement earlier this year of a new fulfillment center in southern Dallas near Hutchins be a sign of more to come? The DART blue line and it’s recent extension all the way down to UNT Dallas provides considerably in the way of transportation infrastructure. The young but aggressive UNT Dallas approach toward advancing programming gives additional workforce education capacity going forward. Bringing the Rangers and the Cowboys to Dallas is a mistake circumvented. The big business of professional sports is a loser for the cities they call home. An indirect transfer from public coffers to private interest. That’s putting it as nicely as I know how. Many thanks to Arlington and Tarrant County for pulling their pants down the furthest.

    • I don’t see that having an impact. The fulfillment center is a glorified warehouse. Amazon has tons of those.
      .
      Sports arena-wise, I agree, but a lot of people and politicians wanted those teams in Dallas. My point is that they couldn’t get the deal done.

  • NY Times did a good analysis of major metro areas and their pros/cons for Amazon site. Denver won based on the criteria outlined in their report.

    • mm

      I saw that too. Denver seems to be a few news outlets’ favorite. But again, if the free money isn’t there, I doubt Amazon will go. Foxconn got $3 billion out of Wisconsin, Amazon will want a lot more.

  • What about, Van Horn or Marfa!

  • All valid comments here…and I agree with Jon that Texas politics, generally speaking, can be a turn-off to companies that are middle of the road or progressive in their worldview. Maybe it will still work out, and we’ll have one more gold medal in our ring of corporate relocations. One last thing to remember: the post closed with “Dallas can’t even pull its pants down far enough to get the Rangers or the Dallas Cowboys into Dallas.” I don’t exactly recall the Rangers situation, but I think the Cowboys move came during the reign of Laura Miller… and a lot has changed since then.