What Amazon HQ2 could mean for NoVA

Multiple area locations could win the huge economic prize, but is it one we want?

Amazon's Seattle Campus 2017
Amazon’s campus in Seattle, Washington. Photographed from the roof of Amazon’s Port 99 building. Photo by Jordan Stead, Amazon

By the numbers, Amazon’s proposed second headquarters would entice any town: $5 billion in investment, $100,000 in average salary and 50,000 new jobs. But those benefits could carry some considerable baggage for Northern Virginia—a region whose homes are already pricey and roadways are already maxed out.

In early September, the mega retailer launched a continent-wide search for a site, billed as HQ2, that would be a “full equal” to its current Seattle headquarters. Though localities had just six weeks to cobble together bids for this massive prize, Amazon received 238 proposals by the Oct. 19 deadline from localities in 54 states, districts, territories and parts of Canada and Mexico, some sent with a few bells and whistles. Tucson, Arizona, sent a 21-foot cactus. Birmingham, Alabama, installed huge Amazon boxes around the city as part of a social media campaign. New York City simultaneously lit up the Empire State Building and other landmarks in the company’s carroty orange just prior to deadline.

Per Amazon’s request, the proposal process has largely been confidential, but bids are said to have come in from several localities in the Metro-D.C. area, including Washington, Maryland and multiple Virginia locations.

The region stands a good chance of being selected, with the Washington Business Journal reporting that real estate data analyst REIS places Washington third and Northern Virginia sixth on a list of probable sites. And recent developments—like Amazon Web Services’ in-the-works campus in Herndon and CEO Jeff Bezos’ purchase of a D.C. home—may indicate a larger interest in the area.

So what would this massive economic get look like, exactly?

“It’d be like plopping a Pentagon, two of them almost, down wherever it lands,” says Jeannette Chapman, deputy director and senior research associate for the Stephen S. Fuller Institute for Research on the Washington Region’s Economic Future. The George Mason University-affiliated center examines long-term trends in the area’s economy and demographics, across industry lines.

“Because of this relatively accelerated timeframe and the reasonably large number of jobs it would bring, the infrastructure needs would need to grow much more quickly than they tend to here,” Chapman says. “In certain jurisdictions they’re behind: the school projections are already growing faster than they can keep up with, WMATA is struggling with funding, road capacity is an issue in some areas.”

“A lot of the conversation in Seattle is about housing cost,” Chapman says. “We would have a similar issue here.”

Indeed, the birthplace of Amazon has seen housing prices rise right along with its population, forcing some residents out and contributing to the city’s homelessness; Seattle and King County have the third highest homeless population in the country, according to a 2016 Forbes report. The median price for single-family homes in the county increased by 18.2 percent from August 2016 to August 2017, now above $650,000, in an area that has the fastest climbing home prices in the nation, reports The Seattle Times.

Whatever city wins the HQ2 prize is more likely to see an extra 2-percent increase added to its regular rent increase annually, according to a study by Apartment List that analyzed data on 15 metropolitan areas, including D.C. Though Baltimore fell into the “most impacted” group of cities, Washington would likely see only an extra .3- to .5-percent increase added to its current average rent growth of 4.2 percent per year, according to the study.

The public response to Amazon’s residence in the Emerald City—which has not only amplified rents but also added perennial construction vehicles and cranes to downtown—has been so contentious that reporters for KUOW, a Seattle public radio station, recently launched a podcast called Prime(d) to discuss what a second headquarters would mean for a new city.

They point out that in its nascency, one of Amazon’s names was Relentless, an early indication that the company led by Bezos—owner of The Washington Post and recently crowned the richest man in the world—would be tireless in his pursuit of company growth and innovation.

Amazon Prime Air Boeing 767
Amazon’s Seattle campus. Photo by Chad Slattery, Amazon

In its request for proposal (RFP), Amazon points to myriad benefits it has brought Seattle. From 2010 to 2016, the RFP states, “every dollar invested by Amazon in Seattle generated an additional $1.40 for the city’s economy,” or an extra $38 billion. The company outlines what it’s seeking in its second home, including a large metro area with an international airport nearby, multimodal transportation options and a well-educated labor pool.

Proposals from Virginia have been mostly under wraps, but the Virginia Economic Development Partnership (VEDP) has confirmed that it worked with Gov. Terry McAuliffe and other elected officials to support offers from individual localities and devise three regional proposals for Northern Virginia, Richmond and Hampton Roads, according to a statement from VEDP President and CEO Stephen Moret.

Among possible Northern Virginia sites is Arlington, a county that recently acquired Nestle’s headquarters. Arlington Economic Development Director Victor Hoskins and his staff were instrumental in persuading Nestle to relocate to Rosslyn earlier this year.

“What we decided early on is to sell the whole region,” Hoskins says. “We would say, ‘OK, you can live in Arlington, but on a weekend you can actually ski in western Maryland.’”

It’s that regional approach—emphasizing the area’s transportation options, top universities and cultural offerings—that may keep Northern Virginia on the list after Amazon’s first round of cuts, which are expected at the end of the year. And being the ultimate victor is a boost the area could use.

“Since sequestration, we have not been performing as well as we should have,” says Chapman, referring to 2013 federal budget cuts that wounded a region known for government jobs. “We’re not really even hitting the national averages in some cases.”

Though recent regional job growth has thrived, Chapman says, much of it has been in the service industry, including restaurant and retail jobs that don’t bring in the types of salaries a federal job nets. Yet when it comes to Amazon’s RFP, she notes “we fit to a T all of their criteria.”

“The RFP has a list of key desirable attributes,” Chapman says. “And we do very, very well in all of these categories, including some of the more buried items, like sustainability.”

One of the sites proposed, according to the Washington Business Journal, is the Center for Innovative Technology, a Herndon office complex near Washington Dulles International Airport and the Innovation Center Metro stop that is likely to open in 2020.

“I think of all the areas in Northern Virginia, the Dulles Corridor, the Herndon/Sterling area, is really well-situated to take on something like this, and could absorb it in a way that is beneficial to the whole community,” says Virginia Del. Jennifer Boysko (D-86), whose district includes the CIT site.

In a region that frequently makes the top 10 list for worst traffic in the country, it’s hard to fathom longer commutes. High-occupancy toll (HOT) lanes are expected to open this month on I-66 in hopes of relieving some of the burden on commuters traveling into the city. And congestion on Route 28 through Fairfax and Prince William County was a hot-button topic in November’s statewide elections, with the Northern Virginia Transportation Authority Chairman Martin Nohe studying ways to help what he calls “the single biggest source of congestion for traffic in all of Northern Virginia,” according to WTOP. Yet it’s too early to tell whether coming transportation changes will make an impact that’s widely felt.

Before Amazon would consider building a new home in the Washington area, the company could demand a solution to the longstanding lack of dedicated funding for Metro, according to an article in Bisnow. Thus the subway system’s financial struggles could act as a deterrent as Amazon winnows down its list of contenders.

Transportation issues aside, outgoing Gov. McAuliffe has been a vocal advocate of Virginia’s bids for the new headquarters. “[Amazon wants] a dynamic, booming area, great place to live. We have the best education system in the country; we have an international airport; we have direct flights to Seattle out of Virginia, Dulles International Airport, every single day; we’ve got the mass transit,” McAuliffe told WTOP in late September.

Hoskins, who calls McAuliffe a “force to be reckoned with,” is confident that the area could successfully absorb an additional 50,000 jobs.

“It’s a seven- to 10-year time period that they’re talking about, so it’s not 50,000 jobs all at once,” Hoskins says. “It’s somewhere between 8,000 and 10,000/12,000 jobs a year. And that’s easily absorbed in this environment, easily, because our population in this region is almost 6 million people, if you go from Baltimore down to Richmond. So really, that really is not the problem. The question will be the rate at which all of this happens.”

For now, all the sites behind these 238 proposals are left to sit tight and wait for word from Amazon. And NoVA is left to consider whether the gift that could land on their doorstep is one they’re sure they won’t want to send back.

(December 2017)