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October 16, 2017 An Amazon city

Worcester hopes to beat the odds and lure Amazon

Brad Kane City Manager Ed Augustus has led to charge in creating a competitive bid to bring Amazon's HQ2 to Central Massachusetts.

Worcester is punching its own lottery ticket in hopes to lure Amazon to open its second headquarters in the city – a decision potentially dramatically transforming Central Massachusetts.

States and municipalities have until Thursday to submit bids to land Amazon's HQ2, which the Seattle online retailer says will have $5 billion in private infrastructure investment and 50,000 jobs over the next 10 years.

With hundreds of applications being made to Amazon for this game-changing economic development opportunity, Worcester's chances of landing the deal are slim; but the city has the same strong argument it makes to companies on a daily basis: Central Massachusetts has access to a highly educated workforce, with established colleges and infrastructure for innovation; real estate prices are significantly lower than Boston and New York, while Worcester offers a revitalized urban setting in New England's second-largest city.

“We're a city that's really kind of on the move,” said City Manager Ed Augustus. “We're ready for the challenge.”

If Worcester were to score Amazon's HQ2, the city's population would swell, its wealth would climb, the tech giant's need for square footage would likely create skyscrapers downtown, and the trade industry would pass healthcare and education as the largest segment of the Worcester economy.

“It would dramatically transform the economy of this city,” said Tim McGourthy, executive director of the Worcester Regional Research Bureau. “It has huge potential, good and bad, on a city like Worcester.”

An Amazon population

Not counting families or indirect jobs created by HQ2, Amazon in its request for proposals says 50,000 people will come to the city it selects. For Worcester – with its 225,000 people during the workday – that's a popluation increase of 22 percent.

Those 50,000 people will bring a lot of money with them, too. Amazon said employees at HQ2 will make average annual salaries north of $100,000, nearly double Worcester County's average annual salary of $56,368, according to the Bureau of Labor Statistics.

Since they will make up more than one-fifth of the city's population and have nearly double the salary of area workers, Amazon's workers have the potential to impact everything from real estate prices to school enrollment.

Also being completely flipped would be the makeup of the area's workforce.

Per the Bureau of Labor Statistics, 288,000 people work in the Worcester area. The education and health industry leads the charge with about 68,000 workers while manufacturing, a hallmark of the region, has about 27,800.

Although HQ2 would have all types of jobs from lawyers and accountants to janitors and computer engineers, they would be classified under the trade, transportation and utilities industry, which is already the second largest in Worcester at about 53,000. Swelling that number to 103,000 would then make it the largest employment industry.

At 50,000 employees, Amazon would be the largest Central Mass. employer, unseating UMass Memorial Health Care with its 12,906 employees.

An Amazon skyline

Amazon's HQ2 campus would demand an immense amount of space – about 500,000 square feet to start and around a whopping 8 million square feet after a decade of full build out.

There are, of course, not 8 million square feet of contiguous ready-to-build land in Worcester, so the city is instead proposing different parcels to contribute to a larger, urban campus.

“We're going to show a couple different ideas of how you could assemble a campus,” Augustus said.

Augustus would not detail potential sites being offered to the company, but Timothy Murray, president and CEO of the Worcester Regional Chamber of Commerce, said multiple sites in the city are just waiting to be developed.

Murray and city officials have their finger on the pulse of developable sites after they were actively marketed to other developers: a space in Gateway Park to fit a 250,000 square feet and the 298,000-square-foot former Unum building on Chestnut Street.

For 8 million square feet, though, the question may not be where will Amazon build, but how high.

“We've seen over the years that Worcester has had some vertical construction,” he said, citing skyscrapers at 446 Main St. and 100 Front St.

There's only about 4 million square feet of office space in the downtown area. Since Amazon's proposal calls for double that, the city would need a lot of new construction, vertically or spread out throughout the community, the research bureau's McGourthy said.

“This campus would literally be a massive reconstruction of Worcester's office market,” McGourthy said.

An Amazon impact

In Seattle, a much bigger city with a population of about 700,000, Amazon was a catalyst for downtown, winning the Downtown Seattle Association City Maker award this year.

Support businesses follow a company like Amazon to serve both its operations and its workforce. After its Seattle headquarters was built, the number of Fortune 500 companies in the city rose from seven to 31, while its headquarters is home to 32 restaurants and retailers.

“Amazon estimates its investments in Seattle from 2010 through 2016 resulted in an additional $38 billion to the city's economy – every dollar invested by Amazon in Seattle generated an additional $1.40 for the city's economy overall,” the company said in its RfP.

Central Massachusetts colleges are already exploring possible programs and partnerships with the company.

Worcester Polytechnic Institute said the school has alumni working at Amazon, said Stephen Flavin, vice president and dean of academic and corporate engagement. The company's search for a second location, Flavin said, has reinforced the importance of STEM education and industry to the economy.

“WPI is of course open to discussing the potential partnerships and opportunities a company of Amazon's size and reputation could bring to the city, region, or state,” he said.

The Amazon bid comes at a perfect time for Quinsigamond Community College, said Kathy Rentsch, dean of the School for Business Engineering and Technology. QCC last year introduced a logistics and supply chain program she said would be perfect for potential Amazon workers.

“It's really not something that's presented to students along the K-12 path or in business administration programs,” she said.

An Amazon pitch

Although he acknowledged the city would have a lot of work to do to bring Amazon to Worcester, Augustus remained extremely optimistic on what Worcester has to offer businesses.

The arts and culture scene in the city is vibrant, new restaurants open almost daily, and more millennials are choosing to stay in Worcester after college, Augustus said.

The odds of Worcester securing HQ2 may be long, but the potential impact is worth taking the time to put together a comprehensive application, he said.

Amazon says it will announce its decision in 2018.

“The payoff is enormous,” Augustus said.

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