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Why Arlington, Texas Wasn't Able to Compete in an Amazon HQ2 World

The Home of the Texas Rangers, Dallas Cowboys Won't be the Last DFW City to Drop From the HQ2 Hunt
May 16, 2018

Courtesy: The City of Arlington.

Dallas-Fort Worth has one of the most comprehensive Amazon HQ2 bid packages in North America, with at least a dozen cities bidding at least one development site. Some North Texas cities bid multiple would-be HQ2 campus sites with more than 30 sites in the Amazon running.

So, facing steep competition in the region and approximately $5 billion in housing development costs, the City of Arlington on Tuesday officially withdrew its bid from consideration for Amazon's second headquarters. And, real estate sources say, other cities in North Texas could follow.

"What is becoming clearer is that the culture, diversity and accessibility of an area are becoming a big driver for Amazon," said Susan Arledge, president of site selection and incentives for Dallas-based ESRP.

 Read More CoStar Amazon HQ2 Coverage 

"If the City of Seattle goes through with asking certain companies of a certain size to pay a per employee tariff to create a fund to help the community, we could see Amazon pull more employees out of Seattle," Arledge added.

Photo Credit: The City of Arlington.

That could put even more pressure on an HQ2 campus to have direct rail access with plenty of housing within quick commute times to the office, she said. For Arlington, even though the city's proposed 200-plus acre site - which would include the repurposed Globe Life Park - has direct access to four major freeways, it doesn't fit the requirements set out in the HQ2 proposal by Amazon execs.

"You can't move that many people around if they have to drive to work," Arledge said.

Cities such as Allen, McKinney and Frisco also suffer from a lack of rail service to their development sites, and could all follow suit behind Arlington and bow out of the running prior to Amazon making its final decision. But some other development sites under consideration for Amazon's HQ2 campus could still work.

"Dallas is still in the hunt with two downtown Dallas sites, including the Hillwood site in Victory Park and Ray Hunt's site at Reunion, with DART rail access and will culturally fit with what Amazon is searching for," she added.

For Robert Deptula, a tenant rep broker and principal at Houston-based Transwestern, it seemingly comes down to the City of Arlington coming up short when it comes to luring an HQ2 campus to the city with incentives.

In all, Arlington - known for being the home of the Dallas Cowboys' AT&T Stadium and the Texas Rangers' ballpark - offered $921 million to Amazon for an HQ2 campus in various incentives, including a 100 percent real and business personal property tax abatement for a decade, waiving fees and an infrastructure grant to help redevelop the site.

City Manager Trey Yelverton said the city's HQ2 campus proposal caught Amazon's attention, with the online retail giant seeking to create a community partnership, but, it wasn't meant to be in Arlington's case.

Deptula said he believes Arlington was hurt by its previous partnerships that relied heavily on giving up economic incentives.

"I think they are tapped out on incentives," Deptula told CoStar News. "If you understand what kind of incentives they poured into the new baseball stadium, football stadium and everything else - I think they tapped out of their war chest."

Photo Credit: The City of Arlington.

And Arlington isn't the only North Texas city that may be unable to compete in the echelon of incentives needed to snag an Amazon HQ2 campus. The region's economic boom has created a strain on economic incentives with fewer cities able to offer swanky tax increment financing districts or other incentives meant to lure corporate America to North Texas.

"Some of these cities just don't want to write a check they can't cash," Deptula said. "And some of them have already given away the store."

Meanwhile, Arlington seems intent on shopping its Amazon HQ2 campus plans to other companies seeking a place to put a major operations center. Arlington Mayor Jeff Williams said he hopes the repurposed stadium and development tract will help anchor the city's "future central business district".

"The interest by Amazon and its executives strongly confirms that this site has great economic development potential," he added. "It is primed for a continued substantive commercial presence in Arlington."

Candace Carlisle, Dallas-Fort Worth Reporter  CoStar Group   
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