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Amazon Second HQ

Palma

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so why do this big production with the proposal that Amazon put out to all cities that wish to apply? Why would cities shearing this spend time and money on a losing proposition?
 

WislaHD

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I read that differently. That some of the Amazon execs have a clear preference for Boston, but that in itself does not mean anything has been decided. The person that needs to be convinced is Bezos.

I find the article's description of MIT and Harvard odd. While the quality and excellence of those institutions cannot be overstated, they will not be able to provide the mass supply of workers Amazon requires in an HQ2.
 

biospherian

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I would be surprised if they choose somewhere other than Boston tbh. I can maybe see Detroit, Pittsburgh, or less so, Atlanta.
 

muller877

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I read that differently. That some of the Amazon execs have a clear preference for Boston, but that in itself does not mean anything has been decided. The person that needs to be convinced is Bezos.

I find the article's description of MIT and Harvard odd. While the quality and excellence of those institutions cannot be overstated, they will not be able to provide the mass supply of workers Amazon requires in an HQ2.
I think the paper is using some mid-level managers comments in a bar and blowing them out of proportion. There are a lot of MIT/Harvard grads at Amazon who would love to come back. One part of the decision but not the whole decision. Boston just like Toronto has to find a place to put this campus. They have the Seaport district (on the Silver line). It only has about 3m sq ft remaining (and at that a combination of residential and commercial).

so why do this big production with the proposal that Amazon put out to all cities that wish to apply? Why would cities shearing this spend time and money on a losing proposition?
An RFP process is very complicated and time consuming (and for people at the upper level who's time is very valuable). If they already had made up their minds they would have not done so and not wasted Amazon management's time. They probably have 4-6 cities short listed. But will be willing to expand the short-listed cities if there is a compelling case made by one they didn't consider.

Beyond Amazon this process is really good for an assessment at the strength of the city. It will give other firms an idea of your strengths when they make a decision on where to locate. It will also give municipal leaders an assessment of what they should be doing to improve the city in the eyes of business. And hopefully they do something to make the city more attractive if they lose out.

What this process made clear for me is the ineptitude of the Ontario government. We are willing to spend untold billions on union jobs which will vanish as soon as the gov't funding dries up (windmills, autos, etc). But they will not spend a dime on higher paying white collared jobs. We could collect $1.2b in personal tax from Amazon employees alone each year (average 100,000/yr x 50,000 employees which i stuck into a tax rate calculator). Plus GST, property tax and corporate tax. Plus taxes collected on spin off jobs.

Give Amazon a 20 year property tax holiday if that is what it takes to get these jobs (about $100m/yr x 20 = $2b). A small price to pay to get the above mentioned taxes. Let's attract the best and brightest to Toronto.
 

tripwire

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As exciting as Amazon having their second headquarters in Toronto is (being a programmer myself), I really don't think it's going to happen just because of developed space. We have the physical space, but I don't think we can develop it fast enough for Amazon. I really feel it's going to stay in the States.
 

TheTigerMaster

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On the bright side, there looks to be only two cities Amazon execs have explicitly considered before this RFQ (at least according to media reports): Boston and Toronto.

I did mention a week or two ago that I felt that Amazon’s request for North American cities was essentially an invitation for Toronto in particular to participate, since Toronto is the only NA city outside of the US to meet Amazons list of requirements.
 

Johnny Au

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On the bright side, there looks to be only two cities Amazon execs have explicitly considered before this RFQ (at least according to media reports): Boston and Toronto.

I did mention a week or two ago that I felt that Amazon’s request for North American cities was essentially an invitation for Toronto in particular to participate, since Toronto is the only NA city outside of the US to meet Amazons list of requirements.
It's us versus the Bean Eaters.
 

rbt

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We have the physical space, but I don't think we can develop it fast enough for Amazon. I really feel it's going to stay in the States.
Office construction in Toronto isn't particularly slow once a tenant signs on. Signing tenants is the long-duration step.

Actually, companies like Oxford do have experience building this size of office complex in a relatively short duration; Hudson Yards was 12 million sqf building over ~12 years and that is a very challenging site.

Amazon wants a 100 acre greenfield site and doesn't really mention a buildout-timeline except to say a it'll be over a minimum of 9 years (beyond 2027) and that they want 500,000 sqft immediately.

If it wasn't for the large greenfield requirement, which makes it sound like they want a relatively low-rise complex, then I'd think Oxford's Convention Center + Front & Simcoe proposal would do it (8 million sqft between them; convert hotel/residential components to office).


The greenfield requirement + immediate 500,000 sqft office space adjacent to that site makes it a bit trickier.
 
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muller877

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Office construction in Toronto isn't particularly slow once a tenant signs on. Signing tenants is the long-duration step.

Actually, companies like Oxford do have experience building this size of office complex in a relatively short duration; Hudson Yards was 12 million sqf building over ~12 years and that is a very challenging site.

Amazon wants a 100 acre greenfield site and doesn't really mention a buildout-timeline except to say a it'll be over a minimum of 9 years (beyond 2027) and that they want 500,000 sqft immediately.
...
The greenfield requirement + immediate 500,000 sqft office space adjacent to that site makes it a bit trickier.
If you think of how spread out the Amazon HQ1 is I understand why they want to have 100 acres to control how it is developed. They want a mixed used community so not all of the 100 acres will be Amazon. In Toronto if we can streamline the EA & political process we have 2 sights (Unilever/Portlands & Ontario Place/CNE parking lots) . In Mississauga there is the Port Credit area (but Port Credit does not meet their wish to be close the cultural activities).

I actually hope that Amazon has the opportunity to develop a mis-rise community (versus some planning department). Civil Servants are great but they sometimes try to please every social group which dilutes the master plan.

As for temporary space, it has to be close enough so that people can explore the neighbourhood and buy houses/condos. But it doesn't have to be part of the sight. If we look at the Unilever sight the financial core is close enough to it.

And there is 500,000 sq ft across a couple of buildings that is available right now (EY old office has 250,000. Add the space that Sun Life just vacated you have the 500,000)
 

jje1000

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Interesting arguments and a splash of cold water here- but of course it's always more alluring to transplant a fully-grown company right away instead of having to grow one (and potentially ending up with harvests of Nortels and Blackberries).

I might also argue for difficulties of relocation of tech companies being easy. As specialized human capital is what drives tech, catering to their needs is more difficult, especially once they settle down and set out roots- the worst that might happen is that that city will be left with an unusually large Amazon office that simply doesn't make the decisions any longer, rather than the complete loss of the operations.

In contrast, manufacturing labour is largely interchangeable, with assets and product being increasingly easy to shift around- losses can be more sudden and absolute there.

Canada should build the next Amazon, not lure one
The Greater Toronto Area, with the backing of Ontario Premier Kathleen Wynne, has stated it will make an aggressive bid, under the stewardship of former TD Bank chief Ed Clark. While the GTA has most of these quality-of-life considerations, protectionist political sentiments in the United States would likely make such an investment by Amazon in Canada to, in part, service the U.S. marketplace politically unpalatable. And Mr. Clark's statement that the GTA bid won't include financial subsidies to the e-commerce giant probably grounded the bid before it ever takes flight.
The competitive nature of Amazon's bidding process will leave the winning bidder with a long-term conundrum. Like other large companies who play the financial-incentives game with state/provincial and municipal governments, Amazon will only be loyal to its hosts as long as the incentives keep flowing.
This has been the case for the North American automotive industry and other manufacturing industries who skewed their cost-curves with government incentives and one-off deals. Once those deals were reaching their end, they venue shopped again looking for the next best deal. If no desperate suitor appeared, global manufacturing, with lower labour costs, emerged as the next best option.

The only difference between those industries and Amazon is the fact that their assets were largely tangible, such as machinery and product, meaning there is a heavy cost to relocate. Amazon and the technology industry's greatest asset is their intangible asset, intellectual property, which can be moved on a whim. This gives them unprecedented clout when it comes time for renegotiation. This argument alone won't likely persuade politicians from backing out of bidding, as many are up for election now. The prospect of short-term, high-paying job-creation is much too good to consider the long-term negatives.
But is this truly net job creation? Amazon is a cutting-edge technology company, employing computer scientists, engineers, data scientists, highly specialized marketing and sales professionals as well as managers with global experience. These fields are in high demand, both in Canada and around the world.

The short-term result for the broader technology sector in the region is better described as job-shuffling for the highly trained, and this comes with a downside. When you create a large number of new jobs without increasing the supply of highly skilled employees, wages inevitably go up. The consequence of this for Canadian tech firms is grave; if they are priced out of the market for talent, this can stall or even halt their growth.
Then there's the issue of ideas conceived of in universities and small Canadian companies flowing to a giant such as Amazon, where they can be commercialized, or buried, much more quickly. Our government subsidizes the creation of intellectual property heavily. If Amazon gobbles up these innovations before they're commercialized in Canada, they can move them anywhere in the world to be commercialized or choose not to advance them at all. Canadian's won't get a solid return on their investment in this case.
Canada is not without potential of creating a global tech giant. Ottawa's Shopify and Montreal's Lightspeed, also in the e-commerce space, and Cambridge's eSentire, a cybersecurity company, are just three examples of companies with proprietary technology that are scaling quickly.

Our politicians need to consider our promising tech companies and longer-term economic analysis. Creating an environment for a Canadian firm to scale up into a global powerhouse similar to Amazon would pay greater dividends than luring an existing tech giant.
https://beta.theglobeandmail.com/re...ttps://www.theglobeandmail.com&service=mobile
 
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AlvinofDiaspar

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Interesting arguments and a splash of cold water here- but of course it's always more alluring to transplant a fully-grown company right away instead of having to grow one (and potentially ending up with harvests of Nortels and Blackberries).

I might also argue for difficulties of relocation of tech companies being easy. As specialized human capital is what drives tech, catering to their needs is more difficult, especially once they settle down and set out roots- the worst that might happen is that that city will be left with an unusually large Amazon office that simply doesn't make the decisions any longer, rather than the complete loss of the operations.

In contrast, manufacturing labour is largely interchangeable, with assets and product being increasingly easy to shift around- losses can be more sudden and absolute there.

https://beta.theglobeandmail.com/re...ttps://www.theglobeandmail.com&service=mobile
I have to question to whole Amazon is going to suck up all the local talent and move on thesis - in many ways, US tech firms already does directly from our universities without even the commensurate benefit to us (and forget nurturing the next BB - it will get sucked up long before that). Also nobody is complaining about having too many tech heavyweights in say SF Bay area being a bad thing overall.

AoD
 

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