Bid for Amazon could be Houston’s catalyst for change
Crafting proposal gets leaders thinking about city’s future
Houston’s bid for Amazon’s second headquarters has challenged local leaders, planners and developers to present the city’s staid industrial economy as a natural fit for a technology giant seeking to invest billions of dollars in a cutting-edge corporate campus.
The proposed $5 billion development, expected to create 50,000 high-paying jobs, has prompted a sweeping collaboration among agencies and organizations hoping to score the cache of one the world’s largest and most disruptive companies. Officials see the project as a means to develop a nascent technology sector, modernize the region’s key industries and transform the city’s transportation network to suit a younger workforce.
Bringing Amazon to Houston almost certainly will be a heavy lift. The pursuit of the company that revolutionized the retail industry has highlighted both the potential and shortcomings of the local technology sector, made up of scattered groups of engineers in the energy, medical and space industries, which account for many of the city’s major in-
novations, but have yet to break out of their silos to create the kind of culture and buzz that animate tech centers such as Silicon Valley, Austin or Amazon’s hometown of Seattle.
But economic development officials say that regardless of outcome, the bid may well become the catalyst for the kind of innovation ecosystem that pushes the region and its economy into new directions to underpin its longterm prosperity.
“Amazon is a foil for thinking about where you’re trying to take a city,” said Bob Harvey, president and CEO of the Greater Houston Partnership, which is leading a team of developers, academics, Texas Medical Center executives and real estate brokers juggling a high-stakes bidding war and Hurricane Harvey recovery efforts.
Amazon announced last month its plan to build a second headquarters in a major metro area with more than 1 million residents, a pipeline of technical talent and strong transit and airline connectivity, among other factors. It outlined a detailed request that encouraged cities to craft creative proposals to accommodate a sprawling 8-million-square-foot development expected to generate billions of dollars for the local economy.
The open-ended solicitation also spurred a frantic race among virtually every major and midsize city across the country, driving political, business and civic leaders to hone pitches, line up incentives and try to divine the answer to the all-consuming question, ‘What does Jeff Bezos want.” Officials in Tuscon, Ariz., hope it starts with a cactus — particularly the 21-foot variety they shipped to the Amazon CEO.
Houston likely has a tough sell ahead of it. The local startup scene has grown in recent years, but has so far failed to attract the sort of venture capital activity concentrated in Austin and other techfocused cities. Skeptics point to the city’s consistent failure to develop projects that would substantially expand its technological base and attract major firms such as Microsoft, Google or Dell, all of which have operations in Austin.
Most recently, the University of Texas system’s ambitious plan to transform roughly 300 acres of land near the Medical Center into a cutting-edge data science center failed in the face of intense opposition from University of Houston leaders and state lawmakers. Proponents of the deal blamed political sparring for scuttling a deal that could elevated the city’s chance of developing a more robust technology sector.
“That type of nonsense has to stop,” said Houston developer David Wolff, chairman and president of Wolff Companies. “You have to have the institutions working together.”
But local leaders argue that the city’s growing number of software engineers and computer programmers could complement Amazon’s ambitions as it expands its data science capabilities outside of retail and entertainment. In addition, city officials in recent years have made a push to elevate local startups and draw venture capital investors. Station Houston, a downtown startup incubator and co-working space, has attracted more than 260 member companies since it opened this spring.
The city’s most prominent universities have bolstered their technology programs in recent years to include data science and analytics. UH offers a master’s degree in data analytics, and Rice University has partnered with IBM to develop robotics.
“We are still evolving, and we can grow and design a city with the help of an Amazon to help customize our city to their particular needs, which many other cities cannot do,” Mayor Sylvester Turner said in an interview. “We are just now beginning to focus on startups, technology, innovation in a very integrated sense.”
Even so, Houston came in at No. 39 on a recent list of U.S. cities ranked by venture capital deals, dollars and active startups, according to Rice’s McNair Center. That’s well behind Dallas, which ranked No. 30.
Amazon, however, could change the city’s trajectory. Ed Egan, director of the McNair Center, anticipates that Houston would climb into the nation’s top 25 most innovative cities if it landed the company’s second headquarters. Amazon is the type of pillar company that can attract top technical company and crossfertilize other innovation sectors, including energy and medicine.
“Houston is a secondtier city, without a doubt,” Egan said. “What we need is one seed, one good neighbor to play with. We could really build an ecosystem around Amazon.”
A recent Brookings Institution analysis identified 20 metro areas that fit the company’s basic criteria, a list that included Houston, Austin and Dallas. These Texas cities, as well as San Antonio, have begun crafting their own bids for the campus, gathering data on the real estate, roads, utilities, accessibility and workforce availability of various spots throughout their metro areas.
“We’re trying to stitch together a story that’s going to show (Amazon) how we’ve positioned ourselves,” said Erica Hurtak, a spokeswoman for the San Antonio Economic Development Foundation.
The process requires contenders to sign a lengthy nondisclosure agreement, and Houston officials declined to outline specific details of the city’s proposal. In an interview, Houston Chief Development Officer Andy Icken said there’s plenty of available land for Amazon’s campus between downtown and the Texas Medical Center, an area dense with some of the city’s most innovative companies.
Amazon noted in its request for proposals that its decision will hinge in part on economic incentives, which Houston routinely offers in the form of property or sales tax breaks to firms expanding or relocating in the area. The state of Texas, meanwhile, has one of the largest and most generous incentive programs in the nation.
State economic officials said they expect to work with cities to put together incentive packages for Amazon.
“That plays to Amazon, and I think we’ll have a proposal that deals with that reality,” Icken said. “If you look at the resources here in this city, we think we have a very competitive situation.”
At Houston’s first-of-itskind Amazon warehouse complex, robots are key to ramping up delivery speed. Story on page B1.