Amazon recently announced that they were looking for a new city to host their second headquarters that will eventually employ up to 50,000 employees with average annual salaries of more than $100,000. At first I dismissed the idea of Austin being chosen with the idea that corporate relocations of that size typically go to the major business hubs like Dallas, Atlanta, New York and Chicago.
After looking at the host city criteria; population over 1 million, a stable and business-friendly environment, urban or suburban locations with the potential to attract and retain strong technical talent and communities that think big and creatively when considering locations and real estate options, I realized that Austin could have a chance. Factoring in the recent acquisition of Whole Foods (including their 2500 Austin area employees) and the huge potential of the $800 Billion grocery market for Amazon, Austin would be a natural headquarters option. Apparently I’m not the only one who feels this way after seeing several major national media outlets putting Austin on their finalist list including CNN and The New York Times.
If Amazon comes to Austin then where?
Amazon is currently occupying 8 million square feet of office space in downtown Seattle, equivalent to all the office space currently in downtown Austin. With very little vacant office space in Austin, Amazon would have to build their campus from scratch.
Downtown is a real possibility. It’s one of the few areas that could absorb that amount of construction. Unfortunately, office rental rates run 40% higher downtown than elsewhere in the city and new construction costs would probably be similar. The cost of employee housing is also significantly higher downtown. A major reason why no Austin technology employer with over 1000 employees is based downtown.
The Domain is another possibility. It has much of the same dense work/live/play atmosphere that makes downtown such an attractive place to be but without the cost. It’s also the current location of Amazon’s local corporate office if that’s any indication of what they are looking for. The major challenge for The Domain is can it really handle 8-12 million square feet of offices and all the surrounding businesses/apartments/restaurants/hotels that will want to be near it? It is already close to build-out and surrounded by existing homes and businesses that would be very difficult to expand into.
The other locations mentioned are further out suburban locations near the airport and even Hutto (where Tesla was pitched for their battery plant). Land is plentiful and less expensive but they are far from where most technology employers and employees reside, which is downtown and North/Northwest Austin.
Everyone who’s lived in Northwest Austin knows about the almost 8000 acre Robinson Ranch that is quickly being enveloped on all sides with development.
Why Robinson Ranch:
- Plenty of space – With almost 12 square miles of open land (many times larger than downtown or The Domain), Amazon and their developers would have a blank canvas to build a dense work/live/play environment that they crave from downtown with significantly less cost.
- Easy zoning – The City of Austin has already annexed it (limited-purpose) with parts of the Ranch zoned for very dense ‘downtown-style’ development.
- Transit Options – The Leander to downtown Austin Metro Rail runs through the property.
- Easy road access – Parmer Ln, Mopac, and SH 45 are all on property.
- Excellent schools – McNeil, Westwood and Round Rock high schools are all nearby.
- Affordable housing – Nearby houses/condos start at around $200,000 and apartment rental rates are significantly below downtown/Domain pricing.
- Nearby talent – Because of all the technology companies clustered in North/Northwest Austin (Apple just built their 6000 employee Austin campus adjacent to Robinson Ranch), the surrounding area is already home to 1000s of technology workers.
Why Not Robinson Ranch:
While Robinson Ranch seems like an ideal fit for Amazon, there’s a reason it’s still a working ranch surrounded by development. The Robinsons don’t seem to be in a hurry to sell. They’ve sold off small pieces to corporations in the past including Abbot Labs and Motorola but have probably turned down many more developers over the years. I’m confident the City of Austin and developers would like to see the Robinsons throw their hat in the ring for the Amazon headquarters competition. If they do and somehow win it, those of us who live in the area will be in for a wild ride.