Editor's Note: This post was originally published in October 2017 and has been revamped to include the latest information on Chicago's HQ2 bid.
What happens when one of the largest companies in the world announces that it’s looking for a city in North America in which to build a massive expansion?
In early September, Amazon did just that. The company announced that it plans to spend $5 billion on a second headquarters—dubbed “HQ2”—somewhere outside of its current home in Seattle, Washington. This additional headquarters, which the company claims is “not a satellite office,” is expected to employ 50,000 people beyond 2027. Naturally, cities from coast to coast have formed bid committees to attract this titan of online retail, and Chicago is no exception.
In January of 2018, Amazon announced 20 finalists for HQ2, including Chicago and a long list of rivals like Atlanta, Austin, Boston, Columbus, Dallas,Los Angeles, New York City, Pittsburg, Toronto, and D.C..
Co-led by Mayor Rahm Emanuel and Governor Bruce Rauner, Chicago’s “all-hands-on-deck” committee is made up of more than 600 members, including a number of business and civic leaders as well as representatives from Chicago real estate developers like Related Midwest, Sterling Bay, and Magellan Development.
According to the mayor, Chicago sees itself as—and is recognized as—a definite frontrunner in the competition thanks to its business-friendly incentives, youthful workforce, and a robust commercial real estate market. The deadline for proposals is October 19, and the committee had been accepting nominations for possible sites until September 27.
While Chicago's chances may be good, other cities across the nation are offering some stiff competition. Atlanta’s position within two-hours of 80% of the U.S. population, for instance, makes it ideal for a business that values having easy access to several American cities. And Washington DC, with its strong pool of tech talent and connection to the federal government, is also a strong possibility. Still, Mayor Emanuel and the committee are very confident that Chicago’s bid will rival any other put forth. The competition is ours to lose.
Why is Chicago a possible favorite? When it comes to Amazon’s Request for Proposal (“RFP”), Chicago is one of the few cities in the country that can check off all the right boxes. Amazon has indicated a preference for a location that has:
- A metropolitan area of more than 1,000,000 people
- A stable local economy friendly to business development
- An urban or suburban location that attracts technical talent
- A location within 45 minutes of an international airport
- A location with 1-2 miles of major highways
- Mass transit accessible at the site
A lot of the speculation about possible locations for this massive headquarters has centered on the troubled redevelopment of the Old Main Post Office in West Loop. In the past, new construction at the Old Main Post Office was slated to include a series of residential and commercial buildings, including construction of twin mixed-use towers that would have been the tallest in North America. However, after financing fell through, the project languished until preface by New York-based 601W. Mayor Emanuel has pushed to get development started again, and a bid from Amazon might be all the fuel he needs.
According to Curbed, other potential sites under consideration are likely Related Midwest’s sprawling 62-acre South Loop—expected to be the largest development project in the city’s history—and Sterling Bay’s similarly ambitious series of redevelopment on both sides of the North Branch. The inclusion of these developers on the committee lends credence to speculation that, at the very least, these sites are being considered for HQ2.
No matter what site the committee chooses for its proposal, Amazon requires that it must have at least 500,000 square feet with the possibility of expanding up to 8 million square feet in the next decade. This doesn't necessarily entail new developments, though. Amazon will accept proposals for existing buildings, 100-acres of shovel-ready land, creative infill, or a combination of these.
What HQ2 Could Mean For Chicago Real Estate
Though the logistical challenges are many, there will be plenty of rewards for Chicagoans and the Chicago real estate market if Amazon decides to locate HQ2 here. The $5 billion investment in the local economy would certainly be a boon, for instance, and Amazon’s presence in Chicago would likely bring many other tech companies and retailers to the city as well, likely setting off a boom in the commercial real estate market.
Given how many new, high-paying jobs this would create, the residential market will also be affected. According to the Tribune, HQ2 is also expected to offer the average worker compensation of more than $100,000, more than double the current median household income. This will lead to greater demand for luxury real estate and luxury condos and probably accelerate future development. Properties near the site would likely see their values skyrocket, so we're excited to see what site the committee puts forward.
However, since Amazon is likely to attract a young workforce eager to start families, HQ2 may also lead to the desire to build single-family housing as close as possible to the headquarters. For this reason, many of Chicago’s suburbs and nearby communities could also benefit from an influx of upper-middle-class families looking to plant roots near the company.
Updated: Amazon's Chicago Visit
In March of 2018, representatives from Amazon visited Chicago, where they inspected half of the sites that make up Chicago's 10 location bid. Though this visit was cloaked in secrecy, we know that the trip included a visit to the 37-acre River West District development as well as Lincoln Yards, The 78 on Chicago's Near South Side, and Fulton Market. These mega-investments in Chicago's residential and commercial real estate were likely to have impressed Amazon, though we'll have to wait and see if they've been convinced.
Have questions about the future of the Chicago real estate market? Contact Terri McAuley today to learn how you can stay ahead of the trends when it comes to buying your next home.