More than 240 locaties are contending to win the economic prize of the decade, Amazon's second, "equal in every way" to its Seattle home, headquarters. Some $5 billion in investment and 50,000 high-paid jobs are possible. Both Phoenix and Tucson are among them. Above is a photo of the Day One tower, part of Amazon's massive downtown Seattle footprint.
I've written about this highly unusual development in my Seattle Times columns here and here. In "Dear Amazon, we picked your new headquarters for you," the Upshot team narrows down cities based on the company's request for proposals (RFP) and comes up with Denver. That jibes with my top three candidates, the others being Toronto and Dallas-Fort Worth.
In the Upshot piece, Phoenix (and Tucson) is quickly eliminated: job growth isn't strong, plus lack of a highly skilled tech workforce, high quality of life (that attracts young, educated workers), strong mass transit, and willingness to "pay to play."
But let's not give up just yet. At the least, this could be an educational experience.
Phoenix has a checkered history of economic development. For decades, the economy was based on the agricultural empire of the Salt River Valley. Manufacturing that located there during World War II quickly closed after VJ-Day, leaving local leaders scrambling to find new jobs for a growing population. Under the leadership of legendary lawyer-fixer Frank Snell and the Chamber of Commerce, the city recruited new technology companies. The biggest catch was Motorola. This was also the third time the federal government came to the rescue, this time with enormous funding for Cold War defense industries.
When Greyhound relocated its headquarters from Chicago to Phoenix in the 1960s, it was thought that other Fortune 500 companies would follow. They didn't. And a familiar pattern settled in. City and state lacked any coherent economic-development strategy. But Phoenix kept adding people, leaders assumed that sunshine was enough of an incentive, and real estate became the major driver. After the collapse of 1990, the leadership regrouped and formed the Greater Phoenix Economic Council (GPEC), led by Ioanna Morfessis and backed by the then-considerable group of civic leaders. Morfessis set several "cluster strategies" in place to recruit, retain and expand advanced industries with high-paying jobs.
It didn't take. As Morfessis recalled, "We got drunk on growth again." Metro Phoenix's population expanded by more than 40 percent in the 1990s. As the Arizona Republic reported, an acre an hour was being developed. Although Intel built semiconductor factories, for the most part the legacy tech industry began to wither. Motorola went away entirely by the 2000s. Phoenix became a back-office town for LA, known for cheap workers in call centers and tilt-up warehouses. The clusters failed for lack of focus, even as major headquarters were lost to the industry consolidations of the 1980s through the 2000s. When I started writing about this in the Republic in 2000s, the local-yokels were offended. But privately, in a GPEC meeting, people said, "My god, Talton is right."
Arizona's stingy right-wing politics prevented GPEC from having the toolbox used by Southern states to draw companies (such things as tax incentives, speedy permitting, land assembling, recruiting missions, etc.). A further problem was GPEC being pressured to feed assets to the supersized suburbs and the spec buildings of the Real Estate Industrial Complex. Phoenix, especially downtown and the Central Corridor, was a consistent loser, even of the small-ball businesses that were landed. The big catch of a large USAA back office didn't go downtown — it landed far out on Black Canyon Freeway and Happy Valley Road.
Phoenix was an epicenter of the Great Recession, with its dependency on tract housing and spec building. It took much longer to recover than peer cities. Some audacious moves in the 2000s — winning T-Gen and starting the downtown Biosciences Campus, a downtown ASU campus, and light rail (WBIYB) — failed to produce the essential wins: Major private investment producing high-paid jobs, especially in the core.
Technology was the one sector that saw real growth in the recovery, but that went disproportionately to cities that already commanded those assets. Think the Bay Area, Seattle, Austin, Denver, Boston, even Portland and San Diego. Phoenix wasn't in the running. Another sea change was the "back to the city" movement, where companies abandoned suburban office "parks" for cities with good bones and a cool urban vibe, the better to recruit top talent. Again, Phoenix lacked this. Although downtown is much recovered from decades of civic malpractice, it has too much of a suburban feel, and most of the region's economic power is in the suburbs.
Phoenix also suffers a long history of failures to win big projects where it competed against other cities. A famous flop was Sematech (which went to Austin). Sunshine and championship golf weren't enough.
This has not changed the local-yokel mentality. The "low tax/light regulation" of Gov. Doug Ducey and the strange privatized Arizona Commerce Authority might attract Amazon warehouses. But it won't make Phoenix, Tucson, or Tempe contenders for an Amazon headquarters. The percentage of adults with college degrees is very low compared with peer cities. There's a lack of density, with the walkable, high-quality urban assets that talented techies desire. They don't want to live in suburbs and be forced to drive everywhere. They don't play golf. Their definition of "quality of life" is the opposite of the Real Estate Industrial Complex's hustles.
There's no question that if Amazon placed an urban innovation district in downtown Phoenix it would be transformative (I wrote about that here). Light rail is available. The core is filling in, although far behind its competitors. ASU doesn't offer a top computer-science program, but a respectable one, with Michael Crow as a top salesman. Central Phoenix is also tolerant, despite Arizona's reputation as a bigoted, closed-minded place. Land is affordable. It's something to dream about. But it's very unlikely. Once again, this would be a time to take stock, benchmark Phoenix against its peer cities, and act accordingly.
One last point: Amazon CEO Jeff Bezos thinks long term. Here, Phoenix is a dangerous position because of climate change and the failure to even address local warming by stopping sprawl and planting shade trees. It's difficult to see Amazon investing $5 billion in a headquarters located in a place that might not be inhabitable in 30 years.
Denver, Dallas, Chicago or Minneapolis.
Posted by: RFP-The document analysis | September 18, 2017 at 05:30 PM
Denver has the same drought issues that Phoenix has and it's in the West. I think Toronto and Boston would be exceptional places for an HQ2. You don't get a better educated workforce than in this region; MIT, Harvard, Brown, Dartmouth, Boston College, Boston U, etc.
I really enjoy living in New England. It's beautiful here, especially in the summer.The history is unparalleled. There are many things I miss about Phoenix but the heat isn't one of them.
Posted by: phxSUNSfan | September 18, 2017 at 06:22 PM
None of the listed considerations is as important as an airport close to downtown. Phx is the only city with that.
Posted by: jojo | September 18, 2017 at 08:19 PM
East coast. Mild weather. Educated workforce. Transport.
North Carolina or Baltimore.
Posted by: emmy brighton | September 18, 2017 at 08:25 PM
You are an idiot, you set up strawmen with little to back your hypothesis, Phx has one of the fastest growing tech sectors in the country,
"After the housing bubble burst -- a crash that hit Arizona particularly hard -- Phoenix worked to diversity its real estate-dependent economy. And it shows: Over the last five years, the number of tech companies headquartered in the city has nearly quadrupled, a fact mayor Greg Stanton touted in his state of the city address this spring.
In the past year, listings for tech jobs have grown 188 percent, according to ZipRecruiter. Project managers, software engineers, software developers and data analysts have the most job listings."
You don't live here anymore, you have no idea what is going on and you are light on the facts. Really sad you get paid to lie, maybe you should jump on the trump train (that can be the mass transit that you are obsessed with)
Posted by: Actual Phoenician | September 18, 2017 at 11:04 PM
Just more facts below:
Climate Change:
"All the rivers in the Southwest are highly volatile, and go up and down 20 percent from year to year," Quay explained, adding that that's "one of the reasons why the Southwest is probably one of the most prepared regions for short-term climate change in the country."
More Tech Jobs:
"The Brookings Institution's Mark Muro and Sifan Liu, meanwhile, found that five big metro areas -- San Francisco; San Jose, California; Austin; Dallas; and Phoenix -- accounted for 28 percent of job growth in technology from 2010 through 2015."
Posted by: Actual Phoenician | September 18, 2017 at 11:15 PM
Why do the word patterns of "Actual Phoenician" sound familiar?
and "paid to lie" Makes it obvious that Actual Phoenician is hiding out and too cowardly to post a real name.
This sentence makes no sense, "maybe you should jump on the trump train (that can be the mass transit that you are obsessed with)"
Short term climate change. IMHO, Because of extreme weather in other parts of the USA the Desert will continue to increase in population and in the "short run" the southwest may be prepared but in the long run its going burn baby burn.
Posted by: Cal Lash | September 19, 2017 at 10:58 AM
South west growth.
Irma, maria, Jose.
Three reasons for living in the
great Sonoran Desert.
Whats left of it.
Posted by: Cal Lash | September 19, 2017 at 11:06 AM
If Short Term Climate change is defined as 50 years, those who post here will be OK.
However
Climate change is of great concern to Military leaders and puts them in a position not in sync with Trump and his billionaire oligarchic pals.
“I will ensure that the Department continues to be prepared to conduct operations today and in the future, and that we are prepared to address the effects of a changing climate on our threat assessments, resources, and readiness.”
https://www.thecipherbrief.com/column/fine-print/austerity-cloud-hovers-pentagon-wish-list-guerillas-climate?utm_source=Join+the+Community+Subscribers&utm_campaign=e368ab3211-EMAIL_CAMPAIGN_2017_09_19&utm_medium=email&utm_term=0_02cbee778d-e368ab3211-122451933
Posted by: Cal Lash | September 19, 2017 at 11:23 AM
I am more concerened with the plight of seniors who will die by the hundreds when the power goes off in the summer for days instead of hours because the utilities keep trying to get cheaper.
This will be harder on Phoenix's reputation than anything and they can kiss any development goodbye forever.As they say-"A cat once burned will never jump on a hot stove again,but it will not jump on a cold stove either."
Posted by: Mike Doughty | September 19, 2017 at 12:36 PM
P.S. Agree with Cal.Actual Phoenician sounds like a troll.
Posted by: Mike Doughty | September 19, 2017 at 12:38 PM
Actual Phoenician aka INPHX. You must have a car in Phoenix. Anyone claiming that metro Phoenix has "adequate public transportation " should give up driving completely for thirty days, preferably during the long, hot summer while working full time. The vast majority of Phoenicians have never use metro Phoenix transportation with good reason. If Emperor Bezos is okay with that reality, bring it on.
Good to hear you're doing well in New England phxSunsfan and congratulations on escaping the armpit called Phoenix before professional atrophy set in.
Posted by: Loser in Scottsdale | September 19, 2017 at 01:20 PM
Rogue "fired" me; which I respect.
I am not Actual Phoenician.
Posted by: INPHX | September 19, 2017 at 02:53 PM
Note: preferable abode. Has wheels, motor, Solar and generator power. No property tax.
Posted by: Cal Lash | September 19, 2017 at 05:05 PM
In my opinion, Phoenix is not under real consideration. Aside from my certainty that Bezos is personally repulsed by Arizona's general political climate, companies like Amazon are not principally motivated by tax cuts and incentives or low occupancy costs. If that were the case, Amazon, Apple, Google, etc. would have all relocated to someplace like Oklahoma years ago.
Posted by: Phil Motta | September 19, 2017 at 07:55 PM
Three reasons why Amazon won't come to Arizona.
1. Heat
2. Crappy Schools
3. Political Climate.
I agree that "actual phoenician" sounds like one of the old antagonists who occasionally invade this space.
Posted by: Ramjet | September 20, 2017 at 08:58 AM
Developer sand filled East coast swamps will insure more folks move to the Southwest deserts.
http://www.huffingtonpost.com/entry/sinkhole-swallows-part-of-home_us_59c26ffae4b0f22c4a8e03ac?ncid=inblnkushpmg00000009
Posted by: Cal Lash | September 20, 2017 at 10:55 AM
Tucson's effort to send Amazon giant cactus is symptomatic of the way Ducey et al think the way business is done.Corporations are smarter today and look at things more important than gifts.
Posted by: Mike Doughty | September 21, 2017 at 10:52 AM
Two mobsters, 30 plus murders later.
Another of Arizona's finest back on the street. Will Johnny Alletto (also recently released coincidentally) take a contract on Sammy "the bull" Gravano from the Gambino's?
Posted by: Cal Lash | September 21, 2017 at 06:33 PM
From a look at the comments, it seems like the commenters are pretty well convinced that Phoenix's chances for HQ2, and for generally good growth options, are about nil.
I live in the metro Phx area, and I can say with certainty that over the last decades our political elites have screwed us over. We do not have any chance at all of landing a large employer, unless they are looking to get cheap, non-union labor.
Without taking into account our massively underfunded K-12 education system, or our weirder-than-s%*t politics, any CEO looking to relocate would be put off by just a car trip around Phoenix.
Let's face it, most of the metro area has been neglected: roads are bad; public landscaping is poor; parks, public pools, libraries and community centers are neglected. The desert has been eaten up for cheap houses, useless strip malls, and fast food joints. What is it exactly that we have to offer?
Posted by: sj | September 22, 2017 at 08:08 AM
Arizona particularly its cities are not keeping up with infrastructure. My Fit is right now in the shop for shocks likely ruined by horribly maintained roads and streets.
Posted by: Cal Lash | September 22, 2017 at 01:13 PM
Arizona's streets are as smooth as mirrors compared to what we deal with over here on the east coast.
Posted by: phxSUNSfan | September 23, 2017 at 12:06 PM
Sorry to hear that. You might put in a call to IKE.
My bigger point is can the planet keep adding more asphalt that constantly needs more repair. Are flying computer driven cars an answer?
Maybe Malthus was correct after all.
Posted by: Cal Lash | September 23, 2017 at 12:20 PM
I think you'll find that the roads in the East are bad primarily because of the long, awful winters.
Here in the rough and tumble West, the roads are bad because we are cheap.
We elect politicians who do not believe in government, and then we profess amazement when the government doesn't work well.
We do not want to pay taxes. And yet we whine when our services decline.
Somehow we have not been able to make the connection between Right to Work laws, anti-unionism, and the low wages that follow from them.
I guess that it's all part of our rugged individualism.
Posted by: B. Franklin | September 23, 2017 at 04:46 PM
For the ever OPTIMISTIC PHOENIX SUNfAN
A Hispanic version of Raymond Aron?
I give you Ray Kurzweil
https://medium.com/abundance-insights/86-accuracy-rate-in-tech-predictions-1d9ffebadc70
Posted by: Cal Lash | September 24, 2017 at 11:14 AM
“Why are they doing this whole dog and pony show? Amazon wants something for nothing,” said Matthew Gardner, a senior fellow at the Institute on Taxation and Economic Policy, a nonpartisan think tank. “They would like a package of tax incentives for something they were going to do anyway.”
Art Rolnick, an economist at the University of Minnesota, called Amazon’s bidding process — and the broader practice of cities competing for stadiums and factories — “blackmail.”
“If you look at it from a national perspective, it’s zero returns. Minnesota might win one, Wisconsin wins the next one. The company wins each time,” Mr. Rolnick said. “It’s corporate welfare.”
-- "Nothing Is Too Strange for Cities Wooing Amazon to Build There," NYT, 9/25/17, byline Nellie Bowles
Posted by: Joe Schallan | September 28, 2017 at 01:15 AM
The desert is the perfect place for the solar energy Amazon is using. Chandler/Gilbert are has a lot of advantages but the mindset that competition can happen without dollars associated to it is a fallacy. It's to be an investment that the money turns back but it's hard for some to see. I didn't realize that AZ was so poor at attracting good companies. That is sad.
Posted by: Barb Richardson | September 29, 2017 at 02:37 PM
Why doesn't Amazon just expand its headquarters in Seattle instead of building a second HQ somewhere else? Is Amazon looking to eventually relocate its Seattle headquarters to the new location?
Posted by: Sanjeev Ramchandra | October 08, 2017 at 11:28 PM