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September 14, 2017

Amazon Fever

By Jonathan Zimmerman

Outside of debating who the Bears’ starting quarterback should be, the number one topic of discussion in Chicago these days involves Amazon’s headquarters announcement. Do we really have a chance to land HQ2? Are they seriously considering other cities? How many people would they hire?

I have never seen a story take on a life of its own so quickly but it’s fascinating to ponder the possibilities. On the surface, it appears as if Chicago really does have a legitimate opportunity to make this happen. Sure, other venues such as Atlanta, Boston, Denver, New York, Philadelphia and Washington DC are formidable contenders indeed, but in my semi-biased opinion, Chicago really does check all of the boxes.

1. We have the population. There over one million people in the metropolitan area. We have access to first class universities both in the city and in the immediate Midwest region. We have the necessary public transportation and an international airport with numerous direct flights to and from Seattle (where Amazon’s current headquarters is located). Not to mention the culture, a vibrant tech scene and of course, plenty of solid real estate options.

2. We have the Amazon presence. The company just expanded into 70,000 square feet at the Franklin Center and added 8 warehouses and a sorting center.

3. We have a vast history of housing corporate headquarters. We all remember when Boeing decided to fly its headquarters from Seattle into town back in 2001. National department stores, like Sears and Montgomery Wards, once called Chicago home and one can argue that Amazon’s platform is the next logical progression from these catalog houses that ruled the way Americans shopped for so many years.

So when news of the story broke, my immediate thought for this month’s blog was to analyze all of the potential city locations for the corporate headquarters. After reading 20 different articles already doing this, however, I decided to back off and take a different angle.

While landing Amazon would be quite the coup for Chicago, suppose that they do eventually bring in 50,000 new jobs. How would this impact the city? The positives are substantial: they would make a reported $5 billion dollar investment in the area, add increased tax revenue (eventually), amplify prestige–which could very well attract more corporate headquarters in the future, create an almost certain tightening of the real estate market (both residential and commercial), generate more development in all sectors, and a produce a strengthened job market.

While the benefits are appropriately touted, there is another side being neglected in the analysis…

•Can downtown really support 50,000 more people?
•Given the anticipated vast number of relocations to Chicago, where will these people live?
•How will they get to work?
•Can the CTA and Metra handle the additional demand?
•Whether it be more frequent trains and additional cars on each route, are the funds available to run additional service?
•Can our already-packed expressways handle more volume, or will suburbanites working downtown need to leave at 6:00 AM in order to arrive to work at 8:30?
•How will our aged infrastructure hold up with increased demand?
•Can the schools handle more students if people are moving to the city?
•Can emergency services handle the additional demands?
•Will the increased demand for real estate end up driving people out?
•Will Chicago become too high priced, a la Manhattan?
•Will downtrodden neighborhoods gentrify to the point that there will be no more affordable housing?
•Will the city and state be able to get their act together to put together an incentive package great enough to lure Amazon?
•Will the amount needed to lure them be so great that it will be counter productive?

These are just a few of the questions that need answers. At the end of the day, though, Amazon HQ2 in Chicago would truly be a transformational experience for our city; it would impact all Chicagoans and certainly take some getting used to. Can we handle it? I would love the opportunity to see us figure it out.