Wanted: Eight million square feet in a metropolitan area of at least a million people in a “stable and business-friendly environment” within 45 minutes of an international airport.
Site or multiple sites welcome, but must be big enough to grow to 50,000 employees. Accessible to mass transit and close to major highways. Vacant land, existing buildings or a combination of the two a must. Think big. Be creative. But be quick about it. Bids are due Oct. 19.
Amazon’s decision to build a second North American corporate headquarters, known as “HQ2,” has touched off a whirlwind competition for the economic development prize of the century.
If Chicago hopes to win it, the city must get inside the head of CEO Jeff Bezos, study his track record and corporate philosophy and put together a competitive incentive package for the site that best anticipates those needs.
Several sites appear to fit the Bezos/Amazon mold, including the Old Main Post Office over the Eisenhower Expy. and Congress Parkway; the Michael Reese Hospital site along Lake Michigan; McCormick Place East or a combination of the last two, and two prime locations in the old North Branch Industrial Corridor along the Chicago River.
“Instead of focusing on the real estate, focus on the man,” said Chicago developer J. Paul Beitler, who has no stake in any of the prospective sites. Bezos is “a man who wants everything for free. He moves quickly. He buys Whole Foods in one month. He’s not going to sit around while you build him a building. And if he does build a building . . . it’s not going to be a monument.”
“He will dance with this with all of the various cities. But at the end of the day, it’s all about cheap. He makes his profits in pennies. He builds big empty warehouses. He’s not gonna sit around while a committee decides what the design is gonna be and pay the cost and take the risk. He’s not that kind of a risk-taker. He’s a bulk buyer. . . . Where can you go to buy bulk cheap?”
A look at the top prospective HQ2 sites in Chicago:
NORTH BRANCH INDUSTRIAL CORRIDOR SITE ONE: Mega-developer Sterling Bay has targeted Amazon as the anchor tenant for a $10 billion mixed-use, riverfront development on land it’s assembling in Lincoln Park and Bucktown that includes the old Finkl Steel plant.
Together with the fleet maintenance facility purchased from the city for $104.7 million, Sterling Bay’s managing principal Andy Gloor hopes to put together nearly 100 acres for the project it calls “Lincoln Yards.”
The potential problem for Amazon is cost and accessibility.
“I’m not so sure about its proximity to the CTA, which is the first thing that pops into my head when that many employees who typically don’t have vehicles are all heading for Amazon HQ. But Andy’s got a magnificent site and he’ll figure something out,” said Mike Nardini, first vice-president at CBRE, a major commercial real estate firm.
Beitler added, “What’s wrong is it has too much risk. Timing. The cost to build. The infrastructure that has to be added. It’s not there.”
NORTH BRANCH SITE TWO: As many as 6,000 people could work and 800 of them could live on a massive riverfront development planned for the site at 640-to-740 W. Chicago.
But what if Tribune Media and Riverside Investment and Development combined that prime site with the adjacent Freedom Center printing plant and offered it as a live and work space to Amazon?
Riverside CEO John O’Donnell would only say that “anything is possible.”
Riverside’s plan to build a 310-unit residential tower and three shorter office buildings with 1.2 million square feet of commercial space have already raised congestion concerns. Widening the Chicago Avenue bridge, installing new traffic signals and providing shuttle buses to nearby CTA and train stations would not be nearly enough to accommodate Amazon.
THE OLD MAIN POST OFFICE: It has only 2.5 million square feet. But as far as Beitler is concerned, no other site in Chicago fits the Amazon/Bezos model.
“If it goes anywhere, it’ll go to an existing building that’s close to driving and rail transportation, that accesses the Millenials, that has the look of what Amazon’s about, which is a big factory,” Beitler said. “There’s no other building around that has the size, the location, that can get the TIF from the city and everything else that this can. He literally walks into it for free.”
Developer Dan McCaffery added, “It’s hard to vote against the Post Office in so many ways. Geez. It’s right there, sitting on transportation. Sitting on a major freeway and still basically walkable to downtown.”
Amazon’s move could also be well-timed. Last summer, Emanuel’s bold threat to seize control of the Old Main Post Office culminated in a court-approved agreement with its new owner, 601W Companies LLC, to begin a five-year, $500 million renovation and restoration.
MICHAEL REESE HOSPITAL: Former First Deputy Planning Commissioner David Doig is part of the development team for this site, so he’s biased.
But he makes the same argument about this site that Beitler makes about the Old Main Post Office.
To make the 49-acre hospital site more attractive to developers, the city added 28 acres of air-rights directly east of the hospital site. The land below is owned by McCormick Place and used as a “marshaling yard” to stage trucks servicing conventions and trade shows.
“You’re 2 miles from downtown. The city owns the site already, so in terms of possible incentives, [it’s free and clear]. You’ve got the lake. Black fiber of the internet runs down the Metra right-of-way. So you’ve got unbelievable connectivity and data centers in that area,” Doig said.
“You’ve got McCormick Place, hotel capacity, highway infrastructure,” Doig said. “You’re not displacing anybody. Plus, you have hundreds of acres around Michael Reese to be developed with housing.”
The downside is that the site needs a ton of infrastructure work, including roads, sewers and mass transit access. But if Amazon wants to get started quickly, Doig said Amazon could start by retrofitting the McCormick Place East building that Emanuel once offered offered to demolish in a failed attempt to keep the Lucas Museum in Chicago.
SOUTH LOOP SITE ONCE OWNED BY CONVICTED DEVELOPER TONY REZKO: Related Midwest has a big vision for this 62-acre site between the South Loop and Chinatown. The $5 billion plan envisions 10 million square feet of homes, offices, hotels and retail. But if Bezos is a man in a hurry, this is not the place to be. There’s too much work to be done and too many complications.
Once owned by Rezko, the land was sold in 2007 to General Mediterranean Holding of Luxembourg, which is owned by Nadhmi Auci. He’s a British businessman born in Iraq.
Said McCaffery, “Access to that site is not terrific. It has to be figured out. That’s one of the planning challenges that have always existed with that site.”
ILLINOIS MEDICAL CENTER DISTRICT: This is the site at Roosevelt Road and Ogden Avenue that Nardini is touting because he’s involved. It’s located near the University of Illinois at Chicago, Stroger Hospital, the V.A. Hospital and Rush University Medical Center.
“That [Amazon] conversation has already come up because it’s got the Pink Line and the Blue Line there, which is gonna be crucial like it was for Google with that extension on the Morgan Street line,” Nardini said. “They’ve got 500 acres — 30 to 35 of it they can dedicate. The medical district is a zoning classification earmarked for technology, innovation and primarily med. But Amazon changes that game very quickly. That’s a compelling location. And it’s south of all of that Fulton Market crazy-price stuff.”