Development

The ‘Amazon effect’: What the failed bid for HQ2 taught Charlotte officials

In Arlington, Va., an old warehouse sits empty, wrapped in a fence covered with inspirational phrases, black and white patterns and other images stretching across it. There’s nothing indicating that it’s among the sites where one of the biggest companies in the nation will soon set up shop.

Amazon will soon bring 25,000 employees to the area for its second headquarters, in a development being branded as “National Landing.” The company has said it will invest more than $2.5 billion in building the campus over the next decade.

A few miles away from the site, officials from Charlotte and other cities gathered in Washington D.C. at a real estate and land use conference held Wednesday through Saturday.

Like many cities big and small, Charlotte made a pitch for the so-called HQ2 but didn’t make the cut for Amazon’s list of 20 finalists. Tracy Dodson, Charlotte’s assistant city manager focused on economic development, says she doesn’t have any regrets.

I have no problem whatsoever that we didn’t get Amazon,” Dodson said. “It would’ve been too much too fast.”

Even though Charlotte was unsuccessful in its bid to land the Seattle-based tech giant, Dodson says the effort was a catalyst to change the way economic development is done in the region.

She calls it the “Amazon effect.”

Next month will mark two years since Charlotte sent its proposal to Amazon. Dodson and other local leaders say that the process created a shift in how the area works to recruit businesses. Charlotte is expanding its transportation system, a key part of what Amazon was looking for, to other parts of the region. There’s also been rapid growth in the tech sector, an area that Amazon said it was lacking in compared to other cities.

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To be sure, Charlotte is far from having a transit network like that of Washington, D.C., or matching its tech workforce, anytime soon.

But in less than a year, the city has had a slew of economic development announcements.

Honeywell moved its corporate headquarters from New Jersey to Charlotte, lured by more than $87 million in state and local incentives.

In June, Lowe’s selected Charlotte for a new 2,000-employee global tech hub that will be housed in a 23-story tower in South End. And BB&T and SunTrust announced that they would merge and put the headquarters of their new bank, to be called Truist, in Charlotte.

So, the next time that a company like Amazon is looking for its headquarters, could Charlotte win out?

‘Playing to the strengths’

Holly Sullivan, director of worldwide Economic Development at Amazon, led the search for HQ2. She kicked off the opening session of the D.C. fall meeting of the Urban Land Institute by emphasizing the importance of regional cooperation in the company’s decision.

Alexandria and Arlington submitted a joint bid to land the headquarters.

Dodson wasn’t in her role when Charlotte put together its proposal for Amazon’s second headquarters. But working for a prominent developer, Lincoln Harris, and serving on the North Carolina Board of Transportation, she saw the need for that kind of regional effort in landing projects.

“I would beat my head against the wall with where we had gotten to in Charlotte, because it was: ‘my neighborhood, my community, what is my neighborhood getting,’ and not thinking more broadly,” she said. “And that tide has shifted now, over really the past two years.”

The Amazon pitch included 25 locations in seven counties in the region, including the site of the former Philip Morris facility in Concord and Camp North End north of uptown.

Dodson said that list should have been narrowed to a handful of strong sites that were well thought out. Now, she said she talks to developers and landowners about the timelines of their projects, and what companies are looking for.

I’m very big on having a deep bench and showing a deep bench of opportunities to prospects, but it’s got to be realistic,” she said.

That increased focus on promoting the whole Charlotte metro region is why the area’s two major economic development groups merged. The Charlotte Chamber and the Charlotte Regional Partnership combined this year to form the Charlotte Regional Business Alliance.

Cooperation should extend beyond just the Charlotte metro area’s borders, said Darryl Dewberry, chairman and CEO of real estate firm the Spectrum Companies. He said the city is starting to work with Raleigh more than it has in the past.

Unlike Charlotte, Raleigh did make Amazon’s list of finalists.

“There’s been a lot of competition between the two, and that’s a little bit of a disadvantage because the state decision makers are in Raleigh,” he said. “We need to be playing to the strengths of both cities.”

Investing in transit

As part of its incentive agreement with Amazon, Virginia has said it will invest up to $295 million in transportation projects in the region.

Charlotte officials say building up the city’s transit infrastructure is key to landing economic development wins.

The city has already seen the benefits of investments in transit in South End, Dewberry said. Retail, restaurants and thousands of apartments have sprung up in just over a decade since the light rail opened.

But space for large corporations like Amazon in uptown and South End is increasingly hard to come by, said Jared Londry, director of capital markets at commercial real estate firm Cushman & Wakefield. He said the city needs more high-quality office space.

That’s part of the problem in Charlotte: where else are you going to go from a land standpoint?” he said.

Dodson said the best sites that would have accommodated Amazon were likely not in Charlotte or Mecklenburg County. But they’re also further from transit.

For example, the Grounds at Concord, the site that encompasses the former Philip Morris plant, is 2,100 acres. Last month, state officials announced that online used car retailer Carvana will put an auto facility on the site. But the nearest light rail stop is at UNC Charlotte, about 8 miles away.

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The former Philip Morris plant on US 29 in Concord is one of the sites that Charlotte included in its proposal for Amazon’s second headquarters. JEFF SINER Observer file photo

“I think there was this moment of, ‘hey, wait a minute, we have sites, we have opportunity, but they’re not connected to transit,’ ” Dodson said. “And so really since Amazon, I’ve seen a shift in a willingness to lean in and talk about regional transportation.”

Pineville’s town council unanimously passed a resolution in support of light rail late last year, nearly two decades after it first said no to CATS’ plan to build light rail through the town. The Charlotte Area Transit System has presented several potential routes for the expansion, though the agency hasn’t given cost estimates.

CATS’ 2030 transit expansion plan also includes the Silver Line, which would run from Matthews west into Gaston County. And officials have even started to discuss whether light rail could be brought to South Carolina.

Growing tech talent

Amazon told Charlotte that the city’s pool of tech talent is “lacking” compared to others, the former Charlotte Regional Partnership said last year.

According to Amazon’s feedback, Charlotte’s tech workers totaled about 47,150 at the time. The average tech talent pool for the candidate cities was more than 105,000.

But Charlotte’s tech workforce is expanding: the total number of tech jobs in the area increased by 30% over the past five years, double the rate of the United States, according to a report from the Charlotte Regional Business Alliance.

In addition to Lowe’s tech center, BB&T and SunTrust also said as part of its new headquarters, they would put a technology and innovation center in Charlotte. And digital mortgage lender Better.com recently said it would hire 1,000 people for its new Charlotte office.

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Vishal Garg, the CEO and Founder of Better.com, and Mayor Vi Lyles at the announcement that Better.com would hire 1,000 people for a new Charlotte office. Xavier Tianyang Wang xwang@mcclatchy.com

Higher education key

For Amazon, it wasn’t just about existing talent, it was about growing a pipeline of workers, Amazon’s Sullivan said at the conference.

“There was no single location that we knew we could go in and hire 25, 30, 40, 50,000 people,” she said.

Higher education emerged as a key piece of the talent pipeline: Virginia Tech is building a $1 billion campus just south of Amazon’s new headquarters, which will offer graduate-level technology courses.

In Charlotte, Londry, with Cushman & Wakefield, said attracting more universities to put satellite campuses in the city would help drive economic development.

He pointed to the part-time MBA program at Wake Forest, which has a campus in uptown. And in April, Atrium Health, Wake Forest Baptist Health and Wake Forest University announced a deal that would bring Charlotte its first four-year medical school.

UNCC’s technology programs are growing too.

The university’s College of Computing and Informatics has seen its enrollment increase from just under 2,100 in 2014 to 3,476 last year, an increase of 65.5%.

Dodson said she brings UNCC into conversations with corporations looking to move to Charlotte. She said the school, which is now the third largest in the UNC system, is an asset for the community but its success story isn’t often told.

“Some of the (UNC) institutions have just been around and been major powerhouses,” she said. “And so I think sometimes we don’t give credit to the ones that have just grown up really quickly.”

In the end, local officials like Dodson say there might have been an upside to missing out on Amazon. Dodson said it would have brought a significant amount of resources to just one part of the region.

“That’s probably what upset a lot of citizens — you’re putting a lot of money into one thing, one spot,” she said. “The thing that I like about the way that we are winning right now is that it’s organic, its not all in one place.”

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Danielle Chemtob covers economic growth and development for the Observer. She’s a 2018 graduate of the journalism school at UNC-Chapel Hill and a California transplant.
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