Amazon's proposal for second headquarters seen as credit positive for Seattle
LOS ANGELES — Amazon's search for a second headquarters could be positive for both Seattle and whichever city snags the distinction of being the company's so-called second home, S&P Global Ratings says.
The ratings bulletin came after Amazon announced that it could spend over $5 billion on a “second home” that might eventually be an equal to its headquarters in Seattle.
The move potentially has positive credit implications for both its current city and, depending on the level of incentives, the city in the U.S. or Canada that lands a new cluster of high-paying jobs, S&P analysts wrote in the report.
“In Seattle, Amazon.com's hunger for skilled workers has boosted office rental rates and spurred a building boom in the city center, with the company itself snapping up at least one speculative office building,” S&P analysts wrote.
Amazon.com plans to keep growing locally, with contracts or options that position it to occupy 62% more square footage in 2022 than it does now, according to real estate broker Cushman and Wakefield.
“Although the company is only one driver of the region's strong economic performance in recent years, we believe Amazon.com has been a major indirect contributor to higher housing prices and rents that are fueling an active housing development pipeline,” analysts wrote.
The city was slated to bring 9,900 apartment units online in 2017 and another 12,500 in 2018, compared with fewer than 3,000 annually in all but one of the past 50 years, according to the report.
“We think that local economic changes, including Amazon.com's growth, during the past decade have supported the city's credit quality overall by making it easier for the city to balance its budget and afford infrastructure investments," analysts wrote.
The change will also help diversify Seattle's economy, according to analysts.
Now that Amazon.com is an established economic presence, a shift in its headquarters growth elsewhere in the coming decade could benefit the city by lessening its exposure to the fortunes and decisions of a single employer, S&P wrote.
For the cities that are vying for Amazon.com's second headquarters, analysts said they “see clear positive economic implications from bringing in high-paying jobs as well as potentially transformative revitalization," S&P wrote.
"However, Amazon.com's use of a public competitive proposal process that requests details on available incentives lead us to believe these benefits would only be a net positive for a city that is careful not to give away the store to lure the giant retailer," analysts said.