Amazon HQ2 RFP

[Rover]

Sincere question: why should Amazon care about Illinois' fiscal crisis? Could they not, essentially, cut a deal that amounted to a state-with-a-state and a city-within-a-city? If the solution is corporate tax increases and pension cuts Amazon would seem to be able to get a waiver (from the tax) or not care.

U Chicago and Northwestern U etc function this way. O'Hare and Midway function as self-financing, self-defending fiefdoms within Chicago's government. Seems like much of what the RFP asks for is already (or in contracting can be) insulated from state-level dysfunction.

Whether Florida or Olrando ever got their act together, Disney got itself the powers of a municipality within Orange County FL as the Reedy Creek Improvement District. Is there something wrong with Illinois that smart lawyers cant isolate Amazon from?

1) Who makes the proposal to Amazon? The governor? The legislature? Just the mayor with zero tax breaks from the state? Dysfunction is dysfunction. Eventually it catches up to everybody doing business there. The govt of Illinois is at war with each other. Why would you want to get in the middle of that? Who in the state can keep their word to you?

2) Lets say Amazon does carve out its own deal. Unless its a constitutional amendment, there's nothing stopping a future administration desperate for money reneging or changing the deal. Once the HQ is up and running, moving 50,000 people will cost huge dollars. This is one of the reasons why GE bailed on CT as they perceived (rightly or wrongly) that they were going to get soaked in order to close the state's budget gap. IL is in a lot worse shape than CT.

 

[stellarfun]

HBS take on Amazon's low retention model, with lots of comments.

http://hbswk.hbs.edu/item/is-something-wrong-with-amazon-s-low-retention-hr-strategy

 

[stellarfun]

The better metric would be (#posted positions - # positions created) / headcount to get an average vacancy rate, but unfortunately that information is probably not public.

Yes it would.

Assuming all posted positions in Seattle are for pre-existing positions, and are professional positions (not fulfillment center jobs) Amazon's current number of job openings in Seattle is 6464.

https://www.amazon.jobs/location/se...=10&sort=relevant&location[]=seattle-wa&cache

The vacancy rate for a 40,000 headcount would be 16 percent.

 

[odurandina]

Imagining Winthrop minus the 7 floors topped and cladded... 1 Congress rising, but something even taller; 1 Amazon Sq above Govt Center (with the power of State law), in the refrigerator with the excavators bombing that cement shit reef on Merrimack St..... Seaport and Cambridge labs filling in with activity... SST, Harbor Garage, Parcel 15, a hunk of the Pike covered over, two neighborhoods connected.... w/ T stations housing going forward... wtf if Amazon has already decided it's Boston? Could it really happen? what a wild ride.

 

[CSTH]

Hey, you know what, Causeway St. + new construction @State services building land + pelli tower @ GC garage is actually a pretty sweet package....

 

[Tombstoner]

I can't help but think that Pittsburgh is almost an ideal site for Amazon--two powerhouse universities in the new Global Rankings Top 50 with many smaller ones (not on par with Boston, but top-notch nonetheless--CMU is an engineering and robotics leader), Pitt/CMU grads would love to stay but the current tech economy while robust is not as big as it needs to be to keep them, VERY affordable in every respect compared to every other city mentioned, mammoth, underused (but very state-of-the-art) airport, geographically positioned within two hours flight time to most the East Coast, South and Midwest, strong--and growing stronger--millennial vibe and good culture scene, Amazon would be the undisputed big fish in a middle-sized pond, lots of develop-able steel mill sites in town...

Downsides: mediocre public transport, not-so-balmy-winters.

Boston is alluring in many ways, but Pittsburgh could be a dark horse.

 

[odurandina]

^^i can't see Pittsburgh in any way filling the long list of requirements. i can not see anyone but Chicago, New York, Boston, or Philadelphia (no particular order) capable of filling 'the list.'

Hey, you know what, Causeway St. + new construction @State services building land + pelli tower @ GC garage is actually a pretty sweet package....

Indeed. true or not, i rudely repeated in the Globe; [development of the State Services site will be required in order for Boston to participate], as it is probably close to a 2.5M sq ft office site, to join with 1 Congress. (out of my depth of course) but, i also can't help but think the State + Boston will need to write the development of the area into law to protect 'the deal.'

 

[JohnAKeith]

Why isn't everyone more excited about this??! You're all being too staid. (staid?)

This is the Big One. This is the IndyCar, Olympics(tm), and downtown stadium, all rolled into one package except in this case, everyone wins instead of everyone losing!

 

[cadetcarl]

I'm totally down for this if they go to Suffolk Downs. Some sort of flagship downtown in one of the new towers, but put the bulk of it up the road from the airport at the track. Two blue line stops, and make them pay for the R-B connector.

I would vehemently oppose any proposal that would put civic space like government center/City Hall Plaza on the block. No company is worth calling a chunk of your city "Amazon Square".

 

[stefal]

Why isn't everyone more excited about this??! You're all being too staid. (staid?)

This is the Big One. This is the IndyCar, Olympics(tm), and downtown stadium, all rolled into one package except in this case, everyone wins instead of everyone losing!

I'm certainly excited; I'm just retaining it until a location is definitely announced. If Amazon were to come to Boston, I wish for a high profile architect to design a building of high value* in the heart of downtown. I feel Amazon may have given NBBJ a low budget based off what was built in Seattle. The rainforest spheres are certainly cool, but from what I've seen, the rest of the buildings going up are dull boxes with random stripes of color.

*High value does not necessarily mean a flashy starchitect creation

---

Regarding location, if I had to choose my top two, I'd either go with 1) State Services Center, Bulfinch Xing, and Causeway as others have brought up or 2) South Station.
Right now I'm leaning toward SST. It's currently permitted for construction, and if/once the post office relocation deal & SSX is set in place (could be expedited by Amazon), a ton of land opens up for mixed-use (primarily office) development. From there, it could expand across the Fort Point into the Seaport, possibly bringing new pedestrian bridges that have been theorized before, and/or down toward Dot. Ave./widdett. Either way, there's a ton of space for development near S.S. with what I believe there to be very little pushback from neighbors, since there are very few of them. Not to mention, it would literally be on top of a transit hub, which is one of what I would assume is one of the more important requirements in their RFP. FWIW, it'd also be slightly easier to get to Logan from S.S. than Bulfinch/N.S.

For Suffolk Downs, I'm concerned about the (understandable) cries of gentrification if Amazon were to move there. That's a lot of high-paid tech workers moving into the area.

 

[Jouhou]

^^i can't see Pittsburgh in any way filling the long list of requirements. i can not see anyone but Chicago, New York, Boston, or Philadelphia (no particular order) capable of filling 'the list.'

+Baltimore. With all the newspapers speculating, I would say the Washington Post would have the most input and inside knowledge. And the article I read said something to the effect of "note to Bezos- consider Baltimore" and the city does satisfy their requirements. It's a good bargain bin alternative to DC.

Why isn't everyone more excited about this??! You're all being too staid. (staid?)

This is the Big One. This is the IndyCar, Olympics(tm), and downtown stadium, all rolled into one package except in this case, everyone wins instead of everyone losing!

I think it's more of a good thing if you're in an industry that benefits. I already voiced my concern about this- rent.

 

[stellarfun]

I was keen on Baltimore, but Maryland and DC are not an academic hub producing hordes of software and engineering graduates.

Amazon's low retention employment model sees employees as a disposable commodity. For that to work, employees have to leave with great frequency for a lateral or upward position elsewhere. And the local labor market has to be able to support and absorb all the comings and goings at Amazon, wherever Amazon is such a dominant employer.

Google set up a 3,000-4,000 person office in Seattle, primarily to poach from Amazon. (Google pays more)

Years ago, when on a rotating internship where I first worked, we were tasked with hiring 90 electrical engineers with a certain, narrow skill set. When looking for these engineers, one of the hiring criteria was that an engineer had to have gotten his degree within the last five years; older than that, and his 'thinking' was obsolete. As I now look at what seems to be Amazon's employment model, I am beginning to think times haven't changed.

 

[bigpicture7]

My guess is that this employee turnover could vary considerably across the different facets of Amazon (not talking about fulfillment centers). Coders doing basic web development may have one turnover rate, whereas people at amazon robotics (legacy Kiva) or doing hardware dev on the echo devices, or doing data warehouse design for AWS may have entirely different cycles to them. Without knowing the make-up of the type of work they'd bring to HQ2, it's tough to know the quality of the jobs.

To stellar's point, yes I am also familiar with the hire young / jettison early model of keeping a cheap, fresh technical workforce. It's sad, but by no means new nor limited to amazon.

 

[FenwayResident]

I think it's more of a good thing if you're in an industry that benefits. I already voiced my concern about this- rent.

How would this not be a massive benefit to the Boston area?

1) Increased tax revenue from property and income tax
2) Around 50,000 high-paying jobs that create a great opportunity for talented locals
3) Likely over 100,000 service-oriented jobs to support the new Amazon employees. This provides additional opportunity for less talented/educated locals
4) Money towards public benefits. These sorts of deals always have sweeteners attached e.g. Red-Blue connector.

What you mention about rent is not a given. Sure, it could happen if Boston does not do anything to change its course. But if we were to loosen restrictions and build more densely in key areas, adding an additional 50,000 units to our current growth is not unrealistic.

 

[CSTH]

Yes, those are the benefits (and the 'money towards public benefits' will come from the state, of course - this could be a catalyst, but Amazon's not building that), but the question is, at what cost?

This has 'winner's curse' written all over it. The concept is that when something is sold at an auction, the winning bidder is likely to be overpaying, almost by definition - he values the item more than the rest of the market.

There are going to be all sorts of a second-rate cities throwing the kitchen sink at this - like FoxConn in Wisconsin levels of public generosity. Even with all of our non-incentive advantages (schools etc.) its going to take a very large sweetener to make this happen. Amazon has always been profoundly tax adverse, and it would be very much against character for it to pay more than it has to.

So - the conversation isn't so much about the benefits - its how much are we willing to pay (yes, pay) to make this happen? Will that be enough? And if so, what the expected ROI - and is that the best investment available to the commonwealth in 2017?

 

[Justin7]

I can't help but think that Pittsburgh is almost an ideal site for Amazon--two powerhouse universities in the new Global Rankings Top 50 with many smaller ones (not on par with Boston, but top-notch nonetheless--CMU is an engineering and robotics leader), Pitt/CMU grads would love to stay but the current tech economy while robust is not as big as it needs to be to keep them, VERY affordable in every respect compared to every other city mentioned, mammoth, underused (but very state-of-the-art) airport, geographically positioned within two hours flight time to most the East Coast, South and Midwest, strong--and growing stronger--millennial vibe and good culture scene, Amazon would be the undisputed big fish in a middle-sized pond, lots of develop-able steel mill sites in town...

Downsides: mediocre public transport, not-so-balmy-winters.

Boston is alluring in many ways, but Pittsburgh could be a dark horse.

I'm not going to get into what city would be best, but I think not locating on the Acela Corridor would be a big mistake. In a lot of ways "BosWash" is one big city and the advantages of this interconnectivity shouldn't be overlooked.

Also keep in mind that Bezos graduated from Princeton, spent time on Wall Street, and owns a home/Washington Post in DC.

 

[tangent]

I'm certainly excited; I'm just retaining it until a location is definitely announced. If Amazon were to come to Boston, I wish for a high profile architect to design a building of high value* in the heart of downtown..

I think we are ( or should be) far from choosing a location. That is a pitfall in this process... that this becomes a mad two week scramble to get any particular property chosen as THE location. Might as well give everyone knives and lock them in a room and commence the local backstabbing.

At this point this should be about a tax package proposal combined with a real estate listing of all the currently available locations.

Amazon can choose and then begin negotiating with the real estate owners... Based on where in Boston they are today... they are in Kendall, Fort Point and Back Bay as well as having offices outside the city. No reason to think they wouldn't want to continue to have a presence in those areas and expand near where they have already chosen to locate.

 

[Jouhou]

While I think Chicago will get it, I am rooting for Baltimore. It's a city on the cusp of a revival, it just needs an anchor tenant of sorts that will provide lots of good jobs. There's tons of vacant row houses to be rehabilitated, there's a ton of vacant urban land where derelict buildings have been demolished- the gentrification has lots of places to go before driving out the poor.

It's also an educated city, with decent schools, near dc, on the north eastern corridor, major international airport, a rich history and character, an existing transit system including a heavy rail subway line (with lots of cheap available property off of it).

It just needs a jumpstart.

I love Boston but we are already doing well. We wouldn't benefit in such a transformative way as a city like Baltimore.

 

[Rover]

I don't get people advocating cities that are on the decline. Yes it would be nice for Amazon to play the white knight but is that really in their best interests?

Pittsburgh and Chicago for example have both lost population in their metro areas since 2010. Baltimore the city's population is nearing a 100 year low. Basically residents are voting with their feet. Another problem with Pittsburgh is the city is too small. A CSA for about 2.6M vs 4.7 for Seattle (and 8.2 for Boston). If Amazon is getting tapped out of workers in an area almost 90% bigger, how does moving to a smaller city solve that problem? Denver has less of an issue but still almost a million less people in the wider area than Seattle.

 

[Jouhou]

I don't get people advocating cities that are on the decline. Yes it would be nice for Amazon to play the white knight but is that really in their best interests?

Pittsburgh and Chicago for example have both lost population in their metro areas since 2010. Baltimore the city's population is nearing a 100 year low. Basically residents are voting with their feet. Another problem with Pittsburgh is the city is too small. A CSA for about 2.6M vs 4.7 for Seattle (and 8.2 for Boston). If Amazon is getting tapped out of workers in an area almost 90% bigger, how does moving to a smaller city solve that problem? Denver has less of an issue but still almost a million less people in the wider area than Seattle.

Baltimore has the characteristics of the "coastal elite". There's just not a lot of good employers. Baltimore has zero fortune 500 companies in the metro area. I really believe that's all they need.

If my job was transferable I'd move elsewhere if it meant I didn't have to pay half my income on rent.