GRAND RAPIDS — Officials from West Michigan acknowledge the region must overcome long odds in its bid to win the economic development sweepstakes for Amazon.com Inc.’s HQ2 project.
Regardless of whether the Grand Rapids area is successful in wooing the Seattle-based e-commerce giant’s massive offices — and the promise of 50,000 new jobs and $5 billion in new investment — the region’s act of participation could pay dividends in the years ahead.
“What we … wanted to do is convey to not just Amazon but others that we are in the economic development business,” said Birgit Klohs, the president and CEO of The Right Place Inc., which submitted a proposal for the project earlier this month.
“We are in a successful region. We are in a community that’s growing and that has turned itself around completely over the last 25 years. We wanted to tell that story,” she said. “If it is not Amazon this time, it may be tomorrow another company that says, ‘Wow, these people are pretty cool. This is a pretty nifty region. Let’s look at it.’”
Klohs added that her organization has received no indication of what the next steps in the selection process will look like.
Other participants in The Right Place-led confidential proposal included Downtown Grand Rapids Inc. (DGRI), city governments in Grand Rapids and Wyoming, and the Michigan Department of Transportation.
The stakeholders involved in the proposal remain mum on the specifics of the region’s “long-shot” bid, which would require building sites for several million square feet of new office space.
However, sources with knowledge of the plans who spoke on the condition of anonymity said the proposal pitched various downtown building sites, largely on city-owned or Downtown Development Authority-owned surface parking lots.
The pitch also included options at Site 36, a 92-acre industrial property in Wyoming that once housed a General Motors stamping plant.
Don Shoemaker, principal with Franklin Partners LLC, the Grand Rapids real estate firm developing the site, declined to comment on Site 36’s place in the proposal. Klohs also declined to share details of the proposal.
According to executives at DGRI, growing downtowns like Grand Rapids lend themselves well to the Amazon project RFP, as well as to other large corporate relocation efforts.
“They increasingly seek clean, safe and distinct urban locations, with a mix of innovative talent and industries that spur creative collaboration, all accessible by a wide range of transportation choices that make it cheap and easy to get around,” Andy Guy, chief outcomes officer at DGRI, wrote in an email to MiBiz. “These are critical selling points that Grand Rapids and other Michigan cities must understand and deliver to compete effectively for these corporate location opportunities.”
Regardless of the sites included in the proposal, West Michigan faces major competition in responding to the Amazon RFP. Amazon says it received a total of 238 proposals from 54 different states, provinces, districts and territories around North America.
The areas submitting proposals run the gamut from large cities like Toronto, Chicago and Atlanta, to growing metropolitan areas such as Charlotte, N.C. and Denver, Colo. and to more unlikely contenders such as Frisco, Texas — and perhaps even Grand Rapids.
To date, the West Michigan region hasn’t been included in national headlines discussing the HQ2 initiative, and at first glance, the area fails to meet the company’s complete list of requirements. For example, the Grand Rapids-Wyoming metropolitan statistical area barely meets Amazon’s threshold of 1 million residents, and the growing Gerald R. Ford International Airport currently lacks the desired direct flights to the West Coast.
Klohs acknowledges the deficiencies, but adds that meeting all of the company’s requirements is quite a tall order.
“Let’s face it, there’s no one city in the country that’s going to meet all of their requirements, but we are very pleased and proud of the work that we put into this proposal,” Klohs said. “We have a very positive story to tell. We have a story to tell of a community that usually punches above its weight. We wanted to tell that story about one of the fastest growing regions in the country to one of the fastest growing companies in the world.”
PRIMED FOR GROWTH?
According to a report in the Seattle Times, the Pacific Northwest city has become “America’s biggest company town.” Amazon occupies 8.1 million square feet of office space in Seattle, representing 19.2 percent of all Class A inventory in the core downtown business district.
“Amazon so dominates Seattle that it has as much office space as the city’s next 40 biggest employers combined,” according to the report.
As such, any city would struggle to absorb that kind of presence, especially given Amazon’s statements that it expects its HQ2 project to equal its current headquarters in Seattle, where the company is considered a driver for much of the local economy.
At the same time, Amazon’s growth and its effect in spurring other ancillary businesses have created unintended consequences in the Seattle metropolitan area, including congested freeways and a challenging housing market with soaring prices and limited inventory, according to various reports.
San Francisco-based rental listing and research firm Apartment List expects the cost of apartment rentals to rise 2 percent per year “on top of baseline rent growth without Amazon” in whichever city the company ultimately selects.
Apartment List did not include Grand Rapids as one of the cities it studied for the report, but the firm noted that “smaller metros with lower wages or severely constrained housing stocks, such as Raleigh, Pittsburgh, Baltimore, and San Jose, will see rents rise the most from the Amazon HQ2.”
A separate Apartment List report from early October noted the median rental rate for a two-bedroom apartment in Grand Rapids stood at $910 –– below the national average of $1,160 –– and that rents in the city have risen 1.4 percent year-over-year.
When asked if any of the challenges in Seattle gave her pause, Klohs said West Michigan would meet any new phased-in demands if the region were lucky enough to be selected.
“People will … be attracted to here, new homes will be built,” Klohs said. “I find that when there is demand for something, the demand will be filled. Let’s wait until we make that next cut (of cities). I would be thrilled to make the next cut.”