All eyes have been on Amazon as they’ve journeyed in a very public way for HQ2. The decision has been made. (congratulations, New York and Arlington!). Now, it’s worth assessing what commercial real estate investors and economic development offices can learn from the HQ2 Sweepstakes.
First and foremost, it’s important to keep in mind what skillset and type of employees Amazon is looking to hire for its 50,000+ jobs. The company needs innovative, tech-skilled workers who can help the company continue to grow. With this baseline understanding of business needs, it becomes clear that it is a niche search. Not every market can step up to bat (though pretty much every market tried!).
Lesson #1 – Understand your audience and target your efforts with incentives.
In looking at the allure of a city, it’s no surprise that tax incentives can be very appealing in drawing a big player like Amazon to a city. The return on any tax incentives will likewise be impactful in the form of a stronger local economy, which is why so many cities competed for the opportunity. Maximizing incentives and targeting them at key players is a good way to lure tech or any other niche industry to your city. The key is knowing your audience to maximize your chances for success.
Lesson #2 – Quality of life cannot be undervalued.
A city’s infrastructure, transit system, housing developments, and more all play a key role in wooing businesses to an area. Specifically, because these factors impact a person’s quality of life. The type of employees Amazon wants require good physical and technical connectivity, a diverse community, and access to a strong research university. How well does your city compete on these measures, and what steps can you take to improve the quality of life for your residents? The return may be more impactful than you think.
Lesson #3 – Losing the bid can be a good thing.
Though all of these seem like positives to a community, it’s important to consider the down-sides. Amazon has the pockets to pay for the right talent pool. This means existing companies in a city may (and likely will) suffer. In the employment ecosystem, there are big fish and small fish. The right balance needs to be struck in order maintain a sustainable working environment for a community.
The competition is fierce in attracting big-name businesses to an area. Commercial real estate investors and economic development agencies need to be attentive and savvy to the needs of potential companies and their communities. They must be willing to play the game but also understand the potential draw-backs that may come from winning.
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