D-FW’s clues are in Seat­tle

Area could eas­ily ab­sorb huge foot­print, but what can vi­able bid­der ex­pect?

The Dallas Morning News - - Front Page - By MARIA HALKIAS Staff Writer mhalkias@dal­las­news.com

Even for a cor­po­rate mag­net and job en­gine like Dal­las-Fort Worth, Ama­zon’s call for cities to bid on where it should build its se­cond head­quar­ters, dubbed HQ2, is ir­re­sistible. D-FW joins scores of cities and states in the in­tense com­pe­ti­tion to lure the e-com­merce gi­ant.

The Dal­las area holds any num­ber of sites that could fill the bill: a clus­ter of build­ings in Dal­las’ newly re­vi­tal­ized cen­tral busi­ness district, the for­mer site of Val­ley View Mall in Far North Dal­las, or even va­cant land south of down­town.

The technology and re­tail com­pany plans to spend $5 bil­lion over a decade and bring up to 50,000 em­ploy­ees to the site, and with its pres­ence, it prom­ises to re­make a re­gion. It’s given gov­ern­ment lead­ers spec­i­fi­ca­tions about what it wants, such as prox­im­ity to tran­sit, avail­abil­ity of tax in­cen­tives and a busi­ness-friendly en­vi­ron­ment.

D-FW is one of the few metropoli­tan ar­eas that could ab­sorb Ama­zon’s gi­ant foot­print that has come to dom­i­nate Seat­tle’s down­town.

Last year, the pop­u­la­tion of D-FW grew by 143,000, mak­ing it No. 1 in the na­tion for the sheer num­ber of

peo­ple added. Com­pa­nies are flock­ing here by the dozens, with the re­gion ac­count­ing for 13 per­cent of net of­fice leas­ing na­tion­wide in 2016.

Adding Ama­zon to Dal­las’ al­ready im­pres­sive lineup of For­tune 500 com­pa­nies would fast-for­ward fu­ture growth in an in­stant.

D-FW, long a dis­tri­bu­tion hub for com­pa­nies like Ama­zon and a cor­po­rate head­quar­ters for ex­ec­u­tive ranks, would sud­denly become a player in shap­ing the fu­ture of e-com­merce. Ama­zon says it is look­ing for a site with 100 acres or ex­ist­ing and new build­ings to­tal­ing 8 mil­lion square feet by 2027.

Ar­chi­tect Lance Josal, chair­man of Cal­lisonRTKL, said it’s too early to fig­ure out ex­actly what kind of fa­cil­ity Ama­zon will build.

“I think ev­ery­body is out there rac­ing around try­ing to think about how they catch the big­gest fish in the ocean,” Josal said. “Right now it’s a real es­tate deal.”

“They have to fig­ure out where they want to be. It will be a lucky city that can at­tract them.”

But what can that city ex­pect? The an­swers are prob­a­bly in Seat­tle.

Big foot­print

Be­fore Ama­zon moved into down­town Seat­tle in 2010, like most U.S. cities it had felt the brunt of sub­ur­bia’s wideopen spa­ces hav­ing the edge — though there were some ef­forts to stop the de­cline. De­vel­oper Matt Griffin, prin­ci­pal at Pine Street Group, worked with Seat­tle-based Nord­strom depart­ment store to turn a three-block area into the Pa­cific Place re­tail and en­ter­tain­ment cen­ter.

That opened in 1998, en­cour­ag­ing young peo­ple and baby boomers to move down­town. While that and a few other projects were a start to the resur­gence, Griffin said, “when Ama­zon de­cided to move, that was like a shot of jet fuel.”

Un­like the self-con­tained cor­po­rate cam­puses Ap­ple, Face­book and Google have built in Sil­i­con Val­ley, Ama­zon founder and CEO Jeff Be­zos in­sisted on an ur­ban cam­pus where any other com­pany build­ing might be across the street.

Ama­zon’s new build­ings in Seat­tle have cafe­te­rias, but those aren’t sub­si­dized and by de­sign only have the ca­pac­ity to hold 20 per­cent of the peo­ple who work there. The point is to have 80 per­cent of its work­force out spend­ing money at the busi­nesses nearby to be sure the en­vi­ron­ment stays vi­brant.

When Ama­zon moved in from the sub­urbs with 5,000 em­ploy­ees, it chose an area called South Lake Union — mostly park­ing lots and old aban­doned build­ings. That area has turned into a hub of com­merce and a low-rise cam­pus set­ting. Other com­pa­nies have of­fices there, and Google is build­ing a fa­cil­ity that will house 4,000 em­ploy­ees.

In 2012, Ama­zon an­nounced that a new high-rise cam­pus was also in the works, and Be­zos in­sisted it was also in the ur­ban core. Last year, em­ploy­ees started fill­ing the $4 bil­lion head­quar­ters on city blocks that lo­cals con­sid­ered an­other blighted area. Two of the three 36-story build­ings — the tallest among the other build­ings in down­town Seat­tle that Ama­zon owns or leases — are fin­ished, and the last one will be com­pleted in 2019.

One of the build­ings has an out­side dog park on the 17th floor. Ama­zon is known for its dog cul­ture. On any day, at least 500 dogs come to work with em­ploy­ees.

About 70 per­cent of Ama­zon’s Seat­tle em­ploy­ees live in the city. Fewer than half use a car, and 20 per­cent walk to work. Many ride their bikes. Ama­zon built what em­ploy­ees call “bike cages,” which are not only places to store bikes, but also have show­ers for em­ploy­ees.

To­day, Ama­zon oc­cu­pies 33 build­ings for a to­tal of 8.1 mil­lion square feet in down­town Seat­tle. No build­ing is far­ther than a 15-minute walk. Its 40,000 head­quar­ters em­ploy­ees work­ing down­town rep­re­sent a $25.7 bil­lion-a-year pay­roll.

Ama­zon pays $43 mil­lion a year into the city’s trans­porta­tion sys­tem as an em­ployee ben­e­fit. Visi­tors to Ama­zon last year re­quired 233,000 ho­tel nights. The num­ber of For­tune 500 com­pa­nies with en­gi­neer­ing/re­search and de­vel­op­ment cen­ters in Seat­tle in­creased from seven in 2010 to 31 in 2017.

Se­cond city

And Ama­zon has promised to do it again over the next 10 years some­where else.

What city wouldn’t want all that? Maybe the ques­tion to ask is what city could han­dle it? Seat­tle is now a more ex­pen­sive city. Some don’t like the dom­i­nant cor­po­rate hold Ama­zon has on Seat­tle, which is also home to Star­bucks. Mi­crosoft and Costco are in the sub­urbs.

Through­out the Seat­tle re­gion, res­i­den­tial and of­fice rents have climbed steadily. Salaries are also higher. Ama­zon says its av­er­age an­nual com­pen­sa­tion for a cor­po­rate em­ployee is more than $100,000.

Dal­las has never feared growth.

“This is the mother ship of all cor­po­rate re­lo­ca­tions, and that also means there’s go­ing to be fierce com­pe­ti­tion for it,” said for­mer Dal­las Mayor Ron Kirk, who said the 50,000 jobs are trans­for­ma­tive for the whole com­mu­nity.

Kirk was in of­fice when Seat­tle-based Boe­ing picked Chicago over Dal­las for its new head­quar­ters and 400 cor­po­rate jobs. Dal­las learned a lot from the Boe­ing episode, and the city has upped its ur­ban quo­tient with parks, busi­nesses and res­i­den­tial devel­op­ments down­town, and new neigh­bor­hoods cir­cling the cen­tral busi­ness district. Ama­zon’s magic dust would ac­cel­er­ate the mo­men­tum in the city.

The Dal­las Re­gional Cham­ber has said it will be putting to­gether a bid by Ama­zon’s Oct. 19 dead­line.

Be­fore Ama­zon made its an­nounce­ment this month and stip­u­lated that mass tran­sit to the site was a re­quire­ment, both DART and the North Texas Coun­cil of Gov­ern­ments had been work­ing to ex­pand the 143-mile train sys­tem.

“For that kind of job cre­ation, it’s worth it for the city of Dal­las to do what­ever it can for Ama­zon,” Kirk said. “That’s a pos­i­tive tax base and 50,000 fam­i­lies help­ing to trans­form this com­mu­nity.”

It could even help heal some long­stand­ing wounds, Kirk said, spec­u­lat­ing that a lo­ca­tion in South Dal­las would help close Dal­las’ north-south eco­nomic di­vide.

Big dreams

One of the sites be­ing pre­pared to be in­cluded in the Greater Dal­las Cham­ber’s pitch to Ama­zon is the Dal­las Mid­town project planned where Val­ley View Mall is be­ing torn down.

Scott Beck, CEO of Beck Ven­tures, has been sell­ing Mid­town as a place for Dal­las to have a lo­ca­tion big enough to com­pete with the sub­urbs for the big cor­po­rate re­lo­ca­tions such as State Farm in Richard­son and Toy­ota in Plano.

Ama­zon Web Ser­vices has oc­cu­pied five floors next door in the Gal­le­ria Tower since 2014 and can ex­pand into sur­round­ing of­fice build­ings while its first new space is be­ing pre­pared. Ama­zon has said it wants to ex­pand into its HQ2 in three phases, with em­ploy­ees start­ing to move to the new city in 2019.

Mid­town’s first phase has 500,000 square feet of of­fice space and may be de­liv­ered around the time Ama­zon said it will be ready for it in early 2020, Beck said. The Val­ley View site is 100 acres, and Beck Ven­tures owns 70 per­cent of it.

The area is part of a 430acre district that the city of Dal­las re­zoned to ac­com­mo­date re­de­vel­op­ment that would in­clude of­fice build­ings of up to 40 sto­ries. The re­gion is bor­dered by LBJ Free­way and ex­tends north of Al­pha Road, Pre­ston on the east side and west to the Dal­las North Toll­way.

“An east-west or di­ag­o­nal light rail line from North Dal­las and Plano to Ad­di­son is part of our pro­posed plan,” Beck said.

He es­ti­mates that Dal­las is one of only a half-dozen cities that can make a valid pitch to Ama­zon. And each city needs to present Ama­zon with a few cred­i­ble op­por­tu­ni­ties, he said.

“It’s trans­for­ma­tional,” Beck said.

“We want to put our best foot for­ward, and any per­ceived short­com­ings won’t be gaps for long.”

Mid­town’s plans in­clude a 20-acre park in the mid­dle. Beck’s al­ready re­nam­ing it Ama­zon Park.

Real es­tate editor Steve Brown con­trib­uted to this re­port.

Would HQ2 swal­low Dal­las?

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