Tuesday, February 6, 2018

HQ2 And Who?

http://www.citylab.com; January 22, 2018


Hello Everyone:

Blogger has been temporarily re-located to a n undisclosed location to do monthly maintenance and a couple of scheduled events. Nevertheless, she persists.

Alright let us move to today's subject, Amazon HQ2.  The list of possible locations has been whittled down to the lucky 20 cities.  In the interest of full disclosure, Blogger's hometown Los Angeles is among the candidates.  However, what does it mean for each of the cities, in terms of housing affordability, to host Amazon HQ2? Can hosting the second headquarters of the online retail giant make things better or worse for the housing market?  The answer depends on where HQ2 finally lands.  This is the subject of Tanvi Misra's CityLab article "Where Amazon HQ2 Could Worsen Affordability the Most."  Hosting HQ2 may sound like a great, idea in terms of generating jobs and boosting the local economy, not every city in the Top 20 can pull it off.  Just ask Seattle, Washington, the home of Amazon HQ1.

When Amazon landed in Seattle, things changed dramatically for the city (politico.com; Oct. 19, 2017; date accessed Feb. 6, 2018).  Two of the not so pleasant dramatic changes were: a massive jump in housing prices, infrastructure was more stressed, and the promised jobs did not quite materialize.  Eventually, the relationship between the city and the tech behemoth deteriorated (citylab.com; Nov. 6, 2017; date accessed Feb. 6, 2018).

Which of the Top 20 cities (Ibid; Jan. 18, 2018), still in the running to become HQ2, is most likely to follow Seattle down the path of a rocky relationship should their bid be accepted?  Lucky for us, the Brookings Institution has generated a new map (brookings.edu; Jan. 19, 2018; date accessed Feb. 6, 2018), giving us a clue at the answer.

Brookings Metropolitan Policy Program (Ibid) Jenny Schuetz (Ibid) grouped the finalists according to the  character of their housing market, "demonstrating how some are in a better position to absorb the shock of the 8 million square feet in office space required for the operation--and the 50,000 or so high-paid workers it will attract to the city."

Ms. Schuetz (Ibid) divided the 19 U.S.-based finalist into four groups.  Ms. Misra notes, "Newark has been represented as part of the New York Metro, and Northern Virginia and Montgomery County, Maryland, have been folded into Washington D.C.  Toronto was excluded because comparable data was not available."  The orange dots on the map: Los Angeles, New York, Boston, Washington, and Miami signify the extremely expensive places where the "rent is too damn high" and the housing is in short supply (nytimes.com; Sept. 6, 2017; date accessed Feb. 6, 2018).

The next group are the cities in yellow: Denver, Austin, Raleigh, and Nashville.  These have experienced an increase in housing, in recent years, and continues to climb.  The resulting gentrification stressors (austin.curbed.com; Jan 31, 2017; date accessed Feb. 6, 2018) are causing protests (citylab.com; Dec. 1, 2017; date accessed Feb. 6, 2018).  Should either one of these cities win the right to host HQ2, "...there's a good chance that former residents will be squeezed out[austin.curbed.com; Jan 31, 2017] at faster rates--angering more residents."  Jenny Schuetz wrote,

Amazon's new HQ would make noticeable ripples in the largest cites,.... For smaller metros, the effect could be more like a tidal wave.

The third group is represented by light blue dots.  These are metropolitans such as: Chicago, Atlanta, Columbus, and Dallas, ones where there is more room to grow.  Tanvi Misra notes that according to Ms. Schuetz (brookings.edu; date accessed Feb. 6, 2018), "That these metro have relatively relaxed regulations that allow for an easy adjustment to growing housing needs and expansive office space means that they're unlikely to experience a major crunch when Amazon comes to town."

The last category are the cities marked with dark blue dots: Indianapolis, Newark ("not shown separately in the map"), Philadelphia, and Pittsburgh.  These are among the cities with ample vacant housing, albeit older, that would require some attention in order to cater to the preferences of Amazon's elite and amenity loving workforce.

No one is absolutely sure what Amazon is looking for as it continues to whittle away at its Top 20 candidate list (Ibid; Jan. 19, 2018).  This includes the cities that did not make the finalist list (citylab.com; Jan. 19, 2018).  However, Ms. Schuetz focused on the ones that did make the list--the ones that are falling all over themselves and each other to attract Jeff Bezos' attention by showing off what they have to offer (Ibid; Jan. 17, 2018).  She wrote,

As the 20 finalists negotiate with Amazon over the next year, local policymakers should be asking themselves and their constituents-whether the benefits of HQ2 will outweigh the social and economic costs.