Amazon.com (NASDAQ:AMZN) has become the belle of the ball that everyone wants to dance with. Cities across the U.S. are pulling out all the stops to lure the e-commerce giant -- and its 50,000 jobs -- to their home turf. The contest began in early September when Amazon said it was accepting proposals from cities that can explain why they're the best pick for its second headquarters. Show Full Story
To help cities determine whether they had a chance to win the contest, CNBC reported that Amazon created the following checklist:
A city with more than a million people.
An international airport.
A good business climate.
Quality higher education.
A well-educated workforce.
Cities have until Oct. 19 to submit proposals.
If you want to understand why mayors are jumping into this contest and creating ad campaigns on YouTube to catch Amazon's eye, just look at what Amazon has done for Seattle, where it's currently headquartered. The company has 40,000 employees at its Seattle location and has created an additional 53,000 jobs in the city as a result of Amazon's direct investments. In addition, Amazon claims that its guests' hotel visits totaled 233,000 nights in Seattle, and it says it's paid $43 million to the city's public transportation systems.
The company has 40,000 employees at its Seattle location and has created an additional 53,000 jobs in the city as a result of Amazon's direct investments. In addition, Amazon claims that its guests' hotel visits totaled 233,000 nights in Seattle, and it says it's paid $43 million to the city's public transportation systems.
Basically, any city that Amazon touches will most likely turn to gold.
I'm going to argue that Amazon should look at Texas. The Lone Star State can provide the space Amazon needs to build a campus similar to what Facebook (NASDAQ: FB) has in Menlo Park, Calif., with a bus system to transport employees to and from work and on-site conveniences such as a hair salon and gym. Facebook also wants to build a second campus -- one that acts as a mini-neighborhood that will include housing and retail for its employees and the general public.
"We plan to build 125,000 square feet of new retail space, including a grocery store, pharmacy, and additional community-facing retail," the company wrote in a blog post.
Texas offers three prime candidates for an Amazon campus: Frisco, Fort Worth, and Austin. According to Seattle-based consultant Brittain Ladd, Frisco is the best choice. Located just outside Dallas and with a population of 168,140, Frisco has caught the eye of the U.S. Census Bureau, which in 2016 ranked it No. 2 among the nation's fastest-growing cities. Ladd has special insight into the matter, having worked on expanding Amazon Fresh and Amazon Pantry from 2015 to May 2017.
Let's take a closer look, then, at what Frisco can offer Amazon.
1. Quality of life
Frisco would give Amazon employees a prime spot to raise a family and live an active social life. The city includes high-quality public and private schools, a number of walk-in emergency clinics, affordable housing, mild winters, a well-educated workforce, and, of course, Southern hospitality.
Here are some statistics if you need more proof:
Financial-advisory company SmartAsset ranked Frisco No. 2 for "Best Places to Raise a Family in Texas" in June 2017.
The city had 60,750 housing units as of Aug. 1, according to friscotexas.gov.
For adults 25 and older, 95.5% are high school graduates or have a GED, and 58% have a bachelor's degree or higher.
Median household income is $123,055.
Top occupations are management, science, and business.
Frisco is safer than 46% of cities according to neighborhoodscout.com.
Frisco was ranked No. 2 among "Best Places to Raise a Family" in June 2017.
Image source: visitfrisco.com.
2. Business-friendly climate
A 30-minute drive from Frisco takes you into the heart of the Dallas-Fort Worth metroplex, which is home to over 50 Fortune 500 companies. The area is known for being friendly to oil, as its the home turf for oil companies including Apache, Marathon Oil, and Pioneer Natural Resources, as well as gas companies such as ExxonMobil and Phillips 66.
"Focus on the fact many Fortune 500 companies are moving to Frisco," Ladd advised. "Change the question from 'why would Amazon ever choose Frisco?' to 'how could Amazon ever say no to Frisco?'"
3. The "cool" factor
If Texas wants to wow a company that has a market cap of $462 billion, then it needs to have a "cool" factor to present, Ladd said.
Top on this list could potentially be the Hyperloop if it gets approved, he said. That's Tesla (NASDAQ: TSLA) CEO Elon Musk's vision of a bullet train that would take people from San Francisco to Los Angeles in 35 minutes, versus the six hours it typically takes by car.
Fortunately for Texas, it's one of the 10 finalists in the international competition that Hyperloop One is hosting to find the best proposals for regional routes. The proposed "Texas Triangle" route would link Dallas, Houston, Austin, San Antonio, and Laredo.
While the Hyperloop is still a way off, if Texas is chosen, then Amazon could potentially have a Hyperloop station that connected its headquarters to the airport, to other nearby cities, and even to Whole Foods' headquarters in Austin.
Frisco can emphasize that its outdoor recreation will help attract millennial workers for Amazon.
Image source: visitfrisco.com.
4. The millennial factor
Since Amazon needs to attract millennials, the winning city is going to have to look appealing to those born between 1980 and 2000.
Texas can do so by driving home that it values innovation and high-tech, including the Hyperloop, as well as clean air, clean water, and caring for its parks, Ladd said.
"You have to change the perception that Texas only cares about oil," he said. "Millennials and Generation Z want to know Texas cares about the environment."
For example, they might want to know that Georgetown, Texas, located outside Austin, made headlines this year for being one of the first cities in the U.S. to be 100% powered by renewable energy.
In addition, Frisco can note its low cost of living, which could be a major plus in comparison to Boston and San Francisco. Millennials could buy or rent a house, even at a young age, Ladd said.
Texas has space for Amazon to go above and beyond what it did with its first headquarters in Seattle. "In dense cities, you can't build out a campus," Ladd says. "Texas gives Amazon the opportunity to 'think big,' and that's what Amazon does best."
10 stocks we like better than Amazon
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now… and Amazon wasn't one of them! That's right -- they think these 10 stocks are even better buys.
Natalie Walters has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon, Facebook, and Tesla. The Motley Fool owns shares of ExxonMobil. The Motley Fool has a disclosure policy.