Amazon HQ2 - REI Opportunity?

208 Replies

First, Amazon is only here in Illinois from an operational perspective to deliver goods to a very large city in a short period of time.  They have built distribution centers in surrounding areas where real estate can be cheaply purchased.  Illinois infrastructure is terrible and is only 1 of 2 major cities that do not have a bypass.  A bypass is the ring around the city.  Our tech workers in Chicago are behind other competing states, that are in the running.  Texas, which is already a major tech hub with better internet infrastructure.  Texas is more competitive from a legal perspective if you’re an employer.  Texas was and is the headquarters of the recent Whole Foods acquisition.  

Originally posted by Account Closed:

He owns a $20 million home in DC and he owns the Washington Post.  Of course it'll be Washington, DC ...

 He also owns a 30 million dollar house in Beverly Hills. I can still see some DC leanings as Bill Gates is next door. It maybe more political advantaged for his future biz we can understand. 

Originally posted by @Andrew Syrios :
Originally posted by @Antoine Martel:
Originally posted by @Andrew Syrios:

Kansas City is making a run for HQ2 and that's who I am pulling for. http://www.kansascity.com/opinion/editorials/article172157917.html

 That would be amazing and I heard that KC was one of the top choices for them. 

 We'll just have to cross our fingers...

 Thats what I'm going to do as well! 

Originally posted by Account Closed:

@Ryan E. What is confirmation bias?  I guess I could have googled it in the time it took me to type this.

 The tendency to find information that confirms your existing opinions.  None of us know where Amazon will choose.  Many folks have a vested interest in them choosing a specific location.  So there is a tendency to find evidence that supports those opinions.  Even if there is other evidence that more strongly supports a different opinion.

In the end I think the biggest factor is government subsidy. If they just wanted to pick a city, they wouldn't announce it in that way and travel around to meet officials. They'd just rent some real estate and setup shop. They want officials to give them money and tax breaks.

Coming to my back yard ?? 

http://www.nextgov.com/cloud-computing/2017/06/amazon-web-services-picks-northern-virginia-east-coast-hq/138544/

Originally posted by @Kraig Kujawa :

Try to think about this through Amazon's lens. What does Amazon NEED?

NEED

They need LOTS of tech people, and QUICKLY. What cities have that? Not Detroit

They need to be able to RECRUIT to areas that will draw talent (whether you like Seattle or not, you can argue its an acquired taste -- costly and not sunny)

They need LOTS of space and they need to be able to scale quickly

They need something this new location can offer that dreary Seattle cannot (Sun and lower cost of living)

WANT

Amazon would love to get massive tax credits

Amazon would love to get cheap talent right out of school.

So given this criteria, I believe Dallas, Austin, North Carolina, Denver, Orlando would be likely targets.

BONUS FOR AUSTIN: Amazon just bought Whole Foods. I used to live in Austin and so I know Whole Foods holds leases on EMPTY office space all over downtown.

Detroit is bad for recruiting

Chicago is not great for tech

THINK like Amazon and you will win.

Chicago has lots of Tech and youngsters love living in this city. Don’t count us out yet.  😁

I’ve been reading a lot of articles on this and I think Chicago has a really good chance of landing HQ2. It seems to have everything on Amazon’s punchlist. 

Originally posted by @Ryan E. :

I’ve been reading a lot of articles on this and I think Chicago has a really good chance of landing HQ2. It seems to have everything on Amazon’s punchlist. 

I’m hardly an investor so what do I know (only on my 1st project now), but Chicago has so many neighborhoods that I can’t imagine it making prices go up drastically in 1 spot, at least if they choose a downtown building for the campus.  I’m already priced out of investing in “cool” neighborhoods like Lincoln Park and the Loop anyway.  Have a great weekend!

@Leslie Voegtlin , I will love to agree with you on a change in pricing in that particular neighborhood where Amazon would come, however, here is what is really going on:

In West Loop, prices  went up 20% over the rest of the city since Google has been announced to move in, and since McDonalds headquarters have started getting build in West Loop, West Loop has no inventory, all the new construction is priced at a million $ + and pricing continues to climb a lot faster than any other neighborhood in the city.

You see, the prices and the rent have gone up because everyone that showed up to work for Google makes a good living and they want to live where they work, so the demand added to the already hot location, automatically increased the prices. Same with McDonald's. This being the World Headquarter, you are getting executives coming to live here, a large number of high earners buying in a small area.

With Amazon, will happen the exact same. Whatever it will build, it will attract luxury builders and the high earners, and then will show up restaurants, boutique, etc, the money will pour in the neighborhood. 

Originally posted by @Lumi Ispas :

@Leslie Voegtlin , I will love to agree with you on a change in pricing in that particular neighborhood where Amazon would come, however, here is what is really going on:

In West Loop, prices  went up 20% over the rest of the city since Google has been announced to move in, and since McDonalds headquarters have started getting build in West Loop, West Loop has no inventory, all the new construction is priced at a million $ + and pricing continues to climb a lot faster than any other neighborhood in the city.

You see, the prices and the rent have gone up because everyone that showed up to work for Google makes a good living and they want to live where they work, so the demand added to the already hot location, automatically increased the prices. Same with McDonald's. This being the World Headquarter, you are getting executives coming to live here, a large number of high earners buying in a small area.

With Amazon, will happen the exact same. Whatever it will build, it will attract luxury builders and the high earners, and then will show up restaurants, boutique, etc, the money will pour in the neighborhood. 

 Hi Lumi!!! Great to see you are on Bigger Pockets!  Hope you and your family are well. - Leslie 

It is interesting that San Antonio dropped their bid saying they believe Amazon has already decided the location and is just playing games to get the best incentive package.

Originally posted by @Michael Biggs:

It is interesting that San Antonio dropped their bid saying they believe Amazon has already decided the location and is just playing games to get the best incentive package.

 That is interesting. You would think it wouldn't take them too long to decide. Maybe San Antonio is right. I keep hearing they will only go to where they can get great incentives..which I could see of course. They are a massive company and would bring many high paying jobs to an area. 

Newark, NJ is also an option for them which would be incredible for investors that bet on appreciation in areas like Newark, Kearny, and the Oranges. Wherever they go... prices will go BOOM.

It's a fool's errand trying to figure where Amazon HQ2 will end up. In the coming months I imagine Amazon will narrow down to a handful of options (if they haven't already done so) and conduct site visits, further negotiations, etc. But aside from any folks who may be privy to such info, it's all just a fun guessing game. 

So instead of picking a winner, let's cast a wide net and figure there's a high probability that HQ2 ends up in one of the following handful of metros: Atlanta, Philly, Chicago, Boston, Austin, Denver, Dallas, DC. These figure to be the frontrunners in the US for many analysts. So which REI markets would HQ2 impact the most? Remember, many Seattleites blame (or in REI I guess celebrate) Amazon for much of the skyrocketing prices, along with traffic/congestion, etc, over the past 15 years or so. The potential impact of HQ2 is enormous.

Which market do you think presents the most opportunities for investment should HQ2 locate in that city/region?