Amazon HQ2 and Philadelphia: A Case For Every Outcome | Philly Views
September 12, 2017

Amazon HQ2 and Philadelphia: A Case For Every Outcome

Written by Matt Schickling

As you’ve almost definitely heard by now, one of the world’s largest retailers is looking for a new location to house its second headquarters.

Amazon put out a request for proposals last week, outlining its preferences for the new location, to be the sister site of its current headquarters in Seattle.

There’s been a ton of discussion on whether Philadelphia fits the bill. Our city certainly checks a lot of the boxes, and at this point, it’s a foregone conclusion that Philadelphia will submit a proposal.

Philadelphia will be a player, but it’s up in the air how strong of a case it actually has. There are some positives, though.

Among Amazon’s chief preferences at the new location are:

-A metropolitan area with more than one million people

Urban or suburban locations with the potential to attract and retain strong technical talent

-Communities that think big and creatively when considering locations and real estate options

These preferences line up well with what Philadelphia has going on right now, but there are still a lot of things to consider. 

This is Philadelphia, so let’s get the negative out of the way first.

Why It Won’t Happen

Let’s be real. Philadelphia is a long shot.

One of the preferences I conveniently left off that first list is:

A stable and business-friendly environment

Sure, Philadelphia is a stable and growing business environment. In 2016, Philadelphia added 16,000 jobs, driven almost entirely by the private sector. That’s after a 1.7 percent rate of growth in employment from 2015 to 2016.

Comcast continues to construct its second skyscraper, and 29 other high rises are joining it.

But Philadelphia is not business-friendly per se, at least not as much as other places. The city wage tax, while slowly declining, is still a problem.

When compared with other cities, Philadelphia residents are still way on the high end of wage taxes.

And that brings up a huge part of the problem for Philadelphia’s candidacy—other cities exist.

Requesting proposals is not typical of a company of Amazon’s pedigree. Amazon could pick anywhere it wanted, and that location would be thrilled to have it. You better believe that every city with even a remote shot at this will go for it.

Competition will be the main adversary for Philadelphia’s candidacy.

While Philadelphia, the sixth largest city in America by population, does have the bodies to feed the projected 50,000 jobs Amazon HQ2 will create, our workforce does not match the tech reputation of other cities in the running.

Cities like Chicago, Denver, Austin, Toronto, Atlanta, and even Pittsburgh have been dubbed more suitable landing spots for Amazon. That doesn’t mean Philadelphia can’t create incentives to outdo these places, it just creates a harder case to make.

There are also peripheral factors holding us back. Education, for example, might be a late-stage factor for Amazon if all things are even between two locations.

Why We Don’t Want It

Lost among the Amazon HQ2 discourse is whether it would actually be a good thing for the people already living here.

In Seattle, well-paid Amazon employees have been buying up, or renting up, housing throughout the city. Amazon’s presence is often attributed to the unprecedented real estate boom in the region with housing prices rising faster than any other region in the country.

Over the last year, the cost of single-family homes has risen by nearly 14 percent.

The Philadelphia housing market has been on the up as well, and with Amazon HQ2, it would undoubtedly continue to rise. 

This is great news for people who actually own property in the city, but renters and prospective homebuyers could be priced out. Philadelphia rents could rise quite a bit, and that would put a damper on the whole “creatives can afford to live here” thing we have going on.

The other thing to consider is whether Amazon is actually a good company to work for.

There’s no doubt Amazon is an ambitious business, and an ever-expanding one, but its proclivity toward pushing employees to the brink has been well-documented.

There’s opportunity to grab some of that soaring stock, a nice salary, and work for one of the most innovative companies in the world, but there’s a flip side to that. It’s hard to work for Amazon, and it’s definitely not for everyone.

You also have to wonder whether the incentives it takes Amazon to actually land here could offset the economic benefits. We haven’t yet heard anything from our public officials on this, but smart money is betting on the incentives to be staggering.

Still, the prospect is just so intriguing. That’s why there’s a flip side to this argument, too.

Why It Might Happen

Let’s be real again. Philadelphia is long shot, but still has a shot.

Philadelphia might not have the pool of employees Amazon is looking for already present, but it’s gotta be close.

Between 2006 and 2012, the millennial population has increased by about 100,000

Philadelphia continues to be a great place for millennials, the demographic that is most apt to fit the tech skills Amazon needs. By 2015, millennials in Philadelphia were more likely to own homes, make more money, and be employed here than in other, similar places.

At that same time, people aged 28 to 32 in Philadelphia were 43 percent more likely to have a college degree, and earned 78.8 cents for every dollar earned by 33 to 55 year olds. That’s higher than any other large metro in the United States.

Amazon will also have the benefit of being able to recruit younger employees from the 100 or so colleges and universities in the region.

Again, Philadelphia checks most of the boxes.

We have the population, the proximity to other major markets like New York and Washington, D.C., relatively cheap real estate, an international airport that’s undergoing major upgrades, decent public transportation, and suitable infrastructure.

There’s also the space to develop, which you won’t find in New York or D.C.

Philadelphia could offer up options, including the Navy Yard, 30th Street Station District, uCity Square, Pennovation Work, where development is already underway.

There’s also still land to be developed if Amazon wanted a fresh start.

Why We Want It

This should be obvious, but here’s some information on what Amazon HQ in Seattle has done.

Money, relevance, investment, jobs. All of these are good things, if handled properly. This would be huge for Philadelphia.

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