Hq2 Impact Research & Analysis National Landing–Va
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HQ2 IMPACT RESEARCH & ANALYSIS NATIONAL LANDING–VA AMAZON BACKGROUND In 1994, Jeff Bezos started Amazon in Seattle, WA, as an of commercial property in the nation. At its current growth online bookstore out of his garage, delivering books pace, Amazon will control more than one square foot of himself. Time magazine named Bezos the “Person of distribution space for every adult U.S. shopper by 2022. the Year” in 1999 when it recognized the company’s success in popularizing online shopping. After the Great The online retailer’s headquarters is located in the South Recession Amazon began to show its potential, attracting Lake Union neighborhood of Seattle, dubbed “Amazonia,” 615 million annual visitors to its website, while employing which encompasses over 8.1 million square feet of space in 17,000 people with real estate holdings encompassing 33 buildings and houses over 45,000 employees. Amazon 12 million square feet in 2008. Amazon has evolved into drove unprecedented job growth in Seattle, completely the largest Internet retailer in the world as measured by revitalized neighborhoods around its campus, and sparked revenue and market capitalization, surpassing $1.0 trillion an urban residential development boom. However, in value last September. Amazon’s rapid growth has also strained Seattle’s housing market, contributed to growing traffic congestion, Today, the world’s largest retailer employs over 575,000 full- and placed pressure on its public transportation system. and part-time workers and controls more than 158 million square feet of leased and owned office, industrial, and KING COUNTY MEDIAN SINGLE FAMILY HOME SALE PRICE retail property in the United States. Amazon encompasses $700,000 more than 40 subsidiaries, including a thriving web services $600,000 business, the Whole Foods grocery chain, and numerous $500,000 online retail outposts like the home security retailer Ring. $400,000 com and shoe seller Zappos.com. $300,000 $200,000 Amazon’s U.S. commercial real estate footprint has grown 2012 2013 2014 2015 2016 2017 2018 by 1,200% over the past decade and has transformed the Median Sale Price Zillow Home Value Index (ZHVI) company into one of the largest and fastest-growing holders Amazon’s Seattle headquarters resides in King County, Washington AMAZON BY THE NUMBERS $177.8B 575,000 158M SF 1,200% 8.1M SF TOTAL ANNUAL FULL- AND PART-TIME LEASED AND OWNED 10 YEAR GROWTH OF IN 33 BUILDINGS AT REVENUE (2017) EMPLOYEES REAL ESTATE REAL ESTATE FOOTPRINT SEATTLE HQ HQ2 | NATIONAL LANDING–VA HQ2 IMPACT RESEARCH & ANALYSIS NATIONAL LANDING–VA HQ2 SEARCH FOR TALENT, TECHNOLOGY, AND TRANSIT On September 7, 2017, Amazon issued an unexpected issues rather than tax breaks and financial incentives. and unusual seven-page request for proposal (RFP) from The city that was able to address Amazon’s transportation cities vying to be the home of the company’s second and housing concerns would have the best chance at headquarters (HQ2). The size and scope of the area becoming the site of its HQ2. Amazon selected would be a full equal of its Seattle footprint in 10 to 15 years with the promise of a $5 Details on a potential winner began to emerge in early billion economic investment and creation of 50,000 November when The Washington Post reported the Crystal high-paying jobs. Amazon was seeking a metropolitan City neighborhood of Arlington was a possible site and area with a significant population center that had a The Wall Street Journal broadened the field of contenders stable and consistent business climate, access to public to include the Long Island City neighborhood in New York transportation, with the potential to attract and retain strong City’s Queens borough, in addition to Crystal City and Dallas. technical talent. On November 13, 2018, Amazon announced New The contest to become Amazon’s HQ2 began with 238 York City and Crystal City, Virginia, which has been cities scrambling to compete for the biggest economic branded National Landing, as the locations for its new jackpot in a lifetime. Competing proposals included multi- headquarters, essentially splitting the $5 billion economic billion-dollar tax incentives, pledges to fund construction investment and 50,000 jobs between the two. The new on groundbreaking transit systems, initiate new education locations would join Seattle as the company’s three programs, and to modernize technological infrastructures. headquarters in North America. “These two locations will allow us to attract world-class talent that will help us to In January 2018, Amazon eliminated 218 hopefuls and continue inventing for customers for years to come,” said notified 20 finalists they made the cut. By March, Amazon Jeff Bezos, founder and CEO of Amazon. In addition, the had taken tours of the finalist cities and their proposed online retailer announced that Nashville, Tennessee, would sites to evaluate the feasibility of a future partnership that be the location for its new Operations Center of Excellence, can accommodate its hiring plans, as well as benefit which will be responsible for the company’s customer employees and the local community. Amazon surprised fulfillment, transportation, supply chain, and other similar some local officials during their onsite visits by quizzing activities. Nashville will receive a $230 million economic them more about regional transportation and housing investment with the creation of 5,000 high-paying jobs. RFP ISSUED AMAZON NAMED AMAZON TOURS NYC & D.C. ANNOUNCED BY AMAZON 20 FINALISTS FINALIST CITIES AS AMAZON HQ2 SEPTEMBER JANUARY MARCH NOVEMBER 2017 2018 2018 2018 HQ2 | NATIONAL LANDING–VA HQ2 IMPACT RESEARCH & ANALYSIS NATIONAL LANDING–VA Amazon’s decision to split its new headquarters between Amazon said it plans to hire 25,000 people each in Long two locations is by many measures unorthodox, but Island City and Crystal City neighborhoods over the next 10 analysts and economists agreed that the company to 15 years. Adding 25,000 new employees in New York City needed too many workers in a tight labor market to represents approximately 0.25% of the total employment locate a second headquarters in one area. By spreading base and roughly 0.75% of the existing employment base its reach among multiple cities, it gives Amazon a larger in Washington, D.C., while 5,000 new jobs in Nashville pool of candidates to hire from while avoiding inundating represents 0.50% of its employment base. Hiring at all three any one city with such a large workforce request. Splitting locations will begin in 2019. Larger metropolitan areas such up the locations could also be beneficial in the event as New York City and Washington, D.C. can more easily of a recession. absorb the large incoming number of workers, plus indirect effects on the region such as new household formation. HQ2 | NATIONAL LANDING–VA WASHINGTON ARLINGTON 5 MILES ALEXANDRIA HQ2 | NATIONAL LANDING–VA HQ2 IMPACT RESEARCH & ANALYSIS NATIONAL LANDING–VA Amazon selected the Crystal City neighborhood of the boxes Amazon required for its second headquarters. Arlington, VA, as the second location of its widely anticipated With a major airport next door, Crystal City is conveniently HQ2. The Northern Virginia neighborhood, situated a located near major freeways, has immediate available half-mile from Ronald Reagan National Airport, across office space, and accessible public transportation. the Potomac River from Washington, D.C., checked all Illustrative Central District Retail Illustrative National Landing (North District) HQ2 | NATIONAL LANDING–VA HQ2 IMPACT RESEARCH & ANALYSIS NATIONAL LANDING–VA Amazon wanted to take space right away and slowly build In a recent filing with the U.S. Securities and Exchange out its campus. With Crystal City, the online retailer only had Commission, JBG Smith said it expects Amazon’s to negotiate with one landlord, JBG Smith Properties, a real headquarters at National Landing will employ as many estate investment trust based in Chevy Chase, Maryland. as 37,850 employees, about 51% more workers than JBG Smith is the largest owner of commercial real estate initially indicated, a sign that the economic benefits in Crystal City, with a portfolio comprised of 6.2 million may be stronger than local officials anticipated. The square feet of office space, 2,850 multifamily units, and Fairfax County Economic Development Authority in Virginia land holdings that could accommodate up to 7.4 million estimates that the initial 25,000 direct jobs created by square feet of additional development, excluding Amazon’s Amazon will likely translate to more than 50,000 indirect job, proposed land purchase. based on traditionally recognized multiplier effects. After the HQ2 announcement, JBG Smith suddenly Northern Virginia is also home to a corporate campus of found itself Amazon’s exclusive partner for its expansive Amazon Web Services (AWS) data center, which provides holdings in a new development, dubbed National on-demand cloud services for large enterprises. AWS is Landing, a newly defined interconnected and walkable currently in the running to win a $10 billion contract from the neighborhood that encompasses Crystal City, the eastern U.S. Department of Defense to provide services to its Joint portion of Pentagon City, and the northern portion Enterprise Defense Initiative, or JEDI program. of Potomac Yard. As a result of Amazon’s selection of National Landing, JBG Smith will accelerate the planning, According to The Stephen S. Fuller Institute at the Schar design, and development of several projects, including a School, George Mason University, “Amazon’s HQ2 would 130,000-square-foot Central District Retail project and two increase the demand for housing in the Washington multifamily projects comprising 750 units. region. However, this demand would be relatively dispersed in the region and occur gradually, allowing jurisdictions Amazon will initially lease approximately 500,000 square to plan for the increase or adjust their current plans as feet of existing office space at Crystal Square 3, Crystal needed.