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Could Dallas land Amazon HQ '2'?

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Redblock
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Re: Could Dallas land Amazon HQ '2'?

Postby Redblock » 13 Nov 2018 13:17

Here is the reaction of a Fast Company magazine writer. Fast Company is based in NYC.



New York got played by Amazon

http://flip.it/Kodoa7

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muncien
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Re: Could Dallas land Amazon HQ '2'?

Postby muncien » 13 Nov 2018 13:18

TNWE wrote:
muncien wrote:Honestly, I don't think the CBD needs a massive office tenant to move in. What it needs are another twenty midrise residential. I'm not even talking 20-30 stories... If we could get 10-12 story residential (rental and condo) to fill in some of the lots, downtown will make a success story out of itself.
What are the occupancy rates in the CBD anyway? They've always seemed quite high... but I haven't followed much lately. I only wish we could get as much residential developers in the core as we have office developers.
Do that, and corporate America will follow...


It seems like every big, recent project downtown has been residential-focused (or at least residential-first). All the big office development has been in Uptown and the exurbs, with all the big downtown "gets" going to vacant floors in existing towers (previously occupied by companies headed to uptown and exurbs). I think that's why Amazon was such a big deal- it would have singlehandedly tilted the concentration of office workers back toward downtown, and with the sort of salaries/demographics that would skew toward living in the urban core (not to mention a built-in loyalty toward PrimeNow, Fresh, and other on-demand services that make up for downtown's shortage of brick and mortar stores).

I do agree from a traffic/transit capacity perspective, there's value in getting more residents downtown, but the benefit is limited if they're still driving north on 35/DNT/75 to get to their jobs. DART is slightly better as AM trains into downtown are jam packed while AM trains out of downtown have but one or two people on them.


I'm not going to pretend that Amazon wouldn't have been a HUGE win for Dallas. It would have, without a doubt, been a shot in the arm that would have jump started the CBD into a PRIME downtown core. I also wouldn't have been too upset if the combined incentives would have been close to $1B. I don't like it... but that's how you play the game now.

All I'm saying is that if you look at uptown as an example... It was a people first approach. It became fairly dense with people, fun stuff to do, and then all the big office tenants started buying up square footage. Downtown has been ridiculously office 'heavy' for a long time. We have taken steps to fix that, but honestly its just scratching the surface. So long as people are willing to sign a lease (OR BUY), that residential tap needs to stay wide open. The people will move in, the retail/entertainment will follow, and business will be falling over themselves to try to get into a vibrant core.

Cutting back on the over the top 'luxury' market, and targeting the middle income working professionals will be what turns the CBD around. Not 40-story fancy glass towers with valet parking.
"He doesn't know how to use the three seashells..."

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PonyUp13
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Re: Could Dallas land Amazon HQ '2'?

Postby PonyUp13 » 13 Nov 2018 14:24

PonyUp13 wrote:Maybe my expectations are too low, but it hurts less to me to lose to New York than it would most places. Losing to Austin, Atlanta, Denver, etc would have stung... DC was a lock and New York is New York.

I think we come out of this with an Amazon 'retail center of excellence' or something like that


Well I had “Center of Excellence” on my mind at the right time, however it went to my hometown of Nashville.

I’m shocked by the incentives NYC paid.....

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CRE_Investor
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Re: Could Dallas land Amazon HQ '2'?

Postby CRE_Investor » 13 Nov 2018 17:08

Just to play devil's advocate, lets look at some grossly oversimplified numbers to get a ballpark of what this may actually look like.

25,000 jobs
Assume an average of $150k/yr for each employee with 80% of that ($120k) of taxable AGI
At that income level the combined NY state and city average tax rate is currently 9.1%
That equates to an annual state and local income tax revenue of $10,900 per employee
At the full 25k employee number that totals $273.3MM per year in income taxes

With a total investment (some would undoubtedly would say giveaway) of $1.525B per the article linked above and $273.3MM of new tax income that equates to an 18% annual return on investment (giveaway) for the state and local incentives. That's a damn good ROI any way you look at it.

Those numbers don't include any additional property tax or sales tax revenue which are also huge amounts of money back in to the government coffers. Obviously there are additional costs in the form of infrastructure, city services, etc. that need to be accounted for as well, but to paint this as some horrible financial outcome based on the incentive package is either naive or full of ulterior motive.

I won't say whether this is a good deal on the whole for NY or not, because it will certainly have far reaching implications on daily life for millions of people, but from where I sit it's not a bad financial deal.

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Re: Could Dallas land Amazon HQ '2'?

Postby DPatel304 » 13 Nov 2018 17:52

CRE_Investor wrote:Just to play devil's advocate, lets look at some grossly oversimplified numbers to get a ballpark of what this may actually look like.

25,000 jobs
Assume an average of $150k/yr for each employee with 80% of that ($120k) of taxable AGI
At that income level the combined NY state and city average tax rate is currently 9.1%
That equates to an annual state and local income tax revenue of $10,900 per employee
At the full 25k employee number that totals $273.3MM per year in income taxes

With a total investment (some would undoubtedly would say giveaway) of $1.525B per the article linked above and $273.3MM of new tax income that equates to an 18% annual return on investment (giveaway) for the state and local incentives. That's a damn good ROI any way you look at it.

Those numbers don't include any additional property tax or sales tax revenue which are also huge amounts of money back in to the government coffers. Obviously there are additional costs in the form of infrastructure, city services, etc. that need to be accounted for as well, but to paint this as some horrible financial outcome based on the incentive package is either naive or full of ulterior motive.

I won't say whether this is a good deal on the whole for NY or not, because it will certainly have far reaching implications on daily life for millions of people, but from where I sit it's not a bad financial deal.


Excellent analysis! I could never quite figure out the best way to find out if a deal was good or not, but thanks for breaking it down for us.

For comparison, this is what Dallas offered:
Dallas' proposal included a mix of incentives that added up to $600 million from the city, or $12,000 per job. Texas' pool for economic incentives, the Texas Enterprise Fund, offers up to $10,000 per job. Together, that would have amounted to a maximum of $1.1 billion in incentives.
https://www.dallasnews.com/business/ama ... incentives

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joshua.dodd
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Re: Could Dallas land Amazon HQ '2'?

Postby joshua.dodd » 13 Nov 2018 23:54

Jesus Christ! This is a horrible deal for New York. Thank goodness azon didn't choose Dallas. I'd say we've dodged a bullet.

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dallaz
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Re: Could Dallas land Amazon HQ '2'?

Postby dallaz » 14 Nov 2018 06:50

The Amazon HQ2 pitch that would have dramatically changed Dallas' skyline

https://www.dallasnews.com/business/rea ... as-skyline

The Dallas Smart District would have been renamed “The Dallas Day 1 District”. It also includes a full animation of the Pelli Clarke Pelli designed campus.

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Mgreen15
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Re: Could Dallas land Amazon HQ '2'?

Postby Mgreen15 » 14 Nov 2018 09:08

dallaz wrote:The Amazon HQ2 pitch that would have dramatically changed Dallas' skyline

https://www.dallasnews.com/business/rea ... as-skyline

The Dallas Smart District would have been renamed “The Dallas Day 1 District”. It also includes a full animation of the Pelli Clarke Pelli designed campus.


I have a feeling this development is going to sit in limbo land forever, or it will be scaled down drastically.

It’s funny, I went back and read the article published in D magazine about a year ago around the time the Smart District was announced. Here’s what Mike Hoque said around the time the HQ2 search started...

“Everybody was running for Amazon and Steve [Van Amburgh, the CEO of KDC,] and I looked at each other, and we did decide to propose this as one of the options,” Hoque says. “If Amazon decided to be a part of our smart district—and they could be—they could drive a lot of change. But we are not banking on Amazon at all. We started designing this way before anyone began talking about Amazon coming to this city.”

In the DMN article published this morning Van Amburgh said,

“For the last nine months, we have been laser focused on this and working with them(Amazon).”

Sounds like they were banking on Amazon a little, doesn’t it?


https://www.dmagazine.com/business-econ ... ng-amazon/

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muncien
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Re: Could Dallas land Amazon HQ '2'?

Postby muncien » 14 Nov 2018 09:15

dallaz wrote:The Amazon HQ2 pitch that would have dramatically changed Dallas' skyline

https://www.dallasnews.com/business/rea ... as-skyline

The Dallas Smart District would have been renamed “The Dallas Day 1 District”. It also includes a full animation of the Pelli Clarke Pelli designed campus.


Great animations, and a solid pitch.

But I have trouble seeing such a development creating a true 'neighborhood'. With so much glass and steel, it comes across kinda Victory Parkish. The development is very 'KDC', and appears to be more of a suburban campus squeezed into an urban street grid. The buildings are beautiful and would no doubt have changed the skyline, but IMO it seems almost too 'Dallas' of an approach. I would have preferred less modern materials, better street level interaction (instead of massive elevated deck park), and other uses incorporated.

I do find it funny how they included The Bridge right into the middle of the plan. I'm sure that went over well. Hopefully, that wasn't sold as our version of 'talent acquisition'.... lol

But it is a beautiful proposal... Who knows, maybe KDC can get a bite from someone else. Otherwise, it seems The Smart District is probably dead.
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Kelley USA
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Re: Could Dallas land Amazon HQ '2'?

Postby Kelley USA » 14 Nov 2018 09:33

^^ I have a few thoughts on the design of the Smart District (Day 1 District).

1. Without really knowing, it could be that Amazon gave some sort of specifications as to how they wanted the buildings to look and how they wanted them to be grouped etc... If they had been working closely with Amazon then I can only assume they provided KDC feedback that they were on the right track with the overall look and feel of the buildings.

OR

2. These designs are simply meant to be mocks. At the end of the day Amazon probably would have brought in separate architects to create the type of architecture and layout that they preferred. So it could be that these designs would have been shredded and something completely new would have been created by an Amazon team.

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Re: Could Dallas land Amazon HQ '2'?

Postby Austin55 » 14 Nov 2018 10:57

Except for that ginormous parking deck that looks pretty nice.

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Tivo_Kenevil
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Re: Could Dallas land Amazon HQ '2'?

Postby Tivo_Kenevil » 14 Nov 2018 11:15

muncien wrote:But it is a beautiful proposal... Who knows, maybe KDC can get a bite from someone else. Otherwise, it seems The Smart District is probably dead.


That's what I'm most interested to know.
KDC, said that they expected to move dirt by end of year in this project. I'm assuming that all hinged on Amazon selecting Dallas. I'm sure we will hear about something new in future for this site. Odds are it won't be years from now though.

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Re: Could Dallas land Amazon HQ '2'?

Postby tamtagon » 14 Nov 2018 12:32

Skybridges are kinda weird, but wouldn't it be something if there's another anchor tenant queued up to get this deal going! Like, that Amazon cavalcade took all the air in the room for a while, so maybe the patient smaller others will find their way into the next addition to the skyline.

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Re: Could Dallas land Amazon HQ '2'?

Postby whit5125 » 14 Nov 2018 13:09

Great, the smart district is going to be another dead development site turned into parking lots while KDC sits on the land and if we are lucky we get a half assed development.

If they were smart they would have banked on other companies.

Of course there is nothing stopping them from you know, going ahead and building this anyway in stages , I guarantee something this high profile would find companies willing to move there , and then throw in a bit more residential into it and you have something.

Seriously I get it fell out of favor in the 80s as a way of doing things, but whatever happened to even a smidgen of "we will build it and they will come" line of thinking ?

Is it that every developer is so risk averse and unwilling to budge on the bottom line that they have to wait for banks or only design to fit a tenant ?

Like seriously the demand is there , you own a prime development location , and the land will only become more valuable once the HSR gets built.

I really want to be proven wrong here and maybe a single developer having this entire site still will allow something to get done , but given the way Dallas has ran in the past, I'll chuck this as a cool "what if" when I star at the parking lots next to city hall.

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muncien
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Re: Could Dallas land Amazon HQ '2'?

Postby muncien » 14 Nov 2018 13:29

joshua.dodd wrote:Jesus Christ! This is a horrible deal for New York. Thank goodness azon didn't choose Dallas. I'd say we've dodged a bullet.


Dallas/Texas offer was $1.2b for the entire 50k HQ. NY is paying over $1.5b for half the 'pie'. I honestly am satisfied with our offer, and I tend to think the only reason NY got into the mix (wasn't favored by any means) was the fact that they pretty much sold the farm. when you consider that NYC wasn't 'desperate' for business, it is quite mind boggling that they would throw that kinda money at a big player like Amazon.
When you consider the housing situation in NYC, the difficulty of running a small business with those property costs, and now the fighting over talent... I'm sure plenty of people will have an issue with Amazon coming to town. Add in the fact that the people of NYC are paying over $1.5b to make it happen, and I think you may have a bit of mutiny on your hands.
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Re: Could Dallas land Amazon HQ '2'?

Postby Tnexster » 14 Nov 2018 14:35

muncien wrote:
joshua.dodd wrote:Jesus Christ! This is a horrible deal for New York. Thank goodness azon didn't choose Dallas. I'd say we've dodged a bullet.


Dallas/Texas offer was $1.2b for the entire 50k HQ. NY is paying over $1.5b for half the 'pie'. I honestly am satisfied with our offer, and I tend to think the only reason NY got into the mix (wasn't favored by any means) was the fact that they pretty much sold the farm. when you consider that NYC wasn't 'desperate' for business, it is quite mind boggling that they would throw that kinda money at a big player like Amazon.
When you consider the housing situation in NYC, the difficulty of running a small business with those property costs, and now the fighting over talent... I'm sure plenty of people will have an issue with Amazon coming to town. Add in the fact that the people of NYC are paying over $1.5b to make it happen, and I think you may have a bit of mutiny on your hands.


It is definitely not worth it. That is a huge price for a corporation that is swimming in cash and probably one of the best positioned companies in the world that could easily make this happen without the huge payout. I can't wait to see how this plays out.

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Re: Could Dallas land Amazon HQ '2'?

Postby Kelley USA » 14 Nov 2018 16:12

From everything I'm reading pretty much nobody in NYC is happy about this. People in the neighborhood aren't happy, lawmakers on both sides aren't happy, NYC City Council isn't happy. There have already been lawsuits filed to stop Amazon from receiving said incentives & payments. It's a mess!

On another note, it does make me sort of laugh to think Amazon is just going to land whatever tech talent they want from these feeder institutions of higher education. As if every graduate is just going to go to work for Amazon once they graduate. They will face significantly greater competition for tech talent in NYC than they ever would have here in Dallas. Facebook, Google, Twitter all have a significant presence in NYC and they're all clamoring for these graduates. I think had they setup here in Dallas they would have been a top choice (maybe THE top choice) for graduates from SMU, UNT, TCU, UTA, UTD etc...I think in NYC they're just 1 of 5+.

Ha, 2 minutes after I posted this I can across this article about Google adding to it's workforce in NYC...

https://www.geekwire.com/2018/google-pl ... ters-site/

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Re: Could Dallas land Amazon HQ '2'?

Postby DPatel304 » 14 Nov 2018 17:02

Tnexster wrote:It is definitely not worth it. That is a huge price for a corporation that is swimming in cash and probably one of the best positioned companies in the world that could easily make this happen without the huge payout. I can't wait to see how this plays out.


But if you're going to pay to have a company come to your city, wouldn't you rather pay for one that is swimming in cash? I get that they can pay for the relocation on their own, but a company flush with cash will add a lot more value to your city than a company that can't even afford its own relocation.

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Re: Could Dallas land Amazon HQ '2'?

Postby tanzoak » 14 Nov 2018 17:52

Kelley USA wrote:On another note, it does make me sort of laugh to think Amazon is just going to land whatever tech talent they want from these feeder institutions of higher education. As if every graduate is just going to go to work for Amazon once they graduate. They will face significantly greater competition for tech talent in NYC than they ever would have here in Dallas. Facebook, Google, Twitter all have a significant presence in NYC and they're all clamoring for these graduates. I think had they setup here in Dallas they would have been a top choice (maybe THE top choice) for graduates from SMU, UNT, TCU, UTA, UTD etc...I think in NYC they're just 1 of 5+.



From a sheer bodies perspective, DFW already has the most imbalanced tech jobs added to tech degrees conferred ratio in the country. Meaning, we don't produce enough home-grown tech grads to fill existing demand, even without Amazon. And again, bodies aren't the relevant metric, it's top-end talent.

While NYC also has an imbalance in the same direction, it's vastly more of a national and international draw than Dallas is, so that's less of a concern. And a large part of the reason why it's more of a draw is exactly the fact that Google et al are also there. That's a benefit to Amazon's recruitment, not a detriment. You can get the best people to move to NYC because they know that they have plenty of options when they want a change. Someone who went to work at Amazon in Dallas would have to be okay with the fact that when they want a new job, they're much more likely going to have to move to find a position they're interested in and would be be less like to have developed the connections that facilitates such a move.

In addition to recruitment of college students, being in an environment with Google (and others) means that there's a pool of people with high-level experience they can hire mid-level people from without having to get them to uproot their lives to move to Dallas. This is the reason why companies continue to pay the Bay Area's outrageous rents: to have access to this skilled workforce. The presence of competitors is a benefit, not a drawback.

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tamtagon
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Re: Could Dallas land Amazon HQ '2'?

Postby tamtagon » 15 Nov 2018 10:01

tanzoak wrote:From a sheer bodies perspective, DFW already has the most imbalanced tech jobs added to tech degrees conferred ratio in the country. Meaning, we don't produce enough home-grown tech grads to fill existing demand, even without Amazon. And again, bodies aren't the relevant metric, it's top-end talent.


I chalk this up to lazy arrogant politics. Gov Perry & Co. did a fantastic job to get 7ish state universities into the fast lane for academic and research expansion and improvement. Gov Abbott let that trajectory reverse. Stupid mistake.

I'd give up to two years for the real estate consolidation used in the Smart District HQ2 proposal to recruit office tenants supplying the HQ2 phase one new construction amount; that ought to be enough to keep the master project intact and continued recruiting determines the long term scope. After that, the collection will be sold off piece by piece.

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Re: Could Dallas land Amazon HQ '2'?

Postby lakewoodhobo » 15 Nov 2018 10:47

It sounds like we understand the talent situation in DC and NYC, but I guess I don't know enough about why the operations center went to Nashville. That would've been a great consolation prize for Dallas, especially if it resulted in new construction south of City Hall and a much more manageable 5,000 new jobs.

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Re: Could Dallas land Amazon HQ '2'?

Postby DPatel304 » 15 Nov 2018 10:55

lakewoodhobo wrote:It sounds like we understand the talent situation in DC and NYC, but I guess I don't know enough about why the operations center went to Nashville. That would've been a great consolation prize for Dallas, especially if it resulted in new construction south of City Hall and a much more manageable 5,000 new jobs.


Yeah, this is probably what we, as a city, should be focusing on. I think we all agree we never had a chance of competing with NYC or DC, but Nashville is a city that is more on our level, and 5,000 jobs would have been more manageable, and still a HUGE win for Downtown. In my eyes, this was the one we should have nabbed, but I don't know the reasoning behind choosing Nashville.

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Tucy
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Re: Could Dallas land Amazon HQ '2'?

Postby Tucy » 15 Nov 2018 11:05

tamtagon wrote:
tanzoak wrote:From a sheer bodies perspective, DFW already has the most imbalanced tech jobs added to tech degrees conferred ratio in the country. Meaning, we don't produce enough home-grown tech grads to fill existing demand, even without Amazon. And again, bodies aren't the relevant metric, it's top-end talent.


I chalk this up to lazy arrogant politics. Gov Perry & Co. did a fantastic job to get 7ish state universities into the fast lane for academic and research expansion and improvement. Gov Abbott let that trajectory reverse.


How so?

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tamtagon
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Re: Could Dallas land Amazon HQ '2'?

Postby tamtagon » 15 Nov 2018 12:00

^State funding, aka bedrock funding, facing actual reductions has not increased much since the recession, some cases not keeping up with inflation and/or enrollment

https://www.texastribune.org/2017/07/27 ... uts-avert/

...though general state funding for higher education over the next two years climbed by 1.6 percent in the state budget signed by Republican Gov. Greg Abbott in June. That’s a marked improvement over the 6 to 10 percent cuts that were initially on the table, and many university officials expressed relief.

But the overall state funding increase only paints part of the picture. Sixteen of Texas’ 43 public universities and system administrative offices still saw a reduction in state funding. Many of the universities that saw an increase in state funding still didn’t get enough to keep up with inflation and enrollment growth.


Texas is booming, has been booming and will continue to boom in the future. Higher education simply must keep pace and deliver a regional product on par with the Northeast and West Coast.

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Re: Could Dallas land Amazon HQ '2'?

Postby Cbdallas » 15 Nov 2018 15:55

In the end Amazon had to do what they had to do and grabbing the taxpayer money from 2 sites to end up with a bigger total was pretty brilliant also not overtaxing the infrastructure of just one city which is still going to be an issue in both of those locations. From a non business perspective I had hoped they would have chosen Dallas in the middle of the country to start spreading out the tech jobs instead of just magnifying the coastal regions even more but oh well I guess it will take care of itself over time. Dallas is on the right track and just needs to keep up with its current growth.

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muncien
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Re: Could Dallas land Amazon HQ '2'?

Postby muncien » 15 Nov 2018 16:00

Seems like paying 50k people in NYC and DC would cost a heck of a LOT more than paying 50k in Dallas. I doubt that treasure chest they got from NYC will come close to offsetting those costs... But, what do I know? I'm sure they did the math.
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Re: Could Dallas land Amazon HQ '2'?

Postby Tnexster » 16 Nov 2018 16:50

Dallas may have lost Amazon, but downtown was still a big winner

https://www.dallasnews.com/business/rea ... big-winner

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Re: Could Dallas land Amazon HQ '2'?

Postby Tnexster » 19 Nov 2018 10:51

24M square feet of possibility: Here’s what downtown Dallas could have looked like if Amazon had moved in

Lot's of "what ifs" here and it's behind the paywall but you can see they were thinking big.

https://www.bizjournals.com/dallas/news ... -what.html

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ContriveDallasite
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Re: Could Dallas land Amazon HQ '2'?

Postby ContriveDallasite » 19 Nov 2018 14:39

:shock: Can we go ahead and lock this thread now :shock:

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Kelley USA
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Re: Could Dallas land Amazon HQ '2'?

Postby Kelley USA » 19 Nov 2018 16:15

ContriveDallasite wrote::shock: Can we go ahead and lock this thread now :shock:


Or at the very least can we change the name of the thread to "Dallas Didn't land Amazon HQ2; Now What?"

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Re: Could Dallas land Amazon HQ '2'?

Postby Tnexster » 22 Nov 2018 15:28

Dallas developer on missing Amazon: ‘I’m not heartbroken’

https://www.bizjournals.com/dallas/news ... m-not.html

"There’s no reason for Dallas to remotely give the concessions that they did in Crystal City," AmeriSouth Realty CEO Ruel Hamilton, who focuses on building affordable apartment projects, said in an interview.

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Re: Could Dallas land Amazon HQ '2'?

Postby joshua.dodd » 22 Nov 2018 17:54

It's ironic that there is literally a big tech bubble bursting on the stock market right now as we speak, Amazon included. Bezos has personally lost 42 billion as the big tech names have lost 20% in value, nearly a trillion dollars, in less than a month.

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Re: Could Dallas land Amazon HQ '2'?

Postby Hwulivn » 22 Nov 2018 18:38

Tnexster wrote:24M square feet of possibility: Here’s what downtown Dallas could have looked like if Amazon had moved in

Lot's of "what ifs" here and it's behind the paywall but you can see they were thinking big.

https://www.bizjournals.com/dallas/news ... -what.html


I just wish developers in Dallas would quit building and/or proposing (conceptual or not) to build fortress developments that do not connect to adjacent properties or the urban fabric surrounding development sites. Enough is enough. This is a detriment and will become even more so in the future.

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DFW
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Re: Could Dallas land Amazon HQ '2'?

Postby DFW » 24 Nov 2018 23:15

One last note; DFW metro area is number one in the nation for office leasing as of the latest figures, yet we can’t erect an office skyscraper downtown like Houston can.
Do we still have to much empty space downtown?

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Re: Could Dallas land Amazon HQ '2'?

Postby joshua.dodd » 25 Nov 2018 06:37

Office demand seems to favor Uptown and the northern burbs over Downtown.

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Tucy
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Re: Could Dallas land Amazon HQ '2'?

Postby Tucy » 25 Nov 2018 08:33

DFW wrote:One last note; DFW metro area is number one in the nation for office leasing as of the latest figures, yet we can’t erect an office skyscraper downtown like Houston can.
Do we still have to much empty space downtown?


Yes. Too much supply. But even more important: too little demand.

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Re: Could Dallas land Amazon HQ '2'?

Postby cowboyeagle05 » 25 Nov 2018 09:25

Plus Downtown is not where the bulk of activity is. Uptown is nice but Downtown is the very bottom edge of the DFW development wave.

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Re: Could Dallas land Amazon HQ '2'?

Postby Mgreen15 » 26 Nov 2018 09:23

DFW wrote:One last note; DFW metro area is number one in the nation for office leasing as of the latest figures, yet we can’t erect an office skyscraper downtown like Houston can.
Do we still have to much empty space downtown?


In comparison to Downtown Dallas, there isn’t more demand in Downtown Houston to add more office space. As of July, office vacancy has increased to over 28% in downtown Houston (highest in over 20 years). I would say developers in downtown Dallas are just more risk averse in comparison to Houston. The major office developments in downtown (smart district, Perot tower, etc.) are waiting to land major tenants before breaking ground. I just don’t know if that’s the case in Houston.


http://www.bizjournals.com/houston/news ... y.amp.html

DPatel304
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Re: Could Dallas land Amazon HQ '2'?

Postby DPatel304 » 26 Nov 2018 09:31

Mgreen15 wrote:In comparison to Downtown Dallas, there isn’t more demand in Downtown Houston to add more office space. As of July, office vacancy has increased to over 28% in downtown Houston (highest in over 20 years). I would say developers in downtown Dallas are just more risk averse in comparison to Houston. The major office developments in downtown (smart district, Perot tower, etc.) are waiting to land major tenants before breaking ground. I just don’t know if that’s the case in Houston.


That's really baffling to me. I guess I do prefer risk averse instead of overbuilding, but, I would think if a developer were going to take a risk, it would make sense to take one in Dallas which has been performing better over the past few years.

A few years ago, I probably would have wanted developers to just take the risk and start building, but, I'm hearing rumblings about economic slowdown, so, for now, I'd rather see more risk averse and smart decisions. We have enough in the pipeline to still keep things moving along in the greater Downtown area.

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Tucy
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Re: Could Dallas land Amazon HQ '2'?

Postby Tucy » 26 Nov 2018 13:17

Mgreen15 wrote:
DFW wrote:One last note; DFW metro area is number one in the nation for office leasing as of the latest figures, yet we can’t erect an office skyscraper downtown like Houston can.
Do we still have to much empty space downtown?


In comparison to Downtown Dallas, there isn’t more demand in Downtown Houston to add more office space. As of July, office vacancy has increased to over 28% in downtown Houston (highest in over 20 years). I would say developers in downtown Dallas are just more risk averse in comparison to Houston. The major office developments in downtown (smart district, Perot tower, etc.) are waiting to land major tenants before breaking ground. I just don’t know if that’s the case in Houston.


http://www.bizjournals.com/houston/news ... y.amp.html


Actually, there is more demand for space in new towers in downtown Houston. If that were not the case, the new towers would not be going up. Nobody is building spec. Hines is no stranger to Dallas. If they could find similar demand for space in downtown Dallas, they would be building new office towers there too.

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Re: Could Dallas land Amazon HQ '2'?

Postby Matt777 » 26 Nov 2018 13:30

Houston is building a lot of spec..... both office and residential.

The new towers around the Arts District and Klyde Warren downtown have leased well. There is no new office product in the Downtown core in ages, so I don't understand how someone can assert confidently that there is no demand. Yes, some company could come in and say "build us a tower to these specifications" but that's not how most office leasing works especially in a large highrise where multiple tenants will be required. I fully believe that the lack of "demand" for Downtown office space is mostly because there is no new product. Only 1980's and earlier product. As nice as some of these buildings have been renovated, many office tenants want new. I think an attractive, new office tower somewhere in the core would lease briskly once under construction. But nobody has tried it.

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Re: Could Dallas land Amazon HQ '2'?

Postby Tucy » 26 Nov 2018 14:03

Matt777 wrote:Houston is building a lot of spec..... both office and residential.

The new towers around the Arts District and Klyde Warren downtown have leased well. There is no new office product in the Downtown core in ages, so I don't understand how someone can assert confidently that there is no demand. Yes, some company could come in and say "build us a tower to these specifications" but that's not how most office leasing works especially in a large highrise where multiple tenants will be required. I fully believe that the lack of "demand" for Downtown office space is mostly because there is no new product. Only 1980's and earlier product. As nice as some of these buildings have been renovated, many office tenants want new. I think an attractive, new office tower somewhere in the core would lease briskly once under construction. But nobody has tried it.


Where is the spec office building construction in Houston? If there is any, it's not downtown.

There is plenty of new product being shopped around for downtown Dallas (Spires, Two Arts, Perot's planned tower, the "Smart District"...). The only thing keeping those from being built is the lack of signed leases (demand). Your imagination of a building being quickly leased if only they would start construction is just not how office towers are typically developed (occasionally, yes, but not typically). Developers typically don't start construction until they have a good portion of the square footage leased.

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Re: Could Dallas land Amazon HQ '2'?

Postby DPatel304 » 26 Nov 2018 14:35

If Houston isn't building to spec, then what is their secret? I'm not familiar with their city, but, from what I've seen, they seem to be lagging behind Dallas in most ways, and were hit the hardest during the recent downturn in the oil industry.

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Re: Could Dallas land Amazon HQ '2'?

Postby Matt777 » 26 Nov 2018 15:17

Tucy wrote:
Matt777 wrote:Houston is building a lot of spec..... both office and residential.

The new towers around the Arts District and Klyde Warren downtown have leased well. There is no new office product in the Downtown core in ages, so I don't understand how someone can assert confidently that there is no demand. Yes, some company could come in and say "build us a tower to these specifications" but that's not how most office leasing works especially in a large highrise where multiple tenants will be required. I fully believe that the lack of "demand" for Downtown office space is mostly because there is no new product. Only 1980's and earlier product. As nice as some of these buildings have been renovated, many office tenants want new. I think an attractive, new office tower somewhere in the core would lease briskly once under construction. But nobody has tried it.


Where is the spec office building construction in Houston? If there is any, it's not downtown.

There is plenty of new product being shopped around for downtown Dallas (Spires, Two Arts, Perot's planned tower, the "Smart District"...). The only thing keeping those from being built is the lack of signed leases (demand). Your imagination of a building being quickly leased if only they would start construction is just not how office towers are typically developed (occasionally, yes, but not typically). Developers typically don't start construction until they have a good portion of the square footage leased.


Less than one third of the new Hines tower in Downtown Houston is leased before construction began, and half of that leased spaced was leased by Hines themselves. Towers in Houston get started with far less leased space. In Dallas, they seem to want 50% or more leased before they even released a render much less start construction. The developers here are more conservative, that's just a fact, and that culture bleeds into tenants as well. So what if Spire is being shopped off a render? Tenants here want something more concrete. Literally. I don't see any of the new Arts District Towers having trouble leasing (and that is part of Downtown). Even when 7-11 left One Arts Plaza, there was somebody already chomping at the bit for that space. Tenants here want to see it, feel it, lease it.

Not to mention that Houston already has a horrible glut of empty office space, whereas Dallas can't build it fast enough:

50 Million Square Feet Vacant in Houston: Worst Vacancy Rate in 30+ Years, NAI Reports
HOUSTON, By Ralph Bivins, Realty News Report, 07-31-18

Key excerpts:

* 50 MSF vacant in Houston, worst office vacancy in over 30 years,

* Houston seeing historically high vacancy with continued negative absorption including ongoing large-scale lease dispositions and an occupancy rate at its lowest level in 30+ years,

* No silver bullet to bring a timely healing as energy companies, backbone of Houston office tenants for almost a century, continue to remain stagnant and many are shedding space

* It’s been so long since Houston scored a major league win in the corporate relocation game, it’s hard to hold hope that economic development can do anything substantive about Houston’s vacancy problem.

* JLL reports leasing demand is “stagnant.” Houston has lost ground in 2018, with 2.4 million SF in negative absorption year-to-date, JLL says.

* Vacancy rate will grow even greater in coming year with no end in sight

http://realtynewsreport.com/2018/07/31/ ... i-reports/

Houston is the epitome of a "build it and they will come" market. It's always been froth and boom and then bust. With a possible recession coming, and possible major drop in fuel prices, along with the world trying to move away from fossil fuels, Houston sure is climbing as high as they can before they dive.

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Re: Could Dallas land Amazon HQ '2'?

Postby Mgreen15 » 26 Nov 2018 15:42

Tucy wrote:
Actually, there is more demand for space in new towers in downtown Houston. If that were not the case, the new towers would not be going up. Nobody is building spec. Hines is no stranger to Dallas. If they could find similar demand for space in downtown Dallas, they would be building new office towers there too.


No spec? Here are some recent numbers from new developments in downtown Houston:

In Q1 2016, 609 Main (1,000,000 sq ft) was only 5.9% leased and the building was complete in February of 2017. In 2018, it’s now just over 50% leased.

Capitol tower (nearly 800,000 sq ft) started in 2015 and is set to be complete next year. It’s currently only 27% leased.

So yes. There is definitely spec in Houston.

https://assets.recenter.tamu.edu/Docume ... kyline.pdf

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Re: Could Dallas land Amazon HQ '2'?

Postby Tucy » 26 Nov 2018 16:46

Mgreen15 wrote:
Tucy wrote:
Actually, there is more demand for space in new towers in downtown Houston. If that were not the case, the new towers would not be going up. Nobody is building spec. Hines is no stranger to Dallas. If they could find similar demand for space in downtown Dallas, they would be building new office towers there too.


No spec? Here are some recent numbers from new developments in downtown Houston:

In Q1 2016, 609 Main (1,000,000 sq ft) was only 5.9% leased and the building was complete in February of 2017. In 2018, it’s now just over 50% leased.

Capitol tower (nearly 800,000 sq ft) started in 2015 and is set to be complete next year. It’s currently only 27% leased.

So yes. There is definitely spec in Houston.

https://assets.recenter.tamu.edu/Docume ... kyline.pdf


Is 609 Main currently under construction? (No, they started construction more than 4 years ago, when the downtown Houston market was in quite a different place. Yes, in the past, even fairly recent past, there has been some spec construction in downtown Houston, but not now; not in this market.) (By the way, the building is currently more than 64%, not 50%, leased https://www.hines.com/news/new-lease-signed-at-609-main-at-texas)

Capitol Tower did not start construction until they had an anchor tenant signed -- 27 or 28% leased when they started construction. http://realtynewsreport.com/2017/04/12/skanska-announces-construction-has-started-on-downtown-skyscraper-with-bank-of-america-as-anchor/
That is not spec construction (and FWIW, it is currently 72% leased, not 27%) https://www.bizjournals.com/houston/news/2018/11/12/major-houston-public-company-to-relocate-downtown.html

So, no, there is no spec office building construction occurring in downtown Houston.
Last edited by Tucy on 26 Nov 2018 17:09, edited 3 times in total.

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Re: Could Dallas land Amazon HQ '2'?

Postby Tucy » 26 Nov 2018 17:05

DUP POST. NM

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tamtagon
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Re: Could Dallas land Amazon HQ '2'?

Postby tamtagon » 26 Nov 2018 17:42

Didn't Energy Corridor get way overbuilt?

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Mgreen15
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Re: Could Dallas land Amazon HQ '2'?

Postby Mgreen15 » 26 Nov 2018 17:45

Tucy wrote:
Mgreen15 wrote:
Tucy wrote:
Actually, there is more demand for space in new towers in downtown Houston. If that were not the case, the new towers would not be going up. Nobody is building spec. Hines is no stranger to Dallas. If they could find similar demand for space in downtown Dallas, they would be building new office towers there too.


No spec? Here are some recent numbers from new developments in downtown Houston:

In Q1 2016, 609 Main (1,000,000 sq ft) was only 5.9% leased and the building was complete in February of 2017. In 2018, it’s now just over 50% leased.

Capitol tower (nearly 800,000 sq ft) started in 2015 and is set to be complete next year. It’s currently only 27% leased.

So yes. There is definitely spec in Houston.

https://assets.recenter.tamu.edu/Docume ... kyline.pdf


Is 609 Main currently under construction? (No, they started construction more than 4 years ago, when the downtown Houston market was in quite a different place. Yes, in the past, even fairly recent past, there has been some spec construction in downtown Houston, but not now; not in this market.) (By the way, the building is currently more than 64%, not 50%, leased https://www.hines.com/news/new-lease-signed-at-609-main-at-texas)

Capitol Tower did not start construction until they had an anchor tenant signed -- 27 or 28% leased when they started construction. http://realtynewsreport.com/2017/04/12/skanska-announces-construction-has-started-on-downtown-skyscraper-with-bank-of-america-as-anchor/
That is not spec construction (and FWIW, it is currently 72% leased, not 27%) https://www.bizjournals.com/houston/news/2018/11/12/major-houston-public-company-to-relocate-downtown.html

So, no, there is no spec office building construction occurring in downtown Houston.


To be fair, I used 609 main as an example, because it’s literally the most recent major development to be completed downtown.

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Tucy
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Re: Could Dallas land Amazon HQ '2'?

Postby Tucy » 26 Nov 2018 17:51

Mgreen15 wrote:
Tucy wrote:
Mgreen15 wrote:
No spec? Here are some recent numbers from new developments in downtown Houston:

In Q1 2016, 609 Main (1,000,000 sq ft) was only 5.9% leased and the building was complete in February of 2017. In 2018, it’s now just over 50% leased.

Capitol tower (nearly 800,000 sq ft) started in 2015 and is set to be complete next year. It’s currently only 27% leased.

So yes. There is definitely spec in Houston.

https://assets.recenter.tamu.edu/Docume ... kyline.pdf


Is 609 Main currently under construction? (No, they started construction more than 4 years ago, when the downtown Houston market was in quite a different place. Yes, in the past, even fairly recent past, there has been some spec construction in downtown Houston, but not now; not in this market.) (By the way, the building is currently more than 64%, not 50%, leased https://www.hines.com/news/new-lease-signed-at-609-main-at-texas)

Capitol Tower did not start construction until they had an anchor tenant signed -- 27 or 28% leased when they started construction. http://realtynewsreport.com/2017/04/12/skanska-announces-construction-has-started-on-downtown-skyscraper-with-bank-of-america-as-anchor/
That is not spec construction (and FWIW, it is currently 72% leased, not 27%) https://www.bizjournals.com/houston/news/2018/11/12/major-houston-public-company-to-relocate-downtown.html

So, no, there is no spec office building construction occurring in downtown Houston.


To be fair, I used 609 main as an example, because it’s literally the most recent major development to be completed downtown.


I don't know why we're talking about Houston at all. The idea that no large office towers are being built in Dallas because Dallas developers and tenants are too cautious and conservative should cause anyone familiar with Dallas to have a good belly laugh. Whatever is happening or not happening in Houston, it is a simple economic and development fact that if a developer could sign enough tenants to get financing for a downtown office tower, they would do so (and plenty of Dallas tenants are willing to sign pre-construction leases, as has been demonstrated many times over the years).


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