Five things Amazon’s HQ2 snub says about Boston
Well, that’s that.
After more than a year of scouring the country for the perfect place to put its second headquarters, Amazon announced Tuesday that it will split the operations between New York City and Washington, D.C., while adding a 5,000-job “Center of Excellence” in Nashville.
That’s nice. But what about us?
Boston was long seen as a top contender for Amazon’s so-called HQ2, thanks to the region’s universities, tech economy, and brainy workforce. Maybe it was a bit of Boston exceptionalism, but a lot of people around here thought the region had a strong shot at landing the big prize.
Apparently, what Boston had to offer wasn’t enough for Amazon. So what does that say about the city? Some thoughts:
Little Brother syndrome strikes again? New York and metro Washington are full of smart people and home to emerging tech economies. They are also expensive, crowded, and complicated places to do business. Boston is all of those things, too.
So why did Amazon pick New York and D.C.? Frankly, they’re just bigger. They have more people to hire, more companies to tap, more access to corporate titans and government decision-makers, more international flights. When you’re one of the largest companies in the world, size matters.
Amazon has outgrown Seattle. That’s why it’s spreading out like this. Why go somewhere else it might outgrow, like Boston? Instead, the company picked cities it probably won’t ever outgrow, or overwhelm. Smaller towns, like Boston, will get the leftovers.
No space to rent. Another likely reason Amazon bypassed Boston: real estate. We just don’t have much right now. Not compared with Crystal City, Va., where whole buildings sit mothballed and ready for Amazon to move in, or Long Island City, where Citibank is getting ready to move out of 1 million square feet in an office tower that could be just perfect for Amazon.
Here, the office market has been so hot that there’s nowhere like that for Amazon to go, at least in the heart of the region. John Hancock is moving out of a 500,000-square-foot building in the Seaport, but beyond that there’s just a handful of spaces even one-fifth that big. Assuming Amazon was never interested in being out at Suffolk Downs, its Boston HQ2 would have been scattered all over town, or delayed while construction projects to accommodate it got underway.
A drum-tight office market is the definition of a first-world problem, a dilemma many cities would love to have. But for Boston’s Amazon bid, it may have been a problem.
We don’t pay up. Governor Charlie Baker and Mayor Martin J. Walsh made one thing clear from the start of this: If Amazon was expecting massive taxpayer-funded subsidies, it should look elsewhere.
It’s not yet known what state and city officials were prepared to pony up in tax breaks and other subsidies to win the second headquarters. Talks never advanced that far, at least publicly. But it clearly was not the billions of dollars offered by states such as New Jersey and Maryland.
Baker stressed that any package for Amazon would be built around investment that benefited everyone — like education and transportation — and Walsh, even if he were so inclined, doesn’t have the tools at the city level to compete with big state subsidies.
New York, by comparison, offered Amazon up to $1.525 billion in tax breaks, while Virginia put up $573 million, along with a promise to spend $195 million more on infrastructure around the company’s campus. Massachusetts just wasn’t willing to spend so much. And that’s OK.
Housing and transit headaches remain. The biggest drawback to a Boston HQ2, for most Bostonians, would have been added strain on an already overheated housing market and stressed road and rail systems.
Absent Amazon, however, those challenges remain. There are still thousands of people moving to this region every year, buying (or renting) homes and trying to get around. Now, for the second time in three years — remember the implosion of Boston’s Olympics bid? — we’ll miss out on the Big Thing that some hoped would prompt action on some long-festering challenges.
But the region doesn’t need Amazon to connect the MBTA’s Red and Blue lines. It shouldn’t take Jeff Bezos for us to tackle zoning challenges that thwart home building in many suburban towns. And Suffolk Downs, or any other sites Amazon may have selected here, will be just fine if the region’s broader economy keeps up at this pace.
Sometimes, you win by losing. A lot of people in the city are cheering this outcome, despite the thousands of jobs Amazon would have created here.
The housing market won’t be flooded with thousands of Amazonians. Neither will the T. And the absence of HQ2 scooping up talent will make it easier for local tech companies to hire. Who knows, one of them might even become Amazon’s next big rival.
Besides, it’s not like Amazon doesn’t already have a major presence in the area. The company employs about 2,000 well-paid engineers and developers in Boston and Cambridge, many of them working on Alexa and other high-tech systems that are a vital part of the company’s future. Hundreds more work at a robotics plant in North Reading, and ground will soon break on a new building in the Seaport that’s set to house an additional 2,000 employees.
That means Amazon will have about as many people in Boston as it will at the Nashville logistics center it announced Tuesday, to great fanfare and $102 million in tax breaks.