Shaken by Amazon’s rejection, some cities ponder what went wrong

BALTIMORE — What could have been.

“It could’ve changed the city,” developer Marc Weller said.

He sat in a quiet conference room not far from Port Covington, the waterfront industrial space on Baltimore’s south end pitched as the perfect home for Amazon’s second headquarters. A year ago, this same conference room brimmed with civic leaders giddy over Amazon’s open casting call for any North American big city to audition for a once-in-a-generation role. Baltimore was all in. So were dozens of other cities.

It didn’t feel like the usual corporate site selection process. It seemed like Amazon wanted to make a real statement with what was known as HQ2. Why else stage such a peculiar and public spectacle?

And then Amazon announced this week HQ2’s 50,000 high-paying jobs would be split between Crystal City, outside Washington, and Long Island City, in New York.

“The usual suspects,” Weller said, “and they don’t need an Amazon.”

Not like Baltimore does. Or Philadelphia. Buffalo. Charlotte, even. Or Detroit.

“In hindsight,” Weller said, “it feels like we were never in the running.”

The 236 bridesmaid cities that failed to capture Amazon’s eye are facing renewed insecurities about their ability to compete for the so-called knowledge jobs that will drive the country’s future economic growth. Some have suggested the losing pitches were good training for the next big deal. Others hope that Amazon might use the data-rich bid documents to locate other projects. That’s apparently what happened with Nashville, which walked away Tuesday with a promise of 5,000 new Amazon jobs.

But Amazon’s hunt was unnerving for many cities. The final decision to go with two fast-growing coastal hubs only highlighted worries about the modern economy’s winner-take-all dynamic.

“This is a ‘rich get richer’ story,” said Stephen Walters, an economics professor at Loyola University Maryland. “And it raises a big question for these other cities: How do you get into that league?”

It won’t be easy. Amazon’s decision highlights the apparent moth-like attraction of tech jobs and the pressure on companies to make expansion decisions that are safe investments. (The Washington Post is owned by Amazon CEO Jeffrey P. Bezos.)

“I think Amazon was being sincere,” Tom Stringer, who heads the site selection practice for business consulting firm BDO, said of the hunt for new office space. But the odds were stacked against less obvious cities because of HQ2’s immense scale. Amazon has a responsibility to shareholders to reduce its risk, Stringer said. Indeed, placing the new headquarters in a city that couldn’t handle it could lead to failure.

[Long Island City faces Amazon dilemma: How to reap rewards amid changing landscape]

In the last five years, tech firms located in the top headquarter markets of Silicon Valley, Seattle, Boston and New York tended to add new office space in these same markets or a handful of other popular cities such as Chicago and Austin, according to a recent report by commercial real estate research firm CBRE. Right now, Google is said to be looking at adding more than 10,000 tech jobs in New York City.

Amazon’s decision shows the premium placed on luring workers.

“They are picking talent to grow revenue above all else,” Stringer said, “and it turns a lot of the arguments about economic development incentives on their head.”

Some of the cities left out expressed frustration with Amazon’s decision — and it was not just sour grapes, they said. It had to do with how the tech giant handled the process, the feedback they got and, in the end, a decision that they said appeared to betray the entire purpose.

Still, Baltimore figured it had a good shot.

The city has long sat in Washington’s shadow — the scrappy metropolis just 35 miles up Interstate 95 but seemingly much further away. Baltimore’s median household income is about half what it is in Washington. But Baltimore offers advantages, too, including house prices that are 80 percent lower. (Yes, that’s right: $99,600 vs. $525,900.)

Port Covington is a 235-acre site that sits to the south of Camden Yards and the Inner Harbor. The former railroad terminal had been bought up by Sagamore Development, a real estate firm founded by Weller and Under Armour chief executive Kevin Plank. The Baltimore-based apparel company’s new headquarters are being built there. Plans call for a $5.5 billion mixed-use development. And there was plenty of room for Amazon to build exactly what it wanted.

“When we heard about Amazon, we were like, ‘We have the perfect spot,’ ” said Steve Siegel, a partner at Weller Development, which is working on the site.

It has a big airport nearby. It has the interstate running right by its door. Major universities are located nearby. There were plans to bring a commuter rail stop to the project. Maryland’s governor threw his support behind Baltimore’s bid — despite D.C. suburb Montgomery County’s competing bid that came with $5 billion in public incentives.

Port Covington supporters clearly expected Amazon to weigh less tangible criteria, too. Baltimore’s pitch, loaded on Kindles and sent to Amazon, argued that this was about more than just a second headquarters: “The HQ2 project will be — in the right place — an opportunity for true urban revitalization and community invigoration.”

It might sound lofty. But the developers pointed to businesses that measure not just their fiscal bottom line but their social impact bottom line.

“We have a double bottom line. We believe in it,” Weller said.

“And we thought they’d think the same thing,” Siegel said.

But Baltimore didn’t even make the list of 20 finalist cities.

Neither did Charlotte.

The city was stunned when Nashville and even interstate rival Raleigh were named finalists. “What’s wrong with our city?” wondered a headline in the Charlotte Observer. The corporate development world took note.

“Heads are rolling in Charlotte over this,” said John Boyd, a corporate site selection consultant in Princeton, N.J.

In September, the Charlotte Regional Partnership — which had spearheaded the city’s Amazon bid — announced it was merging with the Charlotte Chamber. The new group will have a new leader along with a new — and still undecided — name.

Officials continue to wonder where it all went wrong.

“I’m still surprised,” said Tariq Bokhari, a city councilman who was involved in preparing Charlotte’s Amazon bid.

Bokhari said the tech giant cited a shortage of tech talent as one of the city’s drawbacks. But Bokhari pointed out that Charlotte has no problem attracting new workers, making it one of the fastest-growing cities.

Then, last month, Charlotte was named by a major computing trade group as the No. 1 place for tech talent to live and work.

For Bokhari, that cast even more doubt on Amazon’s criticism.

“It felt like they had already decided where to go,” he said.

A lack of tech talent was the same feedback Amazon gave to Baltimore.

But city officials said the talent is here — and could’ve been lured by Baltimore’s charms. They pointed to cybersecurity companies that recently announced plans to open operations in Port Covington.

While the Amazon spectacle has few parallels, it does recall when happened when General Motors announced plans for a $5 billion auto plant for its new Saturn brand in 1985. Governors from more than two dozen states visited Detroit to personally pitch GM’s chairman. Cities put up billboards along Detroit freeways to extol their virtues. A group of governors even went on Phil Donahue’s talk show to make their case.

GM built its Saturn plant in Spring Hill, Tenn., outside Nashville. The Saturn brand was killed off in 2010. But the auto plant is still there, making Cadillacs and GMCs.

In the wake of Amazon’s decision, at least one development official said he envied how Little Rock handled itself last year: It took out a full-page ad in The Washington Post to say it wasn’t even bothering to bid for HQ2 — “It’s just not us.”