Leaders in Los Angeles are eager to make a play for Amazon.com Inc.’s second headquarters despite some significant questions about whether there’s a real shot of luring the e-commerce giant to the area.
Any doubts aren’t stopping local politicians from jostling to lead the bid – a process touched off when Amazon issued the public relations equivalent of a national request for proposals on Sept. 8.
The Los Angeles Economic Development Corp. and Mark Ridley-Thomas, chairman of the Los Angeles County Board of Supervisors, made their intentions clear last week, launching a behind-the-scenes campaign to put the bidding process under a regional umbrella with the county in a lead role.
Letter
A private letter sent to civic leaders last week included a call by Ridley-Thomas and LAEDC Chief Executive Bill Allen for a meeting to discuss a unified regional proposal. The letter champions the county’s abilities to attract businesses and stresses the need for a single front.
Some key criterion laid out by Amazon: a marketplace with a population of at least 1 million, a strong system of colleges and universities, and an international airport within 45 minutes for the headquarters.
“We believe that our region has all the assets to develop, deliver and execute on a successful proposal,” the letter reads. “But, it will take all of us coming together to organize and mount a determined regional effort.”
The push by the county came after Los Angeles Mayor Eric Garcetti said the city would make a bid – an announcement issued just hours after Amazon said it would solicit proposals for what the company describes as a second headquarters to host 50,000 employees spread over up to 8 million square feet of office space.
Garcetti has remained quiet about the city’s plans since then – the mayor last week was in Lima, Peru, to accept an official offer for Los Angeles to host the 2028 Olympic Games. A spokesman for Garcetti said the situation was fluid, but did confirm an unspecified city representative attended the meeting called by county officials last week.
“We are having ongoing discussions about how to best approach this opportunity to bring good paying jobs to Angelenos and people across the region,” said George Kivork, a mayoral spokesman.
The presence of a representative of the Mayor’s Office wasn’t guaranteed.
In an interview prior to the county-led meeting, Carrie Rogers, senior vice president for business assistance and development at LAEDC, said she was hopeful Garcetti would ultimately be on board with a joint regional bid.
“We would welcome and certainly hope that the Mayor’s Office would be a part of this,” Rodgers said. “They’ve got tremendous capacity in the city of L.A.”
In hunt?
Who leads the bid might not matter, with many local economy and real estate watchers skeptical an L.A. bid has any real chance.
Richard Green, director of USC’s Lusk Center for Real Estate, said the city doesn’t have much of a chance because of the high cost of living, in addition to operational advantages that a second headquarters on the other side of the country would afford a company such as Amazon.
“As great as the West Coast is, why do they need it here?” Green said. “They’re overseeing their principal products, like cloud computing, and distribution, so I would think they would want to go east for that.”
But the potential windfall is too big to let the opportunity pass without an effort, even if it’s an uphill struggle, economic experts said. Amazon claims the 50,000 full-time employees it plans to hire in the next 10 to 15 years at the new outpost would average $100,000 a year in salary. And the company expects to spend more than $5 billion to develop the project.
Incentives
Some of the economic benefit might be mitigated by incentives Amazon is asking for as a part of its request for proposals. The company asked respondents to identify tax credits or exemptions, relocation and workforce grants, utility incentives, and permitting and fee reductions it could take receive.
That didn’t sit well with USC’s Green, who said such concessions would be a slap in the face to companies already here.
“First of all, I don’t like the use of incentives to get companies to move to a city,” he said. “We have a lot of great companies in Southern California. They would be rightly upset if they don’t have incentives and here they’re offering a ton of incentives for somebody to move here.”
Amazon’s request for proposals also calls for an enormous amount of space to house the 50,000 employees expected to work at the second HQ.
“I’m not even sure if you took up all the unleased space in downtown would that even be enough,” said Chauncey Swalwell, a partner in downtown law firm Goodwin Proctor’s real estate capital markets group. “The development environment here in California, and generally within L.A. more specifically, makes it hard to get big projects done.”
Green of USC said he thinks a downtown outpost is technically feasible, however.
“There’s lots of vacancy downtown,” he said. “They’re not going to put in 50,000 workers immediately. … L.A. is so huge that, yes, you could find or build 5 million square feet of office space.”
Arts District
One possibility, L.A. real estate market watchers say is the Arts District.
“If you go east along the river, there are places you can do it and you could build towers,” Green said.
Century City and other established office centers likely face even longer odds than downtown, Another possibility could crop up in the next ring out from the city in the Santa Clarita Valley. That’s where Aliso Viejo-based developer Five Point Holdings has plans for Newhall Ranch (see related story, page 1).
Outlying possibilities such as Newhall Ranch could be scotched over their distance from Los Angeles International Airport, even if the region can get a bid together.
Developer the Irvine Co. also announced a plan to work with the city of Irvine to land Amazon for Orange County.
