Amazon is amazing.
I admit it. I’m an Amazon junkie.
I use Amazon Prime almost daily, it seems, to order everything from organic dog food to solar-powered lights.
I only wish I had followed the old Peter Lynch maxim to “invest in what you know,” and had backed up the truck and loaded up on Amazon shares when I first became a fan. In that case, I’d be writing this column from my island estate.
Given how much I like Amazon, it’s probably no surprise I would be thrilled if Amazon chose the Denver area as the site of its second headquarters. Not only would the area gain 50,000 high-paying jobs and a $5 billion investment, but very likely the Broncos would be playing in Amazon Field at Mile High Stadium.
As has been well-publicized, Denver is one of the 20 finalists for the headquarters of the Seattle-based company. Another 218 bidders were not so fortunate.
Like most people, I’m not surprised that Denver made the short list.
But months before Denver made the top 20, what really caught my eye was the penultimate sentence in a Wall Street Journal interview with Jeff Wilke, the chief executive of worldwide consumers at Amazon and the second most important Jeff at Amazon, soon after the company announced it was searching for a second headquarters. (That’s right, he’s second fiddle only to Jeff Bezos, the founder of Amazon and currently the richest man in the world.)
Wilke told the WSJ that the second headquarters “will diversify the opportunity for people to choose where they would like to live.”
Where they would like to live.
If you live in Seattle, there aren’t that many other places where you would like to live.
Immediately, in my mind, the three alternatives to Seattle were Denver, Austin, Texas, and Raleigh, N.C.
I would imagine that if you were going to work outside of Seattle, one of the attractions would be to live someplace that is less expensive than Seattle.
That’s true of the top 20 cities other than Los Angeles and Toronto. Even the median price of a home in New York is less than Seattle, according to Zillow.
However, Denver is the fifth most expensive housing market on the list, topped only by Toronto, L.A., New York and Boston.
The cost of housing and that Denver is not on the East Coast, I think, are the two biggest black marks against Denver’s chances.
“I initially thought being on the East Coast was a red herring, until I saw how many of the cities on the top 20 list were clustered along the East Coast,” Steve Ferris, principal of his development firm, the Real Estate Garage, told me.
Ferris is uniquely qualified to speculate on Amazon.
Not only does the Real Estate Garage engage in public-private developments, but also Ferris is the former director of Development Services for the city of Denver. Ferris displays his knowledge of Denver’s real estate by penning articles on “Whale Sites” in the metro area for the Colorado Real Estate Journal.
Amazon is the “blue whale” of all deals. The Amazon proposal represents by far the largest economic development coup I have seen in the 35 years I have been covering real estate and the local economy.
But not everybody wants Amazon, the second-largest employer in the U.S., to land in Denver.
The biggest objections appear to be worsening traffic congestion, increasing housing costs, a lack of qualified people to fill the six-figure salary jobs Amazon and, finally, providing a subsidy to a company with a $654 billion market cap, the equivalent of the combined GDPs of Norway and Peru.
But as John Lennon once sang, “there are no problems, only solutions.”
Traffic is a case in point.
The 50,000 jobs promised by Amazon would come over a 10- to 15-year period. It’s not like ordering 50,000 jobs on Amazon Prime and they are at your doorstep in two days.
While that’s a lot of people on the road, hopefully the critical mass also would encourage the metro area to do things it should be doing anyway, like installing “smart” traffic signals and adding more and better bike lanes.
“It would be a real challenge to our elected officials in the public sector to provide some serious investments in our infrastructure,” Ferris said.
Those efforts could include more efforts to add to the supply of affordable housing and improving highways, parks, mass transit and water, he noted.
“And, let’s face it. With or without Amazon, housing prices are going to rise in the Denver area,” just based on the current supply and demand, he added.
According to Apartment List, Denver apartment rents are projected to rise by 4.8 percent and the Amazon headquarters would generate an additional annual rental rate pressure of only another 0.8 percent to 1.1 percent.
And as far as not having enough people to fill the 50,000 jobs, Denver is not alone in that respect.
The unemployment rate in Denver for information technology jobs is 1.9 percent, according to the Bureau of Labor Statistics. But the IT unemployment rate is 1.4 percent in Raleigh, 0.7 percent in Chicago and a negative 4.5 percent in Austin. I don’t even know how it is possible to have a negative unemployment rate.
“The people who are going to fill these jobs are still in school,” Ferris said. “My son just entered CU and I would love it if when he graduates he could stay in Denver. We really need to look at Amazon as a generational thing.”
As far as offering incentives to Amazon, Ferris noted that, as a publicly traded company, Amazon has a fiduciary duty to its shareholders to seek them.
But if they were just seeking the biggest pot of money, we probably would see cities like Mobile, Alabama, in the mix.
“I would think that the incentive package would be someplace in the middle as far as importance,” Ferris said.
Ferris said he thinks most of the opposition to Amazon coming to the Denver area is because of the bull market economy.
“The thing is, you cannot pick when your gift horse is going to walk in the door,” Ferris said. “I think if Amazon showed up five or six years ago, people would be clamoring for it.”
And he notes that he not just a “rah-rah” cheerleader for any big company looking to plant its flag in Denver,
“If this was Tesla and not Amazon, for example, I wouldn’t be that excited about it because I don’t know if Tesla is still going to be around 10 or 15 years from now.”
And Denver has never had that many headquarters. If it did, there probably would be fewer booms and busts.
“It’s a lot easier to plan for growth when you have a lot of big corporations headquartered in your city,” Ferris said.
“It would be fascinating to catch Amazon and ride that whale tail,” Ferris said.
In this article
- Headline News
- Rebchook Real Estate Corner
- Colorado Real Estate Journal
- Denver Real Estate News
- Economic Development
- John Rebchook
- Rebchook Real Estate Corner
- Steve Ferris
- 50,000 jobs
- amazon headquarters
- amazon prime
- commercial real estate
- denver area
- east coast
- estate garage
- headquarters of amazon
- people to fill
- real estate
- real estate garage
- seattle campus
- second headquarters
- steve ferris
- unemployment rate