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Posted Jan 26, 2018, 3:23 PM
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Join Date: Sep 2015
Location: Austin, TX
Posts: 3,601
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Sorry for the huge copy pasta here, but this may be one of the best articles I've read about Austin's chances so far. Lots and lots of nice nuggets here:
https://www.bizjournals.com/austin/news/...in-despite-shortcomings-city-a-dark.html
Quote:
By ABJ staff
Jan 25, 2018, 2:51pm CST Updated Jan 25, 2018, 3:17pm
When Amazon.com Inc. issued its prime directive last September to economic development officials that it was willing to drop a $5 billion second headquarters somewhere in North America, the naysayers were quick to pick holes in Austin’s application.
Based on the Seattle retail behemoth’s wish list for the project — that comes with as many as 50,000 high-paying jobs and has been described by economic experts as a “generational” opportunity — the Texas capital just couldn’t stand up to the mega metros like Atlanta, Washington, D.C., or Dallas-Fort Worth. After all, Austin doesn’t have an entrenched mass-transit system, and while its airport is growing quickly, it’s just not on the same scale as, say, Toronto.
What’s more, New Jersey has reportedly offered a whopping $7 billion in incentives to lure HQ2, while Austin Mayor Steve Adler has so far seemed reticent to use the words “incentives” and “Amazon” in the same sentence. The Austin Chamber of Commerce’s regional bid forwarded to Amazon last October did not offer incentives from the city of Austin, according to an October memo from the city.
All along, Austin city leaders have been cautious about the prospect of landing Amazon and using incentives to do so, insisting the project must benefit the city as a whole.
The October city memo notes that Austin’s economic incentive process is formally kicked off when a company provides detailed information about itself and its proposal through the city’s Business Information Form. Melissa Alvarado, a spokeswoman for the Austin Economic Development Department, confirmed Jan. 22 that Amazon had not yet submitted the paperwork.
And as The Business Journals examined last year in a nationwide investigative feature, an Amazon project without incentives in the mix is a rarity: The company has received more than $1.24 billion in subsidies from state and local governments for building out its national network of warehouses.
Stacked up against the city of Plano, part of the Dallas-Fort Worth metroplex, Austin barely registers in the incentives game. Plano offered incentives worth nearly $7 million to help lure Toyota’s North American headquarters.
Highly educated workforce
Flash forward a few months, however, and Austin has not only survived the first cut when the field was narrowed from 238 bids to 20, but stacks up well as a dark horse against many of the finalists in some key areas. (Bettors at this point give the Texas capital 11-to-2 odds, behind Boston at 2-to-1 and Atlanta at 5-to-1).
Amazon already has about 900 corporate employees in Austin, plus thousands more at a distribution center in San Marcos to the south of the capital. And it’s the new owner of Whole Foods Market Inc. after a $13.7 billion acquisition that closed last fall.
Despite those previously mentioned factors working against it, some experts say landowners and commercial developers across Central Texas have reason to be optimistic about their chances, especially at several diverse sites spread across the Austin metro.
It’s also likely that Gov. Greg Abbott would open his wallet wide to allow either Austin or Dallas to snare HQ2. It was the $40 million the state kicked in through the Texas Enterprise Fund that helped seal the deal in 2014 for Toyota to choose Plano for its HQ facilities.
Two of Austin’s biggest advantages are the academic and workforce resources provided by the University of Texas at Austin and other higher-education institutions and the quality of the region’s technology workforce.
“The presence of a highly educated educated workforce and a strong research institution are key assets for the Austin region,” said Minoli Ratnatunga, director of regional economics research for the Milken Institute, a California-based think tank.
Indeed, 42 percent of Austin adults have a bachelor’s degree. That’s the fourth-highest rate among HQ2 finalist metros, behind D.C. (home to three bids), Boston and Raleigh, North Carolina.
And Ratnatunga said UT has a “tech transfer” effect on surrounding companies, spurring research that can be turned into products and innovating in the areas of management, commerce, digital transformation and more.
Nonetheless, Austin lags far behind other finalists when it comes to the sheer size of its workforce. The Texas capital is home to 113,200 tech workers, according to information technology association CompTIA, which has an online tool that allows for metro-to-metro comparisons.
That pales in comparison to places like New York City with 392,400 tech workers, D.C. with 297,900 and Los Angeles with 287,600, Boston with 263,500 and Dallas-Fort Worth with 209,600.
Property requirements
When Amazon announced its HQ2 search in September, it gave a detailed list of preferences for its new campus. It needs at least 500,000 square feet of existing space with room to expand up to 8 million feet, with both infill and greenfield sites being considered.
A 500,000-square-foot office wouldn’t fit just anywhere in Austin.
“It’s a large undertaking. It’s not the same thing as trying to find a few floors of office space,” said Justin Bayne of commercial real estate firm SkylesBayne and co-working startup Firmspace. “Their options become a lot less available and most of the time, it makes sense for them to come in and either do a gigantic renovation or just build a campus from the ground up.”
And there are a host of other factors Amazon likely is considering beyond the basic parameters outlined in the company’s requests for proposals.
“They’re considering every single factor. They’re considering how long is the commute for the average person living nearby? They’re considering the natural light they’re able to get in the space and dozens of other details,” Bayne said.
There are a few clear contender sites in Central Texas. At the Broadmoor campus owned by Brandywine Realty Trust (and currently occupied by IBM Corp.), there is room to construct multiple closely grouped office towers. The 66-acre site abuts The Domain, a burgeoning live-work-play district that is especially appealing for tech workers and employers.
Broadmoor has more than enough room for 500,000 square feet of offices and entitlements in place for nearly 8 million square feet of new construction.
Another developer actively pitching to Amazon is Eightfold Development/Panache Development, which owns the 125-acre former Motorola site in East Austin, about a 10 minute drive from downtown and less than 10 miles from the airport.
Eightfold is leading an extensive renovation regardless of Amazon, so the company already has significant permits, said Adam Zarafshani, the company’s CEO. He believes they can develop 500,000 square feet of office space within a year, with enough room for 5 million to 9 million square feet at full buildout.
Another property frequently in the mix — and on the mind of real estate agents — is the 8,000-acre Robinson Ranch. The Northwest Austin site would offer a blank slate of expansive greenfield space that could be shaped to Amazon’s liking. According to the Robinson family’s attorney, Richard Suttle of Armbrust & Brown PLLC, the family told the Austin Chamber that it would be willing to sell its property at a steep discount or even donate some of the land in order to be considered by Amazon.
“The family expressed interest early in the process and remains interested in having discussions with Amazon during this next phase,” he said.
“I think all parties would agree that properly-zoned property located on the rail line and major highways at this location is an important consideration. This idea is independent of other proposals that may include portions of the Robinson Ranch …[and] was presented to enhance the possibility of Austin becoming the site chosen,” he added.
Laurie Flood, an agent with Keller Williams Realty, has dedicated an entire page on her website to discussing the merits of Robinson Ranch for Amazon. At nearly 12 square miles, it’s bigger than all of downtown Austin, Flood said, with a MetroRail line running through the property. Parts of the ranch are already zoned for “downtown-style” developments, Flood noted. And for a company cognizant of employees’ lifestyles outside of work, the nearby housing options aren’t as pricey as downtown and the Northwest Austin schools are considered desirable, she added in an interview.
Yet another oft-mentioned site is the property occupied by the Austin American-Statesman newspaper on the south side of Lady Bird Lake.
Bryce Miller with Endeavor Real Estate Group — which is managing the redevelopment of the Statesman property — said the group submitted information to the Chamber but he isn’t sure how the site was ranked in the official bid sent to the e-commerce giant.
“We have a sincere interest in Amazon and how they might fit and play a role on the Statesman tract, but we also have a strong interest in Amazon HQ2 [coming to Austin] regardless of where it goes,” Miller said.
He added that the roughly 18.5-acre property would have to be combined with several adjacent properties to accommodate Amazon’s campus. That wouldn’t be too far-fetched, considering the company's Seattle headquarters spans several city blocks, he noted.
“It’s not that Amazon couldn’t do a portion of their headquarters on the Statesman property. They could do a portion of it on a site that’s two blocks away (too),” he said.
Pitting potential sites against each other is a key tenet of Amazon’s strategy to strike the best deal for its real estate projects. And the company has signaled some of its preferences for creative offices in dense, urban environments.
Just last week, Amazon real estate chief John Schoettler dropped another tantalizing hint about what it was looking for while speaking at an event in Seattle.
“We look forward to cities that area… progressive and are thinking forward and long-term in terms of affordable housing and mass transportation, and being able to move people around,” Schoettler said.
He envisions HQ2 as “a combination of buildings and facilities probably within walking proximity to each other.”
Challenges remain
If Austin were to win HQ2, what would the effect be on the local economy — especially on established companies?
“The startup ecosystem won’t be affected, but larger companies will have to find a way to adapt and evolve to compete against Amazon if it moves to town,” said Craig McKinney, head of recruiting at Dosh Inc., a retail technology startup in Bee Cave, just west of Austin.
“Some companies will have to offer incentives in areas like benefits or [paid time off],” McKinney said.
McKinney added that the arrival of Amazon would definitely tighten the tech labor landscape.
Lisa Hooker agreed that bigger companies are more likely to be affected and that the labor market for specific job positions, such as engineers, would get more competitive. She is a technology practice partner at the Austin office of Odgers Berndtson, an executive search firm.
However, the full effect of an HQ2 isn’t known because Amazon hasn’t specified what job functions, divisions or departments it plans to house at its second headquarters.
“A broad spectrum of leadership and level of employee would create another venue for longevity in Austin’s employee base,” Hooker said.
Whether or not Amazon chooses Austin, large tech employers such as HomeAway Inc. — which is owned by Expedia Inc. and runs an online home-rental platform — are focusing on making themselves stand out in an already crowded labor market. HomeAway is building a new sky-scraping headquarters at The Domain and will need to hire 2,000 people to fill it.
“I think it’s really important to have a strong culture,” said Mari Rylander, HomeAway’s director of global talent acquisition. “The reason I say that is because no matter how much money you could potentially compensate a hire with, what keeps people here and attracts them ultimately is your culture.”
When Amazon announced Jan. 18 the finalists for HQ2, it set off another round of frenzied reaction in business and economic development circles.
But there could also be some trepidation in some of Austin’s corner offices. The HQ2 project would surely contribute to escalating housing prices and worsening traffic, two issues identified as among the most pressing in the region.
“Our issues are traffic congestion and affordability and when you have 50,000 new people… that’s going to be difficult to handle,” said William Mellor, vice president of Austin’s AngelouEconomics. “A scale-up of that nature will be hard to take.”
An employer of that size would have an abnormally high concentration of Austin’s skilled workforce: “It would be better to have 50 companies that employ 1,000 people than to have just one company employ 50,000,” Mellor said.
For comparison, the largest regional employer in Austin is HEB Grocery Co. with more than 13,000 workers, followed by Dell Technologies Inc. at around 12,000. After its buyout of Whole Foods, Amazon now has some 7,000 workers in the area.
On the other hand, landing a project the size of Amazon “could catalyze some real solutions from the city’s perspective to pass some policies that take more action to address these issues,” Mellor said.
He added that corporate relocation decisions typically start big-picture, focused on factors such as the strength of the workforce, and eventually get down to specific sites.
“They’re going to want to know first what city makes sense to be in,” Mellor said. “As they get more information and get familiar with each market, they’re going to narrow it down into the specific aspects.”
“Really, the legwork for Amazon is just beginning,” he added.
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) at this point I'm really starting to think that true (gold class) BRT is really what Austin should propose and build. Especially after failing the last two elections. 
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