Amazon announced Thursday plans to build a second headquarters, equal to its home in Seattle, somewhere in North America. The behemoth online retailer is inviting cities across the continent to vie for the $5 billion company and its 50,000 high-paying jobs.
As economic development opportunities go, this one’s big, and San Antonio leaders are on it.
Led by billionaire CEO Jeff Bezos, Amazon estimates it has pumped $38 billion in into Seattle’s economy. The call for proposals states that, in addition to Amazon’s direct hiring and investment, the construction and ongoing operation for Amazon HQ2 is expected to create “tens of thousands of additional jobs and tens of billions of dollars in additional investment in the surrounding community.
“We encourage cities to think big and be creative.”
For a city or region to qualify, it must lie within 30 miles of a major population center and provide space enough for an 8 million-square-foot building requirement. The city must also offer proximity to major highways, provide access to mass transit and sit within a 45-minute drive of an international airport. Cities competing for the Amazon HQ2 prize have until Oct. 19 to submit a proposal.
Rumors of such an announcement had been circulating in the business development world, said San Antonio Economic Development Foundation (SAEDF) spokesperson Erica Hurtak said. The surprise came in how Bezos and Amazon are approaching it, casting such a wide net and coordinating the effort internally rather than through a consultant.
To respond to the call, “Team San Antonio” is currently forming with leaders from the City, Bexar County, CPS Energy and the San Antonio Water System joining with the SAEDF to develop a proposal, Hurtak said.
“There’s a lot of private-sector interest in this project and there’s also some sensitivity – a lot of the bigger folks are nervous about it,” she said. “We are proceeding with caution, trying to be smart, but this is something that’s in our sweet spot because it aligns with our strategy as a community.
“We’re big on tech and focusing on high-wage jobs, so we’re not just chasing the big brass ring because every major city in North America is chasing it. We’re pursuing it because it meets our strategy. So the team will mobilize and come up with an asset package to pitch.”
To attract streaming-service Hulu last year, San Antonio offered the company a six-year tax abatement and the state pitched in a $1.3 million grant through the Texas Enterprise Fund. Hulu is expected to bring in about 500 jobs by next year.
It’s too early to know how SAEDF and its team of government and private business leaders will approach the bid, what incentives will be offered, Hurtak added, or even if a multi-municipality strategy will be part of the pitch. “We don’t know yet if we’re relying only on our set of assets,” she said. “Even we were, I feel like we have such a robust eye to the future.”
One of those assets might be how much San Antonio differs from Amazon’s hometown of Seattle, pointed out David Marquez, executive director of Bexar County Economic and Community Development.
“Given what they are describing, a second headquarters, we have a similar situation with Petco. Their primary headquarters is in San Diego, and they were looking for diversity in a variety of ways: time zone, geographic location, population,” Marquez said.
“A company doesn’t just want two of the same exact community cultures, and San Antonio has a different culture from Seattle, and I think that might be what they are looking for. It could be they just want a clone, but if not, we should fare well.”
If the current press in Seattle around Amazon’s bid to build outside that city is any indication, the company may be looking for something entirely different for a very good reason.
In an email published by Geekwire, Heather Redman, co-founder of venture capital firm Flying Fish and the incoming chair of the Seattle Metropolitan Chamber of Commerce, wrote: “The negative attitude of many citizens and of our government to business in general and to Amazon in particular has created an environment for Amazon and, even more importantly its employees, that is unpredictable and outright hostile.”
Hurtak said the the San Antonio community is already aligned in its messaging and goals, and ready to respond to opportunities like Amazon.
“Team San Antonio is ready to show that our city is in the most competitive position possible when those opportunities arise and when they align with community priorities,” Mayor Ron Nirenberg said in a statement. “Every day, the city and its regional partners work together to compete for jobs and economic development opportunities for this community. We have the workforce, infrastructure and quality of life that all major corporations look for in a location.”
Of course, every community has its strengths and weaknesses, Marquez said, but San Antonio’s perceived weak spots in meeting the requirements of the Request For Proposal (RFP) might not be negatives for a company like Amazon.
“I don’t think we are going to struggle any more than any other community,” Marquez said. “Like a lot of companies their size, you’d think an airport is important. But I wouldn’t think that’s the type of company that drives a huge amount of direct travel – it’s a digital world. They just don’t have that business model.”
The fact that San Antonio’s tech sector is still growing and developing could also be considered a positive in the matrix of pros and cons.
“Even a community that has a huge amount of tech talent also has a huge amount of competition for that tech talent,” Marquez said. “Then the costs are higher and that may be why they are looking beyond Seattle. Going to another tight tech market might defeat the purpose. In our greater region here, all the way to north of Austin, we have a great region for that type of operation.”
Some say taking that kind of “regional” approach may be the answer to any shortcomings San Antonio may have – like an airport lacking in direct flights to major cities. Bexar County Judge Nelson Wolff has said AT&T moved its headquarters from San Antonio to Dallas in 2008 for that reason.
“Figuring out how to ‘regionalize’ the mindset in order to truly compete internationally, as has been done successfully by Dubai-Abu Dhabi, Seattle-Vancouver-Portland, or even Dallas-Fort Worth, is a goal Austin and San Antonio should pursue,” Bell said.
In evaluating five such regions as the most likely candidates for Amazon’s new home, Xconomy correspondent David Holley wrote that Texas’s big cities match up with all the requirements point for point:
“There’s plenty of land — Texas is big, if you haven’t heard — taxes are low for both businesses and workers, and there is lots of talent to recruit, particularly in tech-heavy cities like Austin and San Antonio. With four of the largest 15 cities in the nation, Texas has the people Amazon would be looking for. The area could grow into the next great American metro area, tying together San Antonio and Austin like the Dallas-Fort Worth metroplex.”
Holley named Boston, Detroit, Atlanta and Canada as other favorable cities and regions.
As for San Antonio itself, the city already sits within a triangle of Amazon facilities in Texas – there are three locations in and around Dallas, one in Houston, another in Austin and a fulfillment center in the San Antonio bedroom community of Schertz. According to the Amazon website, there are more than 20,000 Amazon employees in the state, not including seasonal workers, and 160,000 Texas-based authors, sellers and developers who use Amazon e-commerce services.
The RFP for Amazon HQ2 states that a “highly educated labor pool is critical and a strong university system is required.”
“A place like Amazon, they’ve got the base and resources to expand and invest, but what they can’t conjure up out of thin air is tech talent, and if a local market has enough of that to sustain their operations and their growth,” said David Heard, Tech Bloch CEO. “So that is probably a key indicator for them when they look at different metropolitan areas.”
However, tech economies can’t be all things to all people, he said, and here in San Antonio, the city’s tech base is very focused on cybersecurity and cloud computing.
“Amazon is now the world’s leader in hosting and cloud computing, partnering with Rackspace, so there might some synergies there,” he said. “Perhaps that might make us more interesting. We do have talent base of workers here in San Antonio at Rackspace providing the type of network support needed for Amazon Web Services.”