Amazon’s next chapter

Local economist questions Austin as 'ideal fit' for Amazon headquarters

Local economist questions Austin as 'ideal fit' for Amazon HQ2

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A local economist wonders whether Austin really needs Amazon's second headquarters. Photo by Shelley Neuman

Texas Governor Greg Abbott declares Austin would be an “ideal fit” for Amazon’s second headquarters, and executives at the Greater Austin Chamber of Commerce echo that opinion. But an Austin economist isn’t entirely sold on the idea of Amazon’s so-called HQ2 project — a $5 billion initiative that the Seattle-based e-commerce behemoth says will create up to 50,000 jobs — landing here in Central Texas.

William Mellor, vice president and general manager of Austin-based AngelouEconomics, an economic development and site-location consulting firm, questions whether Austin really would be an “ideal fit” for Amazon HQ2. He thinks Austin will remain one of the fastest-growing regions in the country with or without Amazon’s second headquarters.

“That is likely why our city leadership has been a bit ambivalent about the prospect of Amazon, and honestly, I would have to agree with that sentiment,” Mellor tells CultureMap. “Austin’s tech talent pool has become increasingly tight, and it would be better for our economy to grow by 50 companies with 1,000 employees each than by one mega-project with 50,000 employees.”

Nonetheless, Mellor acknowledges it makes sense for Austin to be on the shortlist for Amazon HQ2. On January 18, Amazon whittled down the 238 bidders for its second headquarters to 20 finalists, including Austin and Dallas. “Austin has too much to offer a company like Amazon to not be in the running,” Mellor says.

So, what are Austin’s chances of zooming to the top of Amazon’s final HQ2 list?

“Well, you can’t win if you’re not on the list, but there is a long way to go still,” Mellor says. “A final decision won’t come until the end of the year, and Austin will have to come up with innovative and workable solutions to its traffic and affordability issues. The good news is that, relatively speaking, Austin is already more affordable than many of the other cities on the shortlist.”

On the day of Amazon’s announcement, Austin Mayor Steve Adler reiterated the reluctance of city leaders to extend tax breaks and other incentives in order to lure Amazon HQ2. At this point, it appears the State of Texas would be the key source of financial incentives for HQ2 in Austin.

Adler says Austin must engage in an “open and honest conversation” about Amazon HQ2 and the impact it would have on the region — namely traffic congestion and housing affordability.

“This is a desirable city for companies to come because it’s beautiful, it has lots of talent, and it’s a place where people who work for companies want to live,” Adler told reporters. “So, when we have conversations on economic development, there will have to be conversations that deal both with what is special and desirable in this city, but also what our challenges are and how we can best meet those challenges.”

For his part, Austin entrepreneur Justin Bayne, chief development officer at luxury co-working provider Firmspace and founder of commercial real estate company SkylesBayne, believes Austin is primed to be the home of Amazon HQ2. Bayne says Austin’s downtown and its emerging “second downtown” in the Domain “are intelligently built to disperse the city’s population density and accommodate the influx of growth that Amazon … would bring.”

In response to Amazon’s release of its HQ2 shortlist, Mike Berman, senior vice president of communications for the Greater Austin Chamber of Commerce, simply says: “We look forward to presenting the best of what our region has to offer and how we can partner with Amazon.”