Amazon built a significant presence in Central Texas long before HQ2 frenzy

Posted November 22nd, 2017

If the Austin area does somehow beat out more than 200 competitors and land Amazon’s $5 billion, 50,000-employee second headquarters project , the facility would just be the latest addition to an already significant presence Amazon has established in Central Texas.

Amazon currently employs thousands of workers in varying jobs in Central Texas, giving the online retailer a larger presence in Austin than in any other Texas metro area. 

Amazon is currently examining 238 proposals it received for its “HQ2” in October. As the bidders await Amazon’s decision, it’s unclear if cities like Austin that already have an Amazon presence might have an advantage in the competition. Some experts say an existing relationship could be a positive for Central Texas.

“When a company invests in jobs and real estate like Amazon has in the Austin area, that is a significant capital investment,” said Dean Barber, an economic development and site selection consultant with Dallas-based Barber Business Advisors. “They have an increased presence in the Austin area, which speaks to that they think the talent is there and that it can expand there.”

Amazon’s presence in Central Texas has grown rapidly in the past few years.

In 2015, the Seattle-based company opened a corporate office at the Domain mixed-use development in North Austin, where it holds about 250,000 square feet of office space. Employee headcount  there has grown from about 350  to more than 900 in just the past year, Amazon recently told the American-Statesman.

A year ago, Amazon opened a 855,000-square-foot distribution center in San Marcos, where the company says it now employs more than 2,500 people. 

Also last year, Amazon opened a 2,500-square-foot pickup store at the University of Texas’ Gregory Gymnasium. UT is one of about 30 universities across the country that Amazon has partnered with to open on-campus stores, according to Amazon’s website.

Amazon’s largest investment into the region, however, arrived this year, with its $13.7 billion purchase of Whole Foods Market in August. The deal gave Amazon control of Whole Foods’ five Austin-area stores (as well as its roughly 370 across the U.S., Canada and U.K.), and more significantly, the grocer’s headquarters in downtown Austin. 

Amazon said its investments into Central Texas pumped about $100 million into the local economy from 2011 to 2016, and that its presence here has created more than 4,000 jobs outside of its direct hires. 

Because of its existing operations in Austin, Barber said , Amazon is already very familiar with the area and should like what it sees -- tech talent, a young labor force, rich tech culture and other factors.

“It has helped them understand the Austin area market better,” Barber said. “I would think Amazon would have known the city it picks before it issued its (request for proposal). That’s an advantage for the Austin area.”

At the same time, Central Texas is competing with many other locations where Amazon also has a notable presence, Barber said, including in North Texas and the Houston metro area. 

Amazon has several distribution centers across the Dallas-Fort Worth area, including in Dallas, Fort Worth, Coppell and Haslet. The company’s web services division also occupies several floors in a Dallas office building. 

In the Houston area, Amazon’s presence is less significant, though it is growing. 

One distribution center was opened months ago in North Houston, while another is in development in West Houston. Amazon also operates a sorting center in Humble, north of Houston, and a Prime Now hub in Northwest Houston. There is also an Amazon distribution center, Prime Now hub and sorting center in the San Antonio area, but economic development leaders in that metropolis have indicated they are not interested in the HQ2 project.

Amazon has not said what role existing relationships with cities or regions would play in its decision. But Austin’s significatn Amazon presence can only help its cause, Barber said. 

Meanwhile, Wayne Gearey, chief data scientist at labor research and advisory firm Emsi, said the Austin area is likely to be on Amazon’s shortlist but because of other factors such as “volunteerism, education, tech job growth, walkability, health conscious workforce and the arts.” 

Other analysts, however, have said that issues with mobility and space could hurt Central Texas’ bid.

Regardless of whether Central Texas wins the battle for HQ2, Amazon has already shown that it intends to have a significant presence in Austin for the long term, Barber said. 

“They kind of have voted to be in Austin with their capital dollars,” Barber said. “Something would have to drastically change for the worse, and I don't see anything changing for the worse for Amazon soon in the foreseeable future. This is a company that is a behemoth that is changing the rules of the game. If anything, they will be increasing their presence in most of the places where they already have a presence.”

Amazon plans to pick the winner of HQ2 sometime next year and said the project’s first phase would begin by 2019. The Greater Austin Chamber of Commerce submitted a bid on the region’s behalf on Oct. 18, one day before Amazon’s filing deadline.