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The Transit Factor in Amazon's HQ2 Selection Reflects Transportation's Growing Economic Development Clout

How Prominently Will Mass Transit Figure Into Amazon's Decision?
May 9, 2018
Pictured: 101 Main St. in Cambridge, MA, a 341,000-square-foot office property occupied by Amazon.

In cities across America, weary locals have long complained that strained transportation networks were failing to keep pace with the rush of new development. Then, Amazon announced it would conduct a nationwide search for a place to locate a second headquarters.

The very prospect of landing 50,000 jobs and 8 million square feet of office space quickly brought transportation to the forefront of public discussion, particularly in the 20 communities that made the online retailing giant's list of finalists.

In its request for proposals for its so-called HQ2, Amazon stressed access to public transportation - existing infrastructure and proposed improvements - as part of its wish list. Everything from bike lanes, bus routes, light rail, subways, walkability and uncongested roads could sweeten proposals, company officials said.

And they surprised some local officials during their recently concluded round of onsite visits by quizzing them more about regional transportation and housing issues than financial incentives, according to several reports.

 Read More CoStar Amazon HQ2 Coverage 

Regardless of which city wins the HQ2 sweepstakes, Amazon's push to improve public transit could help the locations that aren't picked focus on improving their transportation infrastructure for the next time a big corporation looks for a new home, experts said.

"Amazon has certainly elevated transit as an issue in metro Atlanta and Georgia," said Paul Donsky, director of communications for the Atlanta Regional Commission. That intragovernmental agency coordinates planning and development efforts among the 10 counties in greater Atlanta, which is one of the front-runners for HQ2. "But it’s really part of a trend we’ve been seeing in the region recently."

Several big corporations have added large headquarters in greater Atlanta in recent years, including State Farm Insurance, Mercedes-Benz and tech giant NCR. All chose locations near mass-transit hubs in part to save their new employees the grinding commute of greater Atlanta’s famously congested highways.

That got people thinking.

The prospect of luring Amazon, along with the success in attracting other recent relocations, helped pass Bill 930, creating a new regional transit authority - The ATL - to oversee massive expansion of light rail from Atlanta's city center and in to the suburbs. It’s been touted as the largest expansion of the area’s public transit system in 40 years.

In Nashville, a similar $5.4 billion proposal to expand light rail was shot down by voters just a week ago. The plan had been simmering for years in the fast-growing market, but its defeat is regarded as a likely death knell for the city’s chance to make it out of the HQ2 top-20.

Meanwhile, politicians and business leaders in Washington, D.C., suburban Maryland and Northern Virginia put their differences aside to finally agree on a $500 million-a-year funding plan to expand and maintain the region's problem-plagued mass transit system after that market snagged three entries in the HQ2 beauty pageant.

The dedicated funding gives the new authority bonding power that exponentially increases its ability to spend for years, and helped solidify the region's place as a front-runner in the competition, especially given the fact that Amazon Web Services has a large presence in the market, and Amazon Chief Executive Jeffrey P. Bezos owns the Washington Post and is currently restoring a second home in the District.

"It certainly sends a good message to Amazon," said Michael Stevens, the president of the Capitol Riverfront Business Improvement District in Washington. His neighborhood is home to the Green line of the Metro system and is part of the area in the District under consideration for HQ2.

"It sends a message that there is good cooperation between the three jurisdictions, and it’s a great thing for the workforce they want to attract."

But even if Amazon goes elsewhere, said Stevens, a renewed focus on public transit is a welcome development in almost all U.S. cities.

"Even if we don’t get it, the city they go to needs to have a robust system," Stevens said. "We’re not going to build new highways."

Boston, too, is one of the favorites to land HQ2. The large presence of high-end universities such as MIT, Harvard, Boston College and Boston University, is viewed as providing a natural talent pool for Amazon.

Boston has put forth two locations for consideration. The preferred one is a former horse race track at Suffolk Downs near the border with former mill town Revere. The other is in Somerville. However, morning driving commutes in Boston are famously frustrating, and certain subway and commuter rail lines are already aged and overcrowded.

Boston has promised Amazon little in the way of improving its transportation grid. In its proposal to the online giant, the city dusted off a years-old plan to connect the city’s heavily-used Red Line with the North-South Blue Line that lands near Suffolk Downs.

That planned expansion has been kicked around for years, though, and little progress has been made.

Boston’s proposal was also notable for offering few other incentives - like tax breaks - that other cities were eager to throw at the company. That’s led some observers to conclude Boston, with an already-tight housing market and stressed transit, was only lukewarm about hosting HQ2.

Officials at the mayor’s office and the city’s planning and economic development office both declined to comment or did not respond to requests for comment. The Massachusetts Bay Transportation Authority emailed:

"The Massachusetts Department of Transportation and the MBTA work closely with partners in stakeholder communities around the Commonwealth on investment and transportation opportunities that benefit the traveling public and economic development."

John Doherty, Multifamily Reporter  CoStar Group   

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