I interviewed a site selector Wednesday whose harsh assessment of Dallas’ chances of landing Amazon’s second headquarters reminded me of boxing great Muhammad Ali’s famous quote before fighting Joe Frazier.
“Frazier's got two chances,” Ali said. “Slim, and none. And Slim just left town.”
As the fight to land Amazon’s HQ2 comes down to the final round, it looks like Dallas has those same two chances. Slim may not have left yet, but he’s packing his bags.
According to published reports, Amazon’s second headquarters will now be split between two cities. Long Island City in Queens and Crystal City in Northern Virginia are the most consistently named finalists, with Dallas also mentioned as a possibility by the Wall Street Journal earlier this week.
Tom Stringer, a New Yorker who heads the site selection and incentives practice for the business consulting firm BDO, has done extensive searches in all three places for his own Fortune 1000 clients, whose needs have ranged from a relocated headquarters to large back office operations. I asked Stringer whether it was time to write Dallas out of the equation for HQ2.
“We don’t know what the company is thinking,” Stringer said. “There’s sure a lot of speculation out there. I wouldn’t write anybody in or out based on leaks and pure speculation without any official commentary.”
He would, however, write Dallas off based on Amazon’s initial preferences spelled out in its request for proposals. Careful reading of the RFP shows Big D and its surrounding cities simply aren’t big enough to handle what the Seattle-based e-commerce titan needs, Stringer said.
“They’re saying there is a volume of jobs and a real estate requirement that they would like to get," he said. "Here are the salaries. Here’s what we propose in cap-ex. Here’s what we propose in square footage. Here’s what we propose in job numbers.”
Those numbers, specifically: 50,000 jobs paying $100,000 a year and up. Up to 8 million square feet of Class A office space spanning 100 acres. And $5 billion in investment.
Only five places in the country could support a project of HQ2’s scale, and Dallas is not one of them, Stringer argues. He put New York, Washington D.C., Boston, Chicago, San Francisco and “maybe, maybe, maybe Atlanta” on the list.
In short, Stringer says, Dallas never had a chance.
Dallas officials and some other national site selectors disagree with Stringer.
Dallas Regional Chamber officials are declining comment on HQ2-related queries. But DRC leadership has made the case that the city and region can accommodate Amazon’s needs.
Mike Rosa, senior vice president of Economic Development for the chamber, has repeatedly mentioned that DFW has added 100,000 jobs a year over the last several years.
“50,000 jobs does not scare us,” Rosa said in a recent forum with NAIOP, a commercial real estate development association.
North Texas has plentiful land for development, which is a plus, Stringer said. It is in the Central time zone and is geographically central in the United States. And the state and local tax climate and the affordability are "exceptional" compared with the other locations being considered, Stringer said.
But Dallas-Fort Worth doesn’t have the urban density that Amazon is looking for, he said. Nor does North Texas have a big enough technology workforce for the type of jobs Amazon is looking to fill. The university system feeding the workforce can’t meet Amazon’s needs. And the region’s mass transit falls short of the cities in Stringer’s top five, he said.
The ability to attract talent is the top consideration in site selection, and all other factors are secondary, Stringer said.
“If you don’t have the advantages on the talent-related factors — and Dallas just doesn’t have the volume — and you don’t have the transit or quality-of-life things that are being requested, you’re probably not going to win,” he said. “If you’re only going to come out ahead on costs, you’re probably not going to win.”
Others, however, argue that Dallas-Fort Worth’s pool of highly educated residents and tech workers stacks up favorably for Amazon's HQ2.
The Dallas area added roughly 402,000 “highly educated” residents between 2008 and 2016, according to a study released in July by commercial real estate firm JLL. The study defines highly educated as those holding a bachelor’s, master’s, professional or doctoral degree.
The Dallas area’s increase in highly educated people falls short of the approximately 914,000 highly educated residents added in the same period in the New York City area. But it's comparable to the 427,000 added in and around Washington, D.C., the report says.
In another report, DFW ranked No. 6 among U.S. metro 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.
The main reason for choosing two cities for HQ2 would be to ensure that Amazon can recruit enough tech talent. Splitting into two locations would dramatically increase its worker pool at a time when low unemployment is making it more difficult for companies to hire large pools of high-caliber people in one area.
Even if the HQ2 project is split into two, it’s too big for DFW, Stringer said.
“Even 25,000 jobs, even over time, is an absurdly large number,” he said. “You really need a certain population base and a university feeder system and density that Dallas just doesn’t have. It has it on a relative scale compared to peer cities, but it does not have it on a global scale.”
Last year, Amazon announced its plans to build a second corporate headquarters, prompting a bidding war as 238 cities and regions responded to the company’s request for proposals. The 238 was later narrowed to 20 possible locales, including Dallas and Austin in Texas. Amazon says it will make its HQ2 decision this year.