The economic prize is huge.
Fifty thousand new full-time employees. A $5 billion investment. Millions of square feet of new office space. And likely more investment over time.
The best part? One employer alone can accomplish it all.
Amazon, the online retailer, announced Thursday that it’s hunting for a location for a second North American headquarters — one the company indicated could eventually become equal in size to its Seattle home base. In an atypical move for a corporate giant, Amazon publicly solicited proposals from metro areas.
The news sent mayors from Philadelphia to Toronto to Chicago scrambling to declare each would submit a bid, one that could unleash billions of dollars in economic development, supercharge housing markets, and put that metro area on the cutting edge of the transformational digital economy.
Can the Philadelphia region even dream of being a contender?
Working in its favor, say local government officials, experts, and developers, is a city on the upswing: The population of millennials increased by about 100,000 between 2006 and 2012, according to the Pew Charitable Trusts, offering a potential pool of candidates with the job skills Amazon likely seeks.
And there’s a precedent for an Amazon-type project: Comcast Corp. has already bet that this traditionally blue-collar city has modernized its labor force enough to supply the tech-skilled employees it needs.
“This is a vastly different place than it was 30 years ago, and it’s a place that can feel like Seattle,” said John Gattuso, senior vice president and regional director for Liberty Property Trust, which is a part-owner of and is developing the new Comcast Innovation and Technology Center. “Philadelphia should feel absolutely confident that it has something to offer a company like Amazon. We should not feel inferior.”
But the hurdles are also high. Despite Comcast’s presence, Philadelphia has not fostered the same robust tech reputation that metro areas like Austin, Texas, and Raleigh-Durham, N.C., have. This region may not have the labor pool for the tens of thousands of jobs Amazon will need to fill.
Then again, Gattuso said, “I am not sure any city does.”
Where the Philadelphia region is most vulnerable is in its ability to compete financially against the other cities vying for Amazon’s favor. Though Philadelphia has cut its wage tax over the past decade, taxes on Philadelphia residents remain high compared to other cities, according to tax-software firm Intuit. And how Pennsylvania, New Jersey, and local governments in the region will stack up remains unclear.
“This is going to be the mother of all feeding frenzies,” said Aaron Renn, a senior fellow who studies American cities at the Manhattan Institute, a nonprofit think tank. “Everyone is going to throw their hat in the ring … and I would expect everyone to fork up a huge amount of money.”
Both Pennsylvania’s Department of Community and Economic Development (DCED) and the Philadelphia Industrial Development Corp. (PIDC) have remained tight-lipped about incentives they might offer, though both, as well as the governor’s office, are evaluating how they may be able to help with a proposal. As for New Jersey, a spokeswoman for the Economic Development Authority said it “looks forward” to reviewing Amazon’s parameters.
In the past, both state agencies have offered incentives for Amazon to build warehouses and distribution centers as the retailer has spread across the nation. In 2008, DCED provided Amazon with a $1.25 million grant to build a distribution facility in Luzerne County as part of an effort to create new jobs.
And last year, Pennsylvania announced that it had approved a $22.5 million package for Amazon to expand its fulfillment centers and distribution options in the state, as long as the company invested at least $150 million and created 5,000 new jobs. According to a spokesman for DCED, the assistance remains contingent upon Amazon’s submitting final applications and meeting their commitments.
New Jersey has made similar investments to attract Amazon warehouses.
To lure a corporate headquarters, however, both state and local agencies would have to dangle a much larger incentive. In recent years, governments have paid out millions and even billions of dollars to lure large companies to their areas. Just last month, Wisconsin lawmakers voted to offer $3 billion in incentives to lure Apple supplier Foxconn.
According to Amazon’s Request for Proposal for the project, the company is looking for more than just cash. Among its other preferences, Amazon said Thursday, is a metro area with at least one million people and a stable business environment, one that could offer land near an international airport, major highways, and a public transit system.
As for particular sites, Amazon said it is considering undeveloped land, infill sites, existing buildings, or a combination. Existing buildings of at least 500,000 square feet or a green site of approximately 100 acres will be a priority, Amazon said. At full build-out, “the campus or park may exceed eight million square feet,” Amazon added.
Which raises a question: Where exactly could Amazon put such a massive headquarters?
“Let’s assume that they want to create a campus with multiple towers over time — that doesn’t suggest right away that you could squeeze them into Center City,” said Paul Levy, president and CEO of the Center City District. “That then points us to the Navy Yard and to 30th Street Station as particular locations where you could amass that much land.”
Liberty Property Trust and PIDC control significant undeveloped land at the 1,100-acre Navy Yard in South Philadelphia that could be used for a campus of low-rise or tall buildings, Gattuso said.
And near 30th Street Station, Brandywine Realty Trust is working alongside Drexel University to build Schuylkill Yards, a 14-acre, $3.5 billion investment to turn industrial buildings and parking lots into a neighborhood of businesses, labs, retail, parks, and residential towers. Still years from completion, the project has not been linked with any companies.
“Look at Port Richmond, at Bridesburg — there is a lot of land along the river,” said Councilman Allan Domb. “I think somewhere along I-95 in the Northeast section makes sense.”