ECONOMIC DEVELOPMENT

The Amazon guessing game: Where in Austin could HQ2 go?

Posted February 2nd, 2018

When Austin made the list of 20 finalists for Amazon’s second headquarters project, it spurred a new local guessing game: If the online retail giant did pick Austin, where would the new development be built? 

In its proposal for the Amazon project, dubbed HQ2, the Greater Austin Chamber of Commerce submitted 40 to 50 potential sites. While the chamber declined to discuss specifics of the sites, Austin-area real estate brokers, developers and economists are buzzing with their own predictions for where it could land. 

Those picks vary greatly for the project, which over time promises a $5 billion investment and 50,000 employees with average annual salaries of $100,000. Possible sites span the five-county Central Texas region, from the downtown Austin area to the former Motorola, 3M and MCC campuses to the Domain, a mixed-use project viewed as Austin’s “second downtown,” and where the Seattle-based company already has 900 employees.

 

Then there are fast-growing neighboring communities including Buda and Kyle. Not to mention San Marcos, where Amazon already has a distribution center. 

One thing is certain: While there are many potential Central Texas sites that could accommodate HQ2, nearly all have shortcomings in one way or another. 

“No site checks every box they’re looking for, but there are definitely a lot that check a lot of boxes,” said Sam Tenenbaum, market economist with CoStar Group, a commercial real estate data and analytics firm. 

RELATED: Comparing Austin’s competition for Amazon’s HQ2

Wherever Amazon chooses, “it’s going to build a city around it, and it would drive a lot of growth,” said Austin economist Angelos Angelou. “But for any city that is able to attract it, Amazon will amplify housing, transportation and development issues. The project is going to bring quite a few challenges to any community.” 

When Amazon announced its plan for the HQ2 project, 238 cities or regions across North American submitted bids. The company said it wanted “an urban or downtown campus” with nearby amenities and a robust public transportation system. It also said financial incentives would be a key factor. 

The company says it needs up to 500,000 square feet of space by 2019, and eventually as much as 8 million square feet. The site should be within a mile or two of major highways, the company said. 

With its young labor force, flagship University of Texas campus, tech scene and quality of life, Austin in January was named one of 20 finalists last month. It will be competing against heavyweights including New York, Boston and Atlanta. Dallas is the only other Texas city to make the short list.

Betting on the Domain 

 Some in the local real estate industry say properties at or near the Domain would have appeal for Amazon, in part because Amazon already has offices there. 

“Based on their search process for their initial Austin location, their focus was being in a central location for a tech hub, a site with curb appeal and walkable amenities,” said Ryan Bohls, who while a broker with real estate firm JLL represented Amazon in their original lease for 80,000 square feet of space at the Domain. 

RELATED: Amazon has quietly ramped up its Austin presence 

Bohls, now managing director for commercial real estate services firm Newmark Knight Frank in Austin, said Amazon last year had a large expansion lease “teed up at the Domain” but tabled it until the HQ2 search is decided. That, he said, has led him and other brokers to think “that Amazon’s interest in Austin is earnest and may even signal we are a top contender; otherwise, one would surmise that they’d move forward with the Austin expansion.” 

Bohls said he thinks the sites best suited for Amazon are the 66-acre Broadmoor campus, which is next to the Domain; Eightfold, a multimillion-dollar mixed-use project underway at Motorola’s former 100-plus acre campus in East Austin; and a proposed development called Project Catalyst planned for East Riverside Drive in Southeast Austin. 

Brandywine Realty TrustThe 66-acre IBM Broadmoor campus on Burnet Road Broadmoor currently has approvals for 8.2 million square feet of space, but potentially could obtain entitlements for another 20 million square feet. Some local real estate experts say it could be the leading contender for a Central Texas site for Amazon’s HQ2 project.

Broadmoor, which is occupied by IBM Corp. and has room to add more buildings, is owned by Brandywine Realty Trust, which has pitched the campus to Amazon, according to published reports. 

“I would guess Broadmoor is the leader in the clubhouse,” Bohls said. “It’s in the heart of Austin’s tech triangle, flanked at all corners by an amenity-rich environment and is (near) MoPac Boulevard (Loop 1) and U.S. 183. 

As for the former Motorola campus, Bohls said: “I love this one for its accessibility to major highways… The site also benefits from being about at the city’s equator line. The city’s planned rail expansion runs alongside the site. This site checks a lot of boxes.”

Looking closer to downtown? 

 Meanwhile, others are taking into consideration Amazon’s stated desire for an urban site, and point to the company’s love for downtown culture and innovative design. 

Tenenbaum says the company could find a home for HQ2 just south of downtown Austin, at the American-Statesman property along Lady Bird Lake. 

“It sounds like (Amazon) wants urban and walkable and to me it screams the Statesman site,” Tenenbaum said. 

The Cox family, which owns the 19-acre property at 305 South Congress Ave., hired Endeavor Real Estate Group, the Austin-based firm that developed the Domain, to redevelop the site. 

“The city also wants to redevelop the waterfront area, called the South Central Waterfront, and a company like Amazon would expedite those plans,” Tenenbaum said. “Plenty of redevelopment opportunities exist along the waterfront,” and it is possible the Cox land could be combined with other surrounding property, he said. 

Others say the Statesman property is unlikely because it couldn’t be ready in time to meet Amazon’s 2019 target date, not to mention the traffic bottleneck a project that size would create. 

Tenenbaum said it is also feasible that Amazon could have a few main buildings on the Statesman land and build the majority of its campus at the proposed Project Catalyst site. 

Nimes Capital owns the 79-acre Catalyst site, which currently is home to about 1,100 student-housing apartments and isn't far from Oracle’s new 560,000-square-foot campus. 

“With Oracle’s new campus, and a large tract of land and relative proximity to the airport, this could be a natural fit for Amazon’s HQ2,” Tenenbaum said of Project Catalyst. 

While some brokers say Amazon will be focused on an urban location, Jill Rowe of Rowe Development points to a site like Robinson Ranch — a family-owned property with thousands of acres straddling Travis and Williamson counties, and near Apple Inc.’s campus in Northwest Austin. 

At Robinson Ranch, Amazon would be “spreading their impact through both Travis and Williamson counties, multiple cities, roadways, rail, and other infrastructure, which would seem ideal,” Rowe said. “Employees could live nearby, or commute via rail from downtown, central, Leander, etc.”

Austin’s odds to land HQ2

Tenenbaum said he doesn’t think Austin is a long shot to land Amazon’s HQ2. He predicts the competition likely will boil down to Austin, Atlanta, Dallas and Toronto, the latter of which he calls a “dark horse” and “Chicago in Canada.” 

Tim Hendricks, senior vice president of Cousins Properties in Austin, said Central Texas “has as many reasons for Amazon to be here as any place in the United States.” 

Hendricks said Amazon’s decision likely will center not only on “how much money they get out of the community" but rather on "what fits their long-term business plan the best, and only they know what that is.”

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Top potential Amazon HQ2 sites in Austin


>Eightfold (former Freescale/Motorola campus) 

 

Location/size: 3501 Ed Bluestein Blvd., 109 acres (commercial portion) 

 

Construction is underway to repurpose the former Freescale/Motorola campus into a major technology and business hub. Features include an existing utility infrastructure that can accommodate more than 8 million square feet of development. The site is less than 5 miles from downtown, and about 6 miles to Austin-Bergstrom International Airport. 

The cost of the first phase is $400 million, said Adam Zarafshani with Eightfold Developments LLC. He said Eightfold’s development team is pursuing its own vision for the project, even without Amazon. 

“I love this one for its accessibility to major highways especially given U.S. 183’s expansion to 12 lanes,” said Ryan Bohls, managing director for Newmark Knight Frank in Austin. “The site also benefits from being about at the city’s equator line. The city’s planned rail expansion runs alongside the site. This site checks a lot of boxes.” 

 

>Broadmoor campus 

 

Location/size: 11501 Burnet Road,  66 acres 

 

The Broadmoor campus is next to the Domain in North Austin and was included in the Austin region’s bid for Amazon that was submitted in October. That’s according to published reports that said Brandywine president and CEO Gerard Sweeney confirmed the site during a conference call in October. 

Brandywine declined to comment for this story. 

The Broadmoor site, whose main tenant is IBM Corp., is large enough to accommodate new buildings, local real estate brokers say. 

Quoting from Brandywine’s bid proposal, published reports said that Brandywine touted Broadmoor as a “66-acre campus uniquely positioned as a virtual perfect match for Amazon HQ2…” 

Broadmoor currently has approvals for 8.2 million square feet of space, but potentially could obtain entitlements for another 20 million square feet, Brandywine’s proposal said. 

 

>Former 3M campus

 

Location/size: At RM 620 and RM 2222, 156 acres 

 

Austin-based World Class Capital, a private investment firm, announced last summer that it was buying the 3M campus for an undisclosed price. 3M said its employees would be moved to a new building off Parmer Lane in Northeast Austin. 

The 3M campus consists of 1.3 million square feet of office space, with approvals to build an additional 3 million square feet of new development, said Dani Tristan, a commercial real estate agent with McAllister & Associates who has toured the site and is familiar with the property. 

Among other pluses, Tristan said: “The good thing about this site is accessibility to the employment base Amazon is targeting, which is crucial. There are a lot of tech companies in that immediate vicinity.” 

 

>Robinson Ranch 

 

Location/size: Travis/Williamson counties, roughly 6,000 acres 

 

Located between MoPac Boulevard (Loop 1), Parmer Lane and RM 620, the sprawling ranch is one of the few empty tracts of land in Northwest Austin. Apple Inc.’s Austin hub lies to the south of Robinson Ranch, and a MetroRail line runs through the property. 

Robinson Ranch could be an ideal fit, as Amazon would be “spreading their impact through both Travis and Williamson counties, multiple cities, roadways, rail, and other infrastructure,” said commercial real estate broker Jill Rowe. “Employees could live nearby, or commute via rail from downtown, central, Leander, etc.” 

 

>Project Catalyst 

 

Location/size: Southeast Austin, 79 acres 

 

Nimes Capital plans to transform land that is now home to student-housing apartments into a high-density, mixed-use project. 

“With Oracle’s new campus (nearby), and a large tract of land and relative proximity to the airport, this could be a natural fit for Amazon’s HQ2,” said Sam Tenenbaum, market economist with CoStar Group, a commercial real estate data and analytics firm. 

Jay Janner/American-StatesmanThe Austin American-Statesman’s property on South Congress Avenue is shown on Oct. 31, 2017.   Some local real estate experts say the 18.9 acre site could be an option for Amazon’s HQ2 project.

 

>Austin-American Statesman site 

 

Location/size: 305 S. Congress Ave., 18.9 acres 

 

Endeavor Real Estate Group, the Austin-based firm chosen to redevelop the Statesman property, submitted information to the Greater Austin Chamber of Commerce about the site. Endeavor noted that the site alone would not meet Amazon’s requirement, although potentially it could be combined with surrounding properties. 

“We have a sincere interest in Amazon and how they might fit and play a role on the Statesman tract, but we also have a strong interest in Amazon HQ2 coming to Austin regardless of where it goes,” Bryce Miller, a managing principal with Endeavor, told the American-Statesman via email.

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