A corporate giant moves in, to reshape a US city

Amazon's new headquarters in Seattle is already overturning old urban plans

Often a corporation with a grand dream to reshape a city wants tax breaks in return.

Not Amazon. When Amazon executives showed up a year ago for the first meetings about their proposal to build a new headquarters in Seattle -- three towers that would draw thousands of workers downtown -- city officials were taken aback. Not by the scope of the plan, but by the simplicity of the discussion. The executives said they were ready to break ground immediately on what would be one of the biggest development projects in city history.

“It was not a hard-boiled negotiation,” said Marshall Foster, the director of city planning. “They basically walked in and said, 'We think this is the site.'” A shovel-ready company that clear and confident, and with the cash to back it up, “doesn’t happen very often,” Foster added. Jeffrey P Bezos, Amazon’s founder and chief executive, has a reputation for the grand gesture, a knack for seizing an opportunity that can remake a landscape. His purchase of The Washington Post this month for $250 million cash, a bet that others might have shied away from, is a case in point.

Here, in his company’s hometown, Bezos has put his chips on the idea of Seattle and urban America itself. The first headquarters tower is already under construction, and the company currently occupies 14 smaller buildings nearby. The result in South Lake Union, previously a low-rise, low-rent warehouse district with ties to the city’s gritty maritime past, is a flood of cash, construction detours and dust. Increases to the city’s tax base aside, some people are apprehensive about whether the growth could outstrip the city’s ability to keep up.

“South Lake Union was a place that people drove through, not to,” John Schoettler, Amazon’s director of global real estate and facilities, said in an interview. “Once we started development there, everything started to spring up around us.” The once-empty streets are flooded at lunchtime with Amazon workers, easily identified by their blue employee badges. Fleets of food trucks have arrived, offering Thai, tacos and other fare. On a nice day, workers take their lunches to a park next to the Museum of History and Industry, which was recently renovated with a $10 million contribution from Bezos.

The company already has about 15,000 employees in Seattle, mostly highly paid engineers, managers and programmers, out of a global workforce of about 97,000, according to people familiar with its head count who were not authorized to discuss a figure that the company does not share publicly. The new towers have a capacity for 12,000, giving the company room for nearly 30,000 workers in Seattle, which has a population of 635,000.

“Nobody else in the downtown area has ever had this kind of impact,” said Matt Griffin, a 35-year veteran of the Seattle economic scene and the managing partner at the Pine Street Group, a real estate marketing and development company. But the Amazon effect only starts with its own big numbers. The thousands of new employees, recently hired or anticipated, have also caught the attention of apartment developers. Last year, Seattle issued more new residential building permits than in any year since at least 1984, when the current system of record-keeping began.

Many of those new apartments are within walking or biking distance of Amazon. Service businesses and startup technology companies, meanwhile, have sought nearby addresses. Northeastern University, based in Boston, set up a remote campus last year across the street from Amazon’s current buildings. “I think they’ve single-handedly defined a whole region,” said Bryan Trussel, the chief executive of Glympse, an Internet startup with offices next to Amazon.

“Now everyone wants to be there.”The setting is significant. In casting its lot in the centre of a congested, bustling city, Amazon has rejected the old model of the suburban company campus that is typical of Silicon Valley and the technology ring road around Boston. The old way is perhaps most vividly exemplified by Microsoft. Its offices, and most of its 42,000 local employees, are about 18 miles from downtown Seattle, in the suburb of Redmond.

But it was, perhaps paradoxically, Microsoft money that made Amazon’s torrid growth in the neighbourhood possible. In the early 1990s, Paul Allen, Microsoft’s billionaire co-founder, agreed to help finance the creation of a 61-acre public park starting in South Lake Union, a project that was eventually killed by voters. As a result, Allen’s investment firm, Vulcan, ended up being a big landowner in the area, eventually selling or leasing many of its buildings to Amazon.

Other technology companies are moving into urban spaces. Twitter and Dropbox, the social networking and online storage services, have made San Francisco home, while Tumblr and Etsy, blogging and shopping sites, are in New York. Google has huge urban spaces from Paris to Pittsburgh. The appeal of cities to potential employees is part of the reason for the shift. An urban setting, with access to good restaurants, nightclubs and cultural attractions has become as important a recruiting tool as salary or benefits for many companies.

Walking distance

But most of those urban pioneers are still small, at least in their real estate and staffing needs. Twitter, one of the largest, employs about 1,500 workers in San Francisco. Amazon, by contrast, is both local and global. By encouraging its employees to live within walking distance, it could help Seattle meet its goals for energy efficiency and conservation, city officials said. As part of its development agreement, Amazon also plans to buy a new streetcar for the light rail line that runs past its properties and pay for a stretch of dedicated bicycle lane.

Schoettler, Amazon’s real estate director, said environmental considerations were an important factor in the company’s decision to remain in Seattle, along with the type of employee that an urban location attracts. “The energy and excitement from employees being in an urban environment - I hear it daily,” said Schoettler, who walks to work. “A lot of people don’t even have a car. They want that urban experience right there.”

By contrast, Microsoft’s private bus line, called the Connector, is a common sight snaking through neighbourhoods in Seattle and other local communities. Of the company’s 42,012 employees in the Puget Sound region, nearly half are registered to ride, a spokeswoman for the company said in an email. Amazon’s transformative rush presents challenges for Seattle. Officials must manage the de facto city-within-a-city that is emerging around the company, with a surge of new restaurants, apartment complexes and commercial buildings.

The new headquarters has limited parking, putting pressure on mass transit, which was crimped this year by a financing stalemate in the state Legislature. The city wants low-cost housing in the Amazon zone, but soaring rents and real estate prices, city officials said, will make that goal difficult to achieve. The company’s business model, and tactics in avoiding state sales taxes in many states, also presents a challenge to retailers.

“As the city grows - and again, it’s a good problem to have, one that other cities don’t - we have to keep investing in all of our places,” Mayor Mike McGinn said. “How do we make sure we preserve the things that make the city special?”