Amazon: The Deal Unwound
This ‘Valentine’s Day breakup’ was inevitable. So affirmed SPP’s May22nd panel comprised of Robert Alexander, Tri-state Chairman, CBRE; Jim Tousignant, former Global RE Director, Verizon; Alfredo Ortiz, President and CEO, Job Creators Network and moderated by the New York Post’s Lois Weiss.
A PERFECT STORM
Conditions were perfect. Between the competing egos of a governor and mayor – each wanting to ‘own’ the win – failing to take their case to the people together (or individually); blind-siding by the radical left promoting an anti-big business strategy; and a multi-billionaire CEO besieged by unwanted press – still, with a host of cities eager to be second choice – it could only end in tears.
THE WINNER IS…
Post-breakup, Amazon seemingly emerges the better for the imploded bargain. Jim Tousignant noted that as a result of the public auction – one of only 6 “official” auctions in US history (1) held with 238 cities competing to be its second HQ– Amazon now owns data on potential new customers in every major urban area in the country. And at the same time, it retains its million square foot Manhattan (rented) presence – without the capital investment of the proposed campus.
Yet New York is not left completely empty handed. As suggested by CBRE’s Bob Alexander – and substantiated by (very) recent NYTimes reporting – New York being, well, New York, offers a talent pool rich enough to entice Amazon not only to remain, but expand its footprint in the Big Apple. Still, as the legal and financial sectors (arguably New York’s economic engines for generations) continue to contract and escalating livings costs continue dissuade millennials from remaining, the city cannot afford to be complacent.
Hudson Yards – equal to (or larger than and continuing to grow) Amazon’s proposed Long Island City campus, with similar development incentives – faced no such public outcry. This despite the fact the west side development holds few affordable attractions for ‘regular New Yorkers’ (save the number of jobs they commute to each day.) But Long Island City, lacking in infrastructure and latent in development interest, caught the public’s attention, largely due to the financial incentives offered to Amazon.
Ironically, Amazon knew they had to support the community and were prepared to do so. Deals were done and contracts were already in place. They just never got to tell their story (or chose not to). What it comes down to is a case of “economic illiteracy” according to Alfredo Ortiz, cautioning “don’t vilify capitalism.”
New York can learn from what the panel considers a preventable loss, provided on our do-over we:
- Identify, quantify and socialize the downstream potential (for starters, the panel estimated 10 new jobs for every 1 Amazon job, not to mention the planned enhancements to infrastructure)
- Build constituency within the community and advocacy within the press. (Only 1 print agency interviewed and reported on Long Island City stakeholders)
- Hold politicians accountable for helping communities achieve their goals (and enjoin more ‘Amazons’ to make it happen)
- Learn the facts; tell the whole story
- The 6 previous US public auctions included Boeing (3) and one each for Tesla, Saturn and GM, Jim Tousignant added that auctions are done all the time but not publicly because of the negative feelings generated by their inherently aggressive nature.