Is Vancouver really in the running for Amazon HQ2?

The question is not so much what Vancouver could offer the tech giant, but what it couldn’t, argues Neil Hamilton

By
Western Investor
December 12, 2017





seattle amazon
Amazon’s HQ1 building in Seattle. | Amazon.com

 

There’s been a lot of hype about where Amazon is going to place its much-vaunted second world headquarters – or HQ2, as it’s been dubbed. There are literally dozens of cities in the running (238 of them, in fact) from Halifax to Austin to Puerto Rico and every place big and small in between.

GeekWire recently reported that major cities such as New York, San Francisco, Washington DC, Seattle and San Jose would be the top five choices based on a study of obvious attributes such as transportation infrastructure, available talent and a business-friendly climate. However, Amazon has hinted that HQ2 won’t be located on the West Coast, and Seattle is not expected to be in the running as it is already home to Amazon HQ1.

Further, there is the possibility that the decision may not come down to any of the above criteria as much as good old dollars and cents – in other words, tax breaks. And proximity to outdoor recreation could also factor in (which is certainly a point in Vancouver’s favour).

What does Vancouver offer?

So, is Vancouver realistically in the running? It certainly has a lot of what you’d expect Amazon to be looking for – a tech-rich workforce, stellar recreational amenities, short shuttle time between here and Seattle (for both executives and family) and a currency advantage (if you can call a weak Canadian dollar an advantage, but in this case, it is). It also has something else that has been put out there as a consideration – the ability to import quality employees from countries that the US president would frown upon (and may possibly even try to stop legally).

For his part, and he has a big part, Jeff Wilke, head of Amazon’s worldwide consumer business and a member of the HQ2 decision committee, has stated, “We will be very data-based in our approach.” That means there will be a preference for a city with a strong public-school system and with an emphasis on science, technology, engineering and mathematics.

Could Vancouver even handle HQ2?

Even if we were a realistic competitor in this race, could we actually handle it? Could Vancouver accommodate a total of 50,000 new bodies at the rate that Amazon would bring them in (we’re not talking about immigration over a couple of decades, folks...). We currently have close to a 0% vacancy rate for rental accommodation, and that shows no sign of abating anytime soon. Consequently, rents are becoming seriously unaffordable for many people. Where would 10,000 new highly paid residents (i.e. tenants) even live, in that situation? And if someone wanted to actually buy a home, well, that’s another matter entirely.

In terms of office space, according to CBRE’s latest report on commercial real estate, the office vacancy rate in downtown YVR has dropped to just 5%, which is half of what it was in early 2016. This is now North America’s second lowest downtown office vacancy rate, just behind downtown Toronto at 4%.

So could we accommodate Amazon HQ2 for office space? The company just announced another 1,000 employees being hired up here, which is great news for our local economy, but that’s a far cry from 10,000, 25,000 or 50,000 that HQ2 would bring.

And could our infrastructure handle it? How many Amazonites would like to live on the North Shore? Probably quite a few from a lifestyle point-of-view. However, as far as getting to and from work is concerned, taking the Seabus is one thing but having to take surface transportation either over or back between 3:00-7:00 PM would be (IS?) nothing but a nightmare – and a huge timewaster (time is money…) - and that’s with no traffic hiccups. Could our public-school system handle it? It’s overcrowded and underfunded now. Amazon is already adding about 1000 new employees to its existing 800 here now. And it currently occupies over 350,000 square feet of downtown office space. Plus, it has one distribution centre in New Westminster and another in Delta and operates subsidiary Abebooks.com in Victoria.

Benefits outweighed by challenges

So, let’s bring it down to brass tacks. Yes, Vancouver has a burgeoning tech-biz environment that would probably be very suitable, welcoming and a hand-in-glove fit for Amazon. Since they are firmly ensconced and still expanding here, it appears obvious that the company does like this city. It’s safe, multicultural, has a currency advantage (as do all other Canadian cities) and is close to Seattle. It could (along with other Canadian cities) import foreign brainpower without the immigration roadblocks that could arise in the US.

However, the challenge of housing its workforce here, on both business and personal levels, would be almost insurmountable. Unfortunately, this city is just too small and expensive every way you look at it to be able to handle what Amazon would throw at us. As Mayor Gregor Robertson himself admits, “That growth would be a challenge to absorb in a short time. It would be impossible. We need all of Metro (Vancouver) involved in this level of growth, so there is an opportunity there.”

Amen.


J. Neil Hamilton is a Senior Property Advisor with Macdonald Realty Ltd. with expertise in the buying, selling and leasing of both residential and commercial properties throughout the GVA. He can be reached at 604-499-7240 or neilhamilton@macrealty.com.
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