On January 18, Amazon announced the shortlist of twenty cities that it’s considering for its second headquarters, informally known as HQ2. On the list, culled from 238 applications, were predictable cities like Los Angeles, New York, and Chicago, as well as less predictable contenders like Columbus, Ohio and Raleigh, North Carolina. One city, Toronto, isn’t even in the U.S. Two Texas cities made the cut: Austin and Dallas.
Perhaps more surprising than the names on the list, at least to Texans, was one city that didn’t make it—Houston, the fourth-largest metropolis in the country. Few people saw Houston as an HQ2 frontrunner, especially in the wake of Hurricane Harvey, but not making the top twenty was viewed by many local business leaders as a slap in the face.
“I believe this is a wake-up call for Houston,” said Greater Houston Partnership CEO Bob Harvey, who helped put the bid together. Mayor Sylvester Turner said the snub shows “there is a lot of work that still needs to be done.” Harvey and Turner attributed the rejection to a weak local technology industry. But internal documents from the bid show a combination of factors contributing to the Amazon snub.
On Friday, Houston officials released the executive summary of their failed bid, along with several hundred pages of internal emails about their courtship of Amazon. In his cover letter, Turner focuses on Houston’s diversity and dynamism, as well as its two international airports, port, and “extensive freeway system,” mentioning Harvey only as an example of the city’s “strength and resilience.” Within the bid to woo Jeff Bezos back to the city where he spent three years as a child, Houston offered the company $268 million in cash and tax incentives.
Houston proposed three potential sites for Amazon’s headquarters: the former Humble Oil building downtown, the now-shuttered Sears in Midtown, and a 150-acre industrial site in the East End, describing the first two as the poles of a new “Innovation Corridor” that would run from Midtown to Downtown, along one of the city’s light rail lines.
Each of those sites is highly problematic, though, as Oscar Slotboom noted in a prescient article on the blog Houston Strategies in October. Slotboom points out that while the 44-story Humble Oil building is empty, it’s also over fifty years old and is surrounded by vacant lots. Having recently visited the East End site, he expresses skepticism about its viability. “Approaching it from interstate 10 on Hirsch, you pass through a disadvantaged neighborhood with pre-WW2 housing and vacant lots . . . I just can’t see Amazon wanting to bring potential recruits to this site, it won’t impress.” Although he doesn’t analyze the Midtown Sears, he does consider the Astrodome, which he argues could be transformed into “one of the most distinctive offices anywhere.”
Newly released emails show that City Hall staffers largely panned Slotboom’s article when it came out. “This article misses the mark by a lot,” wrote the mayor’s chief of staff, Andy Icken. “They haven’t even touched on the urban site we are considering [the old Sears] and the fantasy of the Astrodome is beyond absurd. The area around NRG is essentially a wasteland and about as far away from the urban environment Amazon has fostered in Seattle.”
It seems odd that Icken dismissed the Astrodome (which has a nearby light rail station) as insufficiently urban, given the bid’s inclusion of a 150-acre industrial site with no connection to public transit. And even a cursory comparison of the Astrodome to the three sites the city ultimately pitched to Amazon gives the stadium a clear edge in aesthetics and capacity. After all, Amazon’s RFP asked cities to “think big and creatively when considering locations and real estate options.” What is bigger (a million square feet of potential office space!) or more creative than repurposing the world’s first indoor stadium into Amazon’s HQ2?
Then there’s the matter of Houston’s incentive package. Critics have charged that Amazon doesn’t need the money, but Houston nevertheless came up with $268 million to lure Bezos to the Bayou City. That sounds like a lot—and it is—but it’s dwarfed by some rival cities. Maryland Governor Larry Hogan is offering $3 billion if Amazon chooses Montgomery County, while New Jersey somehow put together a $7 billion offer on behalf of Newark. Both locations made Bezos’s shortlist.
Finally, and unavoidably, there’s the matter of Harvey. Houston’s bid gamely tried to turn a liability into a virtue by highlighting the city’s resilience, but it’s hard to overcome weeks of TV news coverage showing the city underwater. Why would any non-energy company want to build their headquarters in a city that has experienced three “500-year” floods in as many years? Other possible reasons for Amazon’s snub include Houston’s lack of relative lack of public transportation, major research universities, or a robust start-up culture. Even in Texas, Houston lags behind Dallas when it comes to public transportation—DART has 93 miles of track and 99,000 average weekday riders, compared to Metro Rail’s 23-mile system and its 65,000 daily riders—and the city lacks a university the size of the University of Texas at Austin.
Although Houston politicians and business leaders may be let down, other residents may be breathing a sigh of relief. As a Seattle Times columnist warned in an open letter to bidding cities, the company will likely detonate a “prosperity bomb” in whatever city it chooses to host its HQ2. Now Houstonians can rest assured that Amazon won’t be bringing its tens of thousands of workaholic tech bros and employee-only glass biospheres to their city.
Meanwhile, Austin and Dallas are still in the running for Amazon’s HQ2, with many experts putting their money on the capital. Only time will tell if Houston dodged a bullet or missed its golden opportunity.