Making the grade? How DFW stacks up for Amazon’s HQ2


Jake Dean

Population: Exceeds expectations. Amazon wants a metropolitan area with more than 1 million people. With more than 7 million people, DFW has that covered with ease. Amazon also wants a growing population. Last year alone, the population of DFW grew by 143,000 - more than anywhere else in the nation. Size matters to Amazon, and North Texas has it in spades. The major city's nickname is "Big D," "Big Tex" looms over the State Fair. Billy Bob's in Fort Worth proclaims itself the world's largest honky tonk. DFW has big sports arenas (Dallas Cowboys' home AT&T Stadium), big malls (NorthPark Center), and big companies (home of 22 of the Fortune 500 companies). "If you're truly thinking about 50,000 jobs over a period of time, you've got to be in a place that has scale," said Mike Rosa, senior vice president of the Dallas Regional Chamber's economic development program. "We're the fourth largest market in the country, but the largest that comes with a stable business climate." Amazon also wants its site to be within 30 miles of the region's population center, which in this case is Dallas. That's a stretch for places like Denton (39 miles from downtown Dallas) and McKinney (33 miles away), but leaves most of the metroplex in play. Show Full Story

Labor Force/Higher Education: Meets Expectation. "A highly educated labor pool critical and a strong university system is required." So reads Amazon's RFP. North Texas" deep talent pool across a diverse range of industries has long been a hallmark of the region. But as more companies relocate to the area, it's becoming more common to hear hiring executives grumble - typically, privately - about companies poaching top talent from each other.

Seventy-three percent of North Texas' 7.1 million residents are working age. From this base, employers can draw from a total civilian labor force of 3.8 million people-a workforce size bested only by the larger Chicago, Los Angeles and New York metro areas. On the education front, DFW has 15 public and private major universities and dozens of community colleges and smaller institutions of higher learning. The University of North Texas at Denton, the University of Texas at Dallas and UT Arlington are among Texas' seven "emerging research" universities currently expanding program capabilities and funding in an effort to become world class "tier one" research universities. Dallas-Fort Worth is adding tech employees - Amazon will need gobs of software programmers and designers - at a rate that far surpasses the amount of tech degree produced by the area, according to CBRE. That shows DFW's ability to retain its growing number of tech graduates while attracting new talent to the area. The DFW region added 40,330 tech jobs over the last five years while adding 17,750 tech degrees, for a "brain gain" of 22,560, the CBRE study found. The region's brain gain in second only to San Francisco. DFW business groups and educations are striving hard to keep the pipeline of talented workers full. The Dallas Regional Chamber in April, for instance, launched the "Say Yes to Dallas" campaign to attract millennials to North Texas. With a steady stream of new companies moving to the Dallas area, the campaign will help ensure that the businesses have the young creative workers that they need thrive after the company makes the move, chamber officials say.

Submitted Photo

Mass transit: Needs Improvement. Amazon wants its site to have access to mass transit, which it defines as "direct access to rail, train, subway/metro, bus routes." The Dallas-Fort Worth area is hit-or-miss in this category. On the up side, Dallas Area Rapid Transit is the country's longest light rail system, stretching more than 90 miles across North Texas. In addition to Dallas, some of DART's 13 member cities include Irving, Plano and Richardson. But North Texas is a sprawling place, and cars and pickups remain a big part of the culture in the state. Several of North Texas' major job centers - Fort Worth, Frisco, McKinney and Arlington are among them - are not part of the DART system. A plan for the 26-mile Cotton Belt Line that would connect downtown Plano to Dallas Fort Worth International Airport has been slow to develop, with DART board members struggling to reach consensus over funding for the 26-mile line. According to the American Communities Survey, only 1.5 percent of the Dallas Fort-Worth workforce uses public transit. That number ranks DFW low on the list of its Amazon competitors. And Dallas ranks 16th in the world for traffic congestions, just behind Washington D.C. and ahead of Istanbul, according to a recent report by INRIX. By comparison, in Boston, 40 percent of workers use public transit, and in Washington D.C., 36 percent of the workforce rely on it. In the similarly car-centric burgs such as Atlanta and Denver, 9 percent and 8 percent of their respective workforces use mass transit to get to work. In Austin, less than 4 percent do.

Proximity to international airport: Meets expectation. Amazon wants its HQ2 to be 45 minutes from an international airport, putting all but the searches of the Dallas-Fort Worth area in the running. Depending, of course, on traffic congestion. Dallas Forth Worth International Airport is one of the world's busiest and is frequently cited by companies that relocates to the area as a main reason for their move. In 2006, DFW was the nation's fourth busiest airport, behind the international airports in Atlanta, Los Angeles, and Chicago, and just ahead of Denver, according to Airports Council International DFW's 65.7 million passengers in 2016 also ranked it 11th busiest globally. Atlanta's Hartfield Jackson International Airport topped the global ranking last year with 104.1 million passengers. Amazon, as a global company needs to be able to get almost anywhere in the world. DFW has also been trying to successfully in recent years to boost its global destinations lineup for business and leisure travel. Overall, DFW Airport has service to 233 destinations, including 56 international and 167 destinations within the United States. Amazon, specifically says its HQ2 needs direct flights to Seattle, New York, San Francisco and Washington D.C., all of which are offered through DFW International.

Incentives: Meet Expectations. All of the attention that Amazon has triggered with its request for proposals will no doubt be expensive for taxpayers. The potential state and local incentives and tax-related subsidies tied to the new HQ2 are widely anticipated to top $1 billion. "The initial cost and doing cost of doing business are critical decision drivers." Amazon spells out in the RFP. Like a bride registering for wedding gifts at Neiman Marcus, the company then goes on to suggest types of incentives it will entertain - land, site preparation, tax credits/exemptions, relocation grants, workforce grants, utility incentives/grants, and permitting and fee reductions. The Dallas-Fort Worth area will be competitive by offering state and local incentives, abatements and other methods of sweetening the deal for Amazon, Rosa said. He declined to discuss specific amounts. "Any time you have a project where the job figures and capital investment ramps up into the billions of dollars, those incentive possibilities grow in proportion to the project, " Rosa said. As a reference point, Toyota netted $46.75 million in economic incentives from Texas Enterprise Fund ($40 million) and Plano ($6.75 million) with

its consolidation. In general, economic incentives offered in Texas are middle-of-the-pack nationwide, but should be sufficient to close the deal with Amazon if most other considerations match the company's needs.

Stable and business-friendly environment: Exceeds expectations. In addition to scale, the region's business climate is an area in which DFW excels. The proof, as they say, is in the pudding, as major companies such as Toyota Motor Corp., Liberty Mutual, Kubota Tractor Corp., Jacobs Engineering Group and dozens more continue to move in each year. Some of the business climate pluses for DFW include the lack of a state income tax and a relatively low costs of living, housing and doing business. Much of the credit goes to the state. Overall, Texas this week reclaimed its first time ranking among states where it comes to the nation's best climate for business, according to a report by Development Counsellors International. This is the seventh straight time the state has topped the DCI survey, which has been produced every three years since 1996. In this year's report, 42 percent of respondents to the group's survey picked the Lone Star State over all other s as the nation's most pro-business. Respondents cited a favorable tax climate and a quality workforce among the factors benefiting Texas. Texas was followed by Florida (52 percent), and Georgia (20 percent).

Photographer: Todd Sticker

Sustainability: Meets expectations. DFW has a history of commitment to sustainable building, which will be a plus in the quest to lure Amazon. Amazon points out in its RFP that 20 of the buildings on its Seattle campus were built using LEED standards. Additionally, Amazon's newest buildings use a "District Energy" system that recycles heat from a neighboring non-Amazon data center to heat millions of square feet of office space. "Amazon will develop HQ2 with a dedication to sustainability," the RFP says. In North Texas, Toyota has submitted for LEED Platinum status. The campus was built using Texas limestone, concrete and glass, and has solar panels expected to produce 7.75 megawatts of electricity, with the remainder of Toyota's electricity needs being met by energy generated by Texas wind farms. The parking garages have cisterns underneath them that collect rainwater and hold about 400,000 gallons. The water will be used to irrigate the campus. The BMW Dallas Regional Parts Distribution Center in Lancaster (pictured), opened in early 2014, is LEED Silver certified.

Jake Dean

Connectivity: Meets Expectations. Optimal fiber connectivity is "paramount" to the HQ2 location, Amazon's RFP states. The company specifically requests that proposals demonstrate fibers connectivity on submitted sites. The RFP also asks for multiple cell phone coverage maps. Connectivity varies, sometimes dramatically, from site to site, but overall connectivity in DFW is considered strong. Facebook Inc., for starters, put its stamps of approval on DFW's connectivity when the social media build a more than $1 billion campus in north For Worth that will span five buildings totaling 2.5 million square feet in data center space. The project at 4500 Like Way is Facebook's fifth data center in the country. In the first half of this year, a surge of leasing activity by Fortune 1000 companies - as well as one rapidly growing cloud provider - helped Dallas-Fort Worth reach an all-time high for absorbed data center. As the cellular service, coverage is generally excellent for the four major carriers - especially Dallas-based AT&T, according to WhistleOut, which tracks reception and plans offered by mobile phone companies. DFW is a competitive market with plenty of choice, and 4G LTE is widely available, WhistleOut notes. On the down side, coverage is reportedly less reliable in areas surrounding White Rock Lake and a bit patchy around Richardson.

With a $1 billion sticker price and more than 4,000 highly paid employees, the Toyota North America headquarters consolidation in Plano ranks as the biggest project of its type ever to choose North Texas.

Comparing the automaker's project side by side with Amazon’s highly hyped second headquarters, however, is like parking a tiny Toyota Prius next to a Toyota Sequoia full-size SUV.

Amazon’s (Nasdaq: AMZN) projected employment of 50,000 full-time jobs at its new “HQ2“ is more than 10 times the number of jobs created by Toyota (NYSE: TM). The e-commerce giant's projected $5 billion capital expenditure cost over the next 10 to 15 years is roughly five times that of Toyota's in Plano. Toyota hasn’t disclosed its salaries in Plano, but Amazon’s promise of an average annual compensation exceeding $100,000 per employee is likely comparable to the automaker’s, if not more.

With numbers like Amazon’s, it’s no wonder mayors, governors, economic developers and business leaders across North America are falling all over themselves to submit pitches to the Seattle-based company. The competition for HQ2 is fierce.

“We are excited about the project. It’s one of the reasons that economic developers get up in the morning,” said Mike Rosa, senior vice president of the Dallas Regional Chamber’s economic development program.

The regional chamber will assemble and submit to Amazon a single proposal for the Dallas-Fort Worth area that will include multiple potential sites in communities throughout the metroplex, Rosa said. The proposal will highlight the advantages of the region overall and delve into the assets of the individual communities. It will also outline state and local incentives such as grants and tax abatements available at each potential site.

To see how North Texas’ strengths and weaknesses align with Amazon’s wants and needs, we dove into the retailer’s request-for-proposals for HQ2. Then we graded the DFW area on categories ranging from population and labor force to mass transit and connectivity.

Officials have until Oct. 19 to submit proposals to Amazon, which will announce a winner next year.

The attached photo gallery breaks out where North Texas makes the grade and where the region is lacking.

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