Why no city should want Ama­zon’s HQ2

The Jakarta Post - - OPINION - Gre­gory Scruggs The writer is a se­nior cor­re­spon­dent for Ci­tis­cope. He is a co­or­di­na­tor for the Puget Sound Chap­ter of the So­lu­tions Jour­nal­ism Net­work and lives in Seat­tle. The views ex­pressed are his own.

Ama­zon, the world’s largest e-com­merce re­tailer by sales and mar­ket cap, an­nounced last Thurs­day a re­quest for pro­pos­als for a large North Amer­i­can city to host a sec­ond head­quar­ters equal in stature to its down­town Seat­tle cam­pus. This un­ex­pected move sparked an Olympics-style com­pe­ti­tion by the likes of Chicago, Dal­las, Den­ver, Philadel­phia, Pitts­burgh, San Diego and Toronto to se­duce the com­pany.

May­ors and civic lead­ers are pre­pared to of­fer tax breaks, de­vel­op­ment-ready sites, new avi­a­tion con­nec­tions and fiber op­tic lines to lure up to 50,000 high­ly­paid em­ploy­ees for the US$5 bil­lion cam­pus. But they should be care­ful what they wish for: win­ning the Ama­zon beauty pageant might be the ul­ti­mate pyrrhic vic­tory, es­pe­cially if the win­ner of­fers too many sub­si­dies.

As The Brook­ings In­sti­tu­tion ar­gues, “State and lo­cal gov­ern­ments […] have proven over and over that they are all too will­ing to give up their tax base for growth that would have oc­curred some­where any­way.”

Although plenty of ail­ing metropoli­tan economies could use a shot in the arm, bring­ing in Ama­zon is like a heroin in­jec­tion; it’s a sharp spike that can bal­loon hous­ing prices and flip en­tire neigh­bor­hoods in the blink of an eye.

While a hand­ful of lo­cal busi­ness own­ers and real es­tate de­vel­op­ers profit hand­somely, the city as a whole can suf­fer. Some of the chal­lenges, like the sky­rock­et­ing cost of hous­ing in Seat­tle, can be mea­sured.

Oth­ers, like a loss of lo­cal char­ac­ter, are in­tan­gi­ble but no less im­por­tant to many cur­rent res­i­dents. Seat­tle’s ex­pe­ri­ence as the coun­try’s lead­ing com­pany town — 19 per­cent of the prime of­fice space in Seat­tle is oc­cu­pied by Ama­zon, the high­est ra­tio for one com­pany in any Amer­i­can city — of­fers sev­eral warn­ings for why cities shouldn’t be des­per­ately seek­ing Ama­zon.

Seat­tle is un­der­go­ing its big­gest boom since the Yukon Gold Rush. It’s cur­rently the fastest grow­ing city in the United States. That in­flux of peo­ple has put a lot of strain on the Emer­ald City.

House prices rou­tinely climb an av­er­age of 10 per­cent an­nu­ally. As rents have plateaued na­tion­ally, they con­tinue to rise here, again as much as 10 per­cent per year in pop­u­lar neigh­bor­hoods. This trend per­sists de­spite an un­prece­dented build­ing boom.

New apart­ment build­ings keep ma­te­ri­al­iz­ing and sin­gle-fam­ily homes are reg­u­larly re­placed by clus­ters of town­houses, but sup­ply can’t seem to catch up with de­mand.

More and more fam­i­lies mak­ing av­er­age wages find them­selves strug­gling to af­ford a home within the city lim­its, the rate of mega-com­muters have soared and rent hikes force more peo­ple into home­less­ness.

The in­creas­ing cost of liv­ing has fol­lowed Ama­zon’s growth. Over the same pe­riod in which rents have sky­rock­eted — up 57 per­cent since 2011 — Ama­zon’s global work­force has grown from 50,000 to 350,000.

The largest con­cen­tra­tion of Ama­zo­ni­ans, over 25,000, is in Seat­tle. Th­ese highly ed­u­cated tech work­ers are well-paid, with an av­er­age in­come start­ing above $100,000. Fast Com­pany put it bluntly in a head­line: “How Ama­zon’s Non-Stop Growth is Cre­at­ing a Brand-New Seat­tle.”

In fair­ness, there are other fac­tors driv­ing Seat­tle’s hous­ing prices: low-den­sity zon­ing that sets aside most of the city for only sin­gle-fam­ily hous­ing, for­eign real es­tate in­vest­ment, the growth of other tech com­pa­nies, and the cur­rent pop­u­lar­ity of the Pa­cific North­west.

(Home prices have also shot up in Ama­zon-less neigh­bors Van­cou­ver, Bri­tish Columbia and Port­land, Ore­gon.)

But Port­land re­mains the hip­pie Mecca lov­ingly ridiculed on the TV show Port­landia. Seat­tle, the city that birthed grunge rock, finds it­self turn­ing into some­thing quite dif­fer­ent. The Ama­zon-led in­flux has dra­mat­i­cally changed the cul­ture in many parts of the city.

Neigh­bor­hoods in­creas­ingly feel dom­i­nated by a white, male co­hort of re­cent col­lege grad­u­ates mak­ing six-fig­ure salaries. The level of angst among peo­ple who have lived here for much of their lives is pal­pa­ble and in­fec­tious.

Long-time res­i­dents of on­ce­bo­hemian neigh­bor­hoods find their fa­vorite bars over­run by loud groups of Ama­zon “bro­gram­mers.” In Capi­tol Hill, Seat­tle’s famed “gay­bor­hood,” there has been an uptick in anti-LGBT hate crimes on week­end streets in­creas­ingly crowded by drunken frat bros and soror­ity girls.

Ama­zon isn’t the only com­pany of­fer­ing highly paid jobs to young peo­ple, split­ting the lo­cal econ­omy be­tween tech haves and non-tech have-nots. (Some spec­u­late that the re­cent land­mark mu­nic­i­pal in­come tax is driv­ing Ama­zon’s de­ci­sion to cre­ate a sec­ond head­quar­ters in­stead of just ex­pand­ing in Seat­tle.)

And some of Seat­tle’s growthre­lated is­sues, like hor­ri­ble and ever-wors­en­ing traf­fic stem­ming from a lack of in­vest­ment in a re­li­able pub­lic trans­porta­tion sys­tem, can be squarely blamed on Seat­tle’s past my­opia.

But Ama­zon plays an out­sized role in the city’s re­cent trans­for­ma­tion. It oc­cu­pies as much prime com­mer­cial real es­tate as the next 43 Seat­tle com­pa­nies com­bined. With 8.1 mil­lion square feet grow­ing to 12 mil­lion in the next few years, Ama­zon’s Seat­tle foot­print dwarfs the size of any one com­pany in an­other large city. Citi is the next largest big-city cor­po­rate ten­ant by square footage in the United States. Its 3.7 mil­lion square feet in New York City ac­count for only 3 per­cent of the Big Ap­ple’s Class A of­fice space.

The Ama­zon ef­fect has gen­er­ated tremen­dous re­sent­ment. In a re­gion fa­mous for its re­served, some­times pas­sive-ag­gres­sive at­ti­tude.

Ama­zo­ni­ans aren’t ha­rassed on the street. But they are pil­lo­ried in other forms, like a dystopian love let­ter from fu­ture Seat­tle, a bevy of hi­lar­i­ous comics de­pict­ing I-sur­vived-to-tell-thetale sto­ries of work­ing for the be­he­moth, and a satir­i­cal an­tiA­ma­zon news­let­ter that pe­ri­od­i­cally ap­pears pasted on light poles around Capi­tol Hill.

Street protests against the Bay Area tech giants demon­strate that th­ese feel­ings are shared by the res­i­dents of other crunchy, formerly funky cities be­ing eco­nom­i­cally di­vided and cul­tur­ally de­stroyed by the fast growth of tech. That’s why Oak­land Mayor Libby Schaaf ex­pressed tepid in­ter­est in Ama­zon, say­ing, “we would need to ad­dress all out­comes a project of this mag­ni­tude would cre­ate.”

The even­tual home of HQ2 may not ex­pe­ri­ence the same shocks as Seat­tle did. Many poorer or de­pop­u­lated older cities would gladly trade their prob­lems for Seat­tle’s. A much big­ger city might ab­sorb 50,000 new em­ploy­ees with­out a change to the lo­cal vibe.

A city that is al­ready bor­ing might not find its char­ac­ter un­der as­sault. A city with more ro­bust mass tran­sit may not find Ama­zon’s ar­rival gen­er­at­ing so much more traf­fic and a city with a lot of va­cant hous­ing might not see prices reach astro­nom­i­cal lev­els.

But like Cas­san­dra, I must share the warn­ing: Be­ware of tech CEOs bear­ing gifts.

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