Amazon HQ2 - REI Opportunity?

208 Replies

As someone who is born and raised in Seattle, works in tech, and can throw a football at their HQ from my house, let me share my observations about Amazon.

1. This is going to be a 2nd HQ equal to the Seattle HQ. It is not going to be a big fulfillment center. So those 50,000 jobs are going to be $100k a year jobs and not $15 hour warehouse jobs.

2. Amazon wants to be in a dense urban city. My guess is Boston, Atlanta, Dallas, LA, etc. It will also want to poach top tech talent from other companies. They provide large signing bonuses and stock options to new employees to attract those employees.

3. Those signing bonuses will be used for down payments on houses in the city. People will move from around the country to work there. I have several Amazon employees in my rentals and they have driven up housing/rental prices significantly .

4. Appreciation will soar in whatever city is selected. I would look to invest in flips and apartment complexes.

Finally anyone who says Amazon is bad for a city is an idiot in my opinion. Every city will have their issues but they create "good problems" to have. I know I'll be watching their move very closely and looking for opportunities in whatever city they choose.

Agree w/@Kraig Kujawa , I think local high tech talent will be a high priority in a reasonable cost city.  Univ of Texas Austin is top 5 school  in Computer Science currently (daughter goes their so I keep up on this, ha) and is one of the largest univ in the country w/over 50K students.  Austin is a tech hub, liberal w/this backdrop, culturally more aligned w/Amazon than one would think about TX in general (they don't say keep Austin weird for nothing) and yes, Whole Foods their big acquisition is HQd here.  They have a strong presence already in the Domain area and near tech row.  The Texas Enterprise fund is sizeable and able to bring big companies to TX.  Drawbacks might be airport (not as intl as DFW/ATL w/ fewer direct flights) and size of infrastructure needed to support but if there criteria is just 1M folks then that might not be as much of an issue. Here's the take from the Austin Business Journal.

https://www.bizjournals.com/austin/news/2017/09/07...

@David Thompson yep, I didn't go there, but it's totally true. Austin is a liberal mecca, and so is Bezos. It means more to them than they would publically admit, but it does. As an aside, they also just completed a major airport expansion and right before I left, were adding more and more direct flights by the month.

Amazon-Wholefoods in TX makes too much sense.  I just don't see Boston or Chicago as true competition there. Maybe Denver.

Like a few folks have already figured out I've got my bets on TX - probably Austin or Dallas. The only thing more important than having local talent is being able to attract non-local talent based on low cost of living and family-friendliness. Silicon Valley and Seattle folks know what I'm on about. If they announced HQ2 in Austin today I'd be on a flight there next week and I know more than a few of my tech industry friends won't be too far behind.

In general it's wise to follow the big movers and shakers like Amazon. I bet on a Amazon distribution center and been rewarded with high occupancy and accelerated appreciation. In fact one of my tenants was a construction manager building the distribution center.

If you can't beat 'em, join 'em.

Just like General Electric HQ building in Boston I see other large companies coming. Boston has the talent that Amazon needs. Wouldn't be surprised if amazon picks an outside city of Boston. With two airports MHT and BOS nearby it offer maximum transit options.

Originally posted by @Kraig Kujawa :

@Andrew Wong I do believe it is between Denver and Austin.   Austin's airport continues to improve, but their traffic situation is not improving, and will not improve, anytime in the foreseeable future.  

 Austin doesn't make sense to me. Dallas area has 2 large airports. DFW and Love (though it's still small compared to DFW). There are smaller airports all around too. As far as I understand it, Austin does not have much as far as tech goes so no built in talent pool to pull from. Dallas/Richardson/Plano has been described as the "tech corridor" for Texas which is why we moved to Plano (and now Frisco) when we decided to make the leap and move here even without jobs. (It's worked out very well, thanks!)  IMO I think (and I'm no expert) that Plano's Legacy/Corporate/Headquarters Dr area (so named because of all the corporations) would be a desirable spot except for the traffic issues right there (the city is "working on it) or Frisco along the DNT corridor would also be desirable. Talent pool nearby, access, etc. The other location would be maybe where 121 and 75 meet as this would provide lots of access.

@Debra Grumbach  I'm in the tech industry, and I can tell you 100% that Austin has tons of tech. It's one of the hottest B2B, if not hottest, startup communities in the US. 

Amazon, EA, Apple, Facebook, Google, Arkane Studios, Homeaway, etc, are all ramping up their footprints in meaningful ways.

Austin has a young and talented employment pool but the city has not been able to close the deal on any large employers in the past 10+ years.  Dell is down to a shadow of what it once was, Applied Materials and the other semiconductor places sent all their jobs overseas.  Samsung seems to be the only big name putting more "real jobs" into the area.  I think the city is getting away from giving the big handout packages to these companies so I would be surprised to see this large of a move into Austin anytime soon.  My guess is Amazon is just throwing Austin out there to get some other city to give them the incentives that they want.

Would love to see Amazon make the move here but really just so my rental properties would have that many more candidates.

With my experience as an IT Guy. Texas got the high weight in this game. With no income tax, tropical Climate and Low cost of living, etc most of the software guys prefer to re locate here with no additional incentives.

Originally posted by @Christopher Gilbert :

Austin has a young and talented employment pool but the city has not been able to close the deal on any large employers in the past 10+ years.  Dell is down to a shadow of what it once was, Applied Materials and the other semiconductor places sent all their jobs overseas.  Samsung seems to be the only big name putting more "real jobs" into the area.  I think the city is getting away from giving the big handout packages to these companies so I would be surprised to see this large of a move into Austin anytime soon.  My guess is Amazon is just throwing Austin out there to get some other city to give them the incentives that they want.

Would love to see Amazon make the move here but really just so my rental properties would have that many more candidates.

Google just took up 3/4ths of the new tower on San Antonio street downtown, so not sure what you mean regarding 'not closing the deal on large employers'. Facebook has grown considerably on W6 as well. I could go on and on.

How many people do Google, Facebook actually employ in Austin?  Not much.  They don't even show up on any of the metrics for employees over 1000 people.  Mostly just consolidating local offices into a larger, more visible one so they can say they have a footprint in a "cool" city.   Largest employers in Austin by an order of magnitude are state/local government, UT, local school districts and a couple of semi-conductor/high-tech manufacturing facilities.  Austin has a robust satellite center environment for lots of tech companies but none of them want to setup anything bigger here other than an IT or R&D center. 

Don't get me wrong, Austin could do well by an employer with a large footprint but they aren't willing to shell out the bucks to pay them off with tax incentives like they did in the 90's and early 2000's.  And that is ultimately all that companies care about when making these types of decisions.

@Christopher Gilbert , The google highrise is 29 floors in one of the most coveted blocks downtown. Imagine how many 6 figure salaries that holds. Austin won't shell out the tax incentives anymore. But that's because they no longer have to. If that's all companies cared about, Amazon would go fleece Detroit or Dayton Ohio and this thread would be a moot point.

Great discussion gents!  As an investor in the Milwaukee market we are looking for an additional spike into the local economy.  Looking forward to the rebuilding of the Bradley center to see what that does for home prices and the flow of cash into Milwaukee.

Originally posted by @Michael Wilkinson :

Not going to Texas. Not urban enough. Friends here in commercial real estate tell me chicago. Makes total sense: central, urban, affordable, easy to recruit talent.

 

It's totally going to be Chicago. Rahm will put all possible chips on the table to make it happen. Corporate relocation is so ingrained into his desire for this city; there's just no way he's going to let Amazon pass by.

This is an interesting discussion, do you know when Amazon will award the city and begin construction? I haven't seen any dates yet in any of the articles I've read, I'm guessing it's going to be at least 2-3 years for everything to be completed?

Amazon HQ2 RFP (.pdf)

Here are some links directly to Amazon pages on the new HQ:

Amazon to Build New HQ

According to the RFP responses are dues by October 19, 2017.  The selection and announcement will be in 2018.   So selection could be as soon as four months or as long as 16 months.  Lots of details in the RFP.

I think anything any of us offer as far as "it will certainly be XYZ city" is nothing but speculation.  Every city in the competition is going to have a long list of reasons why they are the best choice.