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Seattle CRE Community: City Leaders Shoulder Some Blame For Amazon's Move

News that Amazon would relocate its entire worldwide operations team to neighboring Bellevue rattled Seattle's business community last week. As business leaders absorb the news, many are blaming Seattle's city leadership for the tech giant's decision to remove thousands of workers from the city's core.

The move came as a shock to many. The company seemed fully invested in Seattle when it opened its three spheres a little over a year ago. The rain forest-like environment is filled with 40,000 mature plants and a 55-foot Ficus rubiginosa tree named Rubi. Rubi was transported live from Southern California because CEO Jeff Bezos didn’t want to wait five years for a sapling to mature.

South Lake Union Amazon
Giant spheres at Amazon's Seattle office building

Geekwire broke the news last week that Amazon was planning to move its entire worldwide operations team to Bellevue by 2023, which includes thousands of jobs.

The move will be done in phases and will be complete by 2023.

The issue will be a hot topic at Bisnow’s Seattle Construction & Development Forecast April 25 at Four Seasons Seattle. 

Though Mayor Jenny Durkan called Amazon’s decision to shift major operations out of Seattle “great news,” in a KUOW report, the city’s business community does not agree. Many are blaming the lack of leadership in both the mayor’s office and the Seattle City Council for creating a hostile business environment that makes a move like this inevitable.

Seattle CRE Community: City Leaders Shoulder Some Blame For Amazon's Move
Daniels Real Estate's Kevin Daniels

Daniels Real Estate President Kevin Daniels is not at all surprised by Amazon’s decision to leave the city. 

“Amazon has been a great contributor to Seattle’s recent success but it’s clearly time to explore other options in the region based upon Seattle’s political leaders' actions over the last few years,” he said.  

Daniels was an outspoken opponent of the city’s proposed head tax for low-income housing and homeless services that directly targeted Amazon and other large employers. Though the city repealed the proposed tax after a massive outcry by the city’s business community, the damage was already done.

“Amazon is going nowhere with their current commitments in Seattle, so I am sure they will continue to reach out to work with Seattle on the growth issues we are facing,” he said. “The question is: Are our current political leaders ready to show leadership and reach back, or will they continue to throw barbs at this amazing company for their own shortcomings in preparing the city for growth?”

Seattle CRE Community: City Leaders Shoulder Some Blame For Amazon's Move
barrientos RYAN's Maria Barrientos

Barrientos RYAN co-owner Maria Barrientos, who will be a panelist at the upcoming event, said she sees a disconnect between the city’s political policies and the economics of the city. 

“I really hope it changes,” she said. “We desperately need better, stronger leadership that understands that you have to have businesses thrive to make a city work.”

Windemere Real Estate Chief Economist Matthew Gardner agrees that Amazon’s decision should be considered a direct admonishment of Seattle’s government.

“Although Amazon’s growth in Bellevue is unlikely to have been entirely driven by Seattle’s policies, I believe that it likely played a part in their decision-making,” he said. “Our elected officials should all be taking a long, hard look at current policies.”

Barrientos said Amazon’s decision to move may be based on other factors, rather than just city politics. However, there are a few city leaders that seem to blame everything on Amazon.  

“That’s not fair,” she said. “[City leaders] take no responsibility for the lack of housing, and they blame it on Amazon and the big companies. Our City Council refuses to acknowledge it's not just the fault of the big companies.” 

That said, Barrientos is not overly concerned about Amazon's Bellevue move triggering a massive slowdown of development in Seattle. 

“I think the slowdown has already started,” she said. “The question is how deep will it go? I don’t think we will see much impact for the next two years because so many buildings are already planned. We won’t see the impact until ’21 or ’22.”

Gardner expects that Amazon’s move will negatively impact Seattle’s apartment market. 

“Downtown Seattle apartments have flourished from job growth at Amazon and any contraction in demand, as employees move to the Eastside, will likely lead to slower rental rate growth,” he said.

Gardner said the rental rate was already slowing due to the number of new units that recently came on the market.

On the other hand, the hole that Amazon leaves may be filled with the growth of Google, Facebook and other tech companies, which would offset the rental rate drop, he said.

Seattle CRE Community: City Leaders Shoulder Some Blame For Amazon's Move
Kemper Development Co. CEO Kemper Freeman

This is all good news for Bellevue's housing market.

“I would not be surprised to see the Bellevue apartment market grow at a faster rate than expected and I would also not be surprised to see more permit applications for apartments in downtown Bellevue.”

While Gardner believes Bellevue’s housing market will see increased demand over time, he does not think Amazon’s move will have a significant impact on Seattle’s housing market.

Kemper Development Co.’s CEO Kemper Freeman believes that both Seattle and Bellevue are among the country’s top real estate markets. 

“I think you’ll see some shuffling back and forth between the cities,” he said, referring to shifts like Expedia’s move from Bellevue to Seattle. 

“There are differences between the two markets and we tend to serve two types of people,” Kemper said. “People who want to live in Seattle are typically just getting started. When they get a few years older, they start thinking about good public and private schools, they want to have a swing in their backyard.”

Freeman has long been a proponent of public schools and he believes the Eastside public schools are some of the best in the country. 

Transportation, however, is a problem for the entire region.

Both cities need to implement better infrastructure to move people around, he said. 

“All of the transportation problems will be coming to a head,” he said. “The problems can be solved. But we need to do something because soon we will have a major congestion problem in both Seattle and Bellevue.” 

Find out more about what lies ahead for Seattle at Bisnow's Seattle Construction & Development Forecast April 25 at the Four Seasons Seattle.