Does Cincinnati have what it takes to land Amazon headquarters?
Councilman: We're 'a genuine contender'
11:42 AM, Sep 8, 2017
6:12 AM, Oct 9, 2017
CINCINNATI - Cincinnati Mayor John Cranley told CNBC Friday that the city will "do whatever it takes" to be the second headquarters location for Amazon Inc.
He's not the only civic booster so enthused.
“This is a once-in-a-generation economic development opportunity,” said Cincinnati Councilman P.G. Sittenfeld. “Cincinnati is going to be a genuine contender.”
REDI Cincinnati, the region’s lead economic development agency, confirms it is working with its partners to respond to Amazon’s request for proposals. Amazon is asking cities to compete for a $5 billion headquarters operation that could employ 50,000 people with "average annual compensation exceeding $100,000."
“Mega-projects like Amazon, without doubt, are transformational for any region,” said REDI Cincinnati CEO Johnna Reeder. “Equally important is how communities unify and respond to such opportunities. Our team at REDI is carefully reviewing Amazon’s request for proposals, and will work collaboratively with our regional partners to ensure that any response delivered on behalf of the Cincinnati region is cohesive, organized and proud.”
So, what are Cincinnati’s chances? Experts say that will depend on the ability of real estate developers to quickly assemble lots of office space and the state’s eagerness to offer big incentives for southwest Ohio – as opposed to Columbus or Cleveland. Cincinnati is getting better at attracting young professionals and its eight Fortune 500 companies have built a stable supply of legal, marketing and financial executives who could fill the Amazon HQ2.
But the region still lacks software development engineers and it comes up short on “access to mass transit,” which Amazon identifies as a “core preference” in its RFP.
“This is one of those things where you find a way,” Sittenfeld said. “You will yourself to the finish line. We will not lose out because we couldn't find the space for them.”
WCPO asked site-search adviser Jim McGraw to evaluate how Cincinnati’s qualifications stack up against Amazon’s “ideal site and building requirements.” McGraw is a partner at the Keating Muething & Klekamp law firm Downtown. He’s worked in more than 100 U.S. cities on economic development initiatives, representing both companies and communities in his 36-year consulting career.
McGraw said it will be a tall order for Cincinnati to meet Amazon’s requirement for up to 1 million square feet of office space by 2019 and 8 million square feet over 15 to 17 years. Amazon said it’s willing to consider existing space or new construction on “a greenfield site of approximately 100 acres.” It would consider multiple sites “in close proximity to each other to foster a sense of place and be pedestrian friendly.” It wants a site that’s within 1 to 2 miles of “major arterial roads” and 45 minutes of an international airport.
McGraw said three separately owned parcels in the Oakley area, Blue Ash’s Summit Park and the former Camp Marydale property in Boone County could meet Amazon’s requirements, but building at least 500,000 square feet on those sites by 2019 might be tough.
“Can we make the real estate work in the right place, the right sense of a campus that the company is going to demand? There’s not a lot of options,” he said. “That’s going to have to be thought through and strategized and sold.”
Cincinnati will score points on Amazon’s desire for a “cultural community fit.” The RFP says Amazon wants an environment that’s compatible with its long-term success:
“This includes the presence and support of a diverse population, excellent institutions of higher education, local government structure and elected officials eager and willing to work with the company, among other attributes. A stable and consistent business climate is important to Amazon.”
McGraw said Cincinnati’s reputation as a headquarters town will play well for this criteria.
Cincinnati has “a business culture that’s built for big headquarter companies,” he said. “It’s a culture this community thrives on. So, from that standpoint it shows really well.”
Cincinnati’s labor pool could be a strength for Amazon, as General Electric Co. discovered when it started filling jobs at its Global Operations Center at the Banks. Many of its new hires were former employees of Procter & Gamble Co., Toyota Motor Corp., Omnicare Inc. and Duke Energy.
“I think the combination of compliance, legal, regulatory (talent) here is actually very strong,” GE Senior Vice President Shane Fitzsimons told WCPO in 2016.
Amazon’s HQ2 will hire as many as 50,000 full-time employees in the next 10 to 15 years. Here’s how the RFP breaks down Amazon’s labor needs:
“The jobs will likely be broken down into the following categories: executive/management, engineering with a preference for software development engineers (SDE), legal, accounting and administrative.”
McGraw said Cincinnati will look better than other towns on the talent front, while many markets will have trouble guaranteeing a plentiful supply of software engineers.
"The good thing about Cincinnati is that the market is so attractive for livability, it sells pretty well," he said. "There’s an awful lot going on here that helps set this place apart."
Speaking on the cable financial news network, CNBC, Cranley said Cincinnati will be at least as aggressive with Amazon as it was with GE at the Banks. There, the city awarded job creation tax credits worth nearly $39 million for 1,800 jobs and a $90 million investment. The city incentives were part of a larger package of state and county tax breaks worth a combined $112 million.
"Look, we want to win," Cranley said. "Amazon.com putting a major headquarters in Cincinnati would be a game changer for us and we'll do whatever it takes to win that bid."
How much would Ohio contribute toward an Amazon incentive package? Governor John Kasich has criticized Wisconsin’s $3 billion incentive package for Foxconn as an investment that will take 40 years to generate a return for the state.
Amazon doesn't specify how much it wants from state and local governments, but the RFP says “the initial cost and ongoing cost of doing business are critical decision drivers.”
Despite the Governor’s comments, McGraw said Ohio’s bid for Foxconn was “massive” and “showed that they are capable of assembling a very strong, sophisticated, sexy package.”
Connectivity could be a major issue for Amazon, based on its “core preference” for mass transit options at its headquarters site, including “direct access to rail, train, subway/metro, bus routes.” Amazon’s RFP asks communities to provide details on transportation options for commuters, describing travel time for its workers as a key factor in its site search.
“For each proposed site in your region, identify all transit options, including bike lanes and pedestrian access to the site(s). Also, list the ranking of traffic congestion for your community and/or region during peak commuting times.”
Cincinnati ranks in the nation's top 50 on traffic congestion and obviously can’t provide on-site access to light rail and subway.
The streetcar could be a positive if Amazon settles on a Downtown site, but a recent report from the commercial real estate firm CBRE shows the city center currently has 7 million square feet of “Class A” office space for rent. That’s 1 million less than Amazon wants to fill in the next 17 years.
“Is there a city that gets an A up and down this entire chart?” Councilman Sittenfeld said.
While Cincinnati has "areas for improvement," Sittenfeld said Amazon has already demonstrated this region is worthy of investment by committing $1.5 billion to its cargo hub at the Greater Cincinnati Northern Kentucky International Airport.
"We have a stable, friendly business environment," Sittenfeld said. "We’re a real metro with a lot to offer. The revitalization of the region’s core is a big deal. We have a great story to tell."