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DFW swung and missed on Amazon's HQ2, but here's why we'll be fine

Jeff Bezos, Amazon CEO, spoke on April 20 during a leadership forum hosted by the George W. Bush Presidential Center and Southern Methodist University. Amazon made it official Tuesday, announcing plans to split its second headquarters known as HQ2 between the Washington, D.C., and New York City areas.

 

If the Amazon HQ2 search were the Academy Awards, Dallas would be saying, “It’s an honor just to be nominated.

 

And if the HQ2 search was a Dallas Cowboys season, Jerry Jones would be saying, “At least we made the playoffs.”

Dallas-Fort Worth was a finalist for the most highly coveted economic development prize in history, but didn’t land the HQ2 project — and that’s OK, North Texas officials say. Show Full Story

 

Amazon.com Inc. (Nasdaq: AMZN) made it official Tuesday, announcing plans to split its second headquarters known as HQ2 between the Washington, D.C., and New York City areas.

 

The announcement set Dallas-Fort Worth, which prides itself above all else on winning headquarter relocations and expansions, in full spin mode.

 

“Make no mistake, this has been a ‘win’ for our region regardless of the outcome,” said Dale Petroskey, president and CEO of the Dallas Regional Chamber. “Our business community grows and expands by the day, and our momentum as a destination of choice has only increased as a result of being a finalist for HQ2.”

 

The Dallas Regional Chamber, working with the Fort Worth Chamber and dozens of regional economic development partners, led the DFW region’s unified response to Amazon’s HQ2 request for proposals.

 

Dallas-Fort Worth looked to be an early frontrunner for Amazon’s huge expansion, but DFW’s hopes seemed to fade as the search dragged out for 14 months. In the past week, Crystal City in Northern Virginia and Long Island City in Queens emerged as clear favorites to land a split HQ2, with Dallas mentioned only as a possibility.

 

Since September 2017 alone, when the HQ2 project was launched, 40 corporations have announced relocations and expansions within North Texas, including Core-Mark, Louis Vuitton, Paycom, Peloton, Smoothie King and Vistaprint, according to a Dallas Regional Chamber news release issued after Amazon’s announcement on Tuesday.

 

In the last eight years, DFW has added more than 120 corporate headquarter relocations and more than 1 million new residents, plus hundreds of local company expansions. All told, it adds up to more than 750,000 new jobs.

 

Mike Rosa, senior vice president of Economic Development for the Chamber, said Amazon’s final selection is not a reflection on the merits of Dallas, but a judgment that Dallas “was not the exact fit for Amazon’s HQ2 plans.”

 

“We like to win, and we’re used to winning, so while we are disappointed, we understand Amazon’s decision is one they believe is best for their company at this time,” Rosa said.

 

Dallas Mayor Mike Rawlings said during a news conference Tuesday the site within North Texas that Amazon focused on stretched from Union Station and the former Dallas Morning News building south to the Cedars and Southside on Lamar then east to 20 acres behind Dallas City Hall to Interstate 30. 

 

Dallas offered Amazon roughly $600 million in local incentives and another $600 million in state incentive to plant HQ2 in the city, Rawlings said. That compares to roughly $1.5 billion offered by New York and a combined state-local incentive of about $1.5 billion in northern Virginia, the mayor said.

 

New York is paying about $61,000 per job to land Amazon, Rawlings said. The combined state-local offer in Dallas worked out about $22,000 per job, he said.

 

“This morning, I got a phone call from Amazon telling us that we lost,” Rawlings said. “We competed hard, we competed well, but we did not succeed.”

 

Rawlings said Amazon told him that being on the East Coast was important to the company. He also said that Amazon was impressed with the talent pipeline in DFW, but worried that the talent they could hire immediately was better in the two locations the company chose.

 

Dallas must press state legislators to increase spending on higher education if it wants to compete against the country’s top cities for the biggest and best corporations in the world, Rawlings said.

 

“There is some soul searching that’s going to take place this spring to see if our legislature can come forth with a plan to make sure that we’re competitive with the talent that we need,” he said.

 

The areas that Amazon chose are major hubs for key interests inside the company, including media and advertising in New York and spending on its cloud services by the government.

 

“Everything’s obvious in hindsight,” said Cooper Smith, an analyst at Gartner. “New York and D.C. — those two areas make a lot of sense.”

 

Still, while Dallas lost out, there may be some upside from the process itself with the region getting more attention for its tech chops, observers say.

 

North Texas didn’t just participate in the HQ2 sweepstakes, but emerged as a top 20 finalist when Amazon narrowed the field several months ago. Then, as the process drew to a close, Dallas was mentioned along with the two main winners in a key story early last week by The Wall Street Journal as Amazon neared picking a winner.

 

Dallas has worked to show it’s in the mix for leading tech cities, and now it can use the Amazon experience to bolster its reputation for innovation.

 

“Maybe being prominently mentioned in the dispatches from the front is going to help in that regard,” said Mike Davis, senior lecturer on business strategy and economics at Southern Methodist University’s Cox School of Business.

 

Already, Dallas has been getting more attention for its tech prowess. The region took No. 6 among U.S. metropolitan areas, according to the 2018 “Tech Town Index” from CompTIA, or the Computing Technology Industry Association. That put it ahead of No. 7 Seattle, No. 8 Denver and No. 11 Washington, D.C.

 

A survey released last month says Dallas-area residents are increasingly optimistic about the area growing as a tech hub, according to a new Capital One Future Edge DFW report. Nearly two-thirds of respondents believe that major tech companies will increase their presence in the region in the next decade.

 

The ”reputation hasn’t caught up to the reality,” Davis said.

 

And all the work in getting together pitches could be used again in the future, Smith said. There’s reason to put all that effort up for just the e-commerce giant.

 

“They could use the same proposals to attract other large employers,” Smith said. “The reality is that jobs are jobs. There are a number of companies that require the same level of talent — and have the same resources to pay that Amazon would.”

 

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