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Economic Development Features

How Amazon could transform Delaware, from offices to bananas

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From left: New Castle County Executive Matt Meyer, Wilmington Mayor Mike Purzycki, U.S. Rep. Lisa Blunt Rochester, Gov. John Carney, Lt. Gov. Bethany Hall-Long, and State Rep. Mike Ramone at a press conference announcing Delaware’s bid for Amazon.

By Ken Mammarella
Special to Delaware Business Times

If northern New Castle County were to land Amazon’s second headquarters (and that’s a huge if), the area would be dramatically transformed.

“I don’t see Delaware as a realistic option” for the online giant, said James L. Butkiewicz, chair of the University of Delaware economics department. “The competition has much more to offer in incentives than does Delaware.”

For example, New Jersey and Newark, New Jersey, are offering up to $7 billion for the Amazon deal. Delaware won’t say how much it is offering in incentives.

Delaware is suggesting three sites: First State Crossing in Claymont, which once was Evraz Steel; 1800 Concord Pike, which is used by AstraZeneca and JPMorgan Chase and has 500,000 square feet of available office space; and various parcels off South Market Street, on the east side of Wilmington’s Riverfront.

Here are some possible outcomes of an Amazon move to Delaware.

Amazon, which plans on having as many as 50,000 employees in its second headquarters, would become Delaware’s largest employer. The state’s largest employer today is the Christiana Care Health System, with 11,500 employees. An Amazon headquarters would cement trade/transportation/utilities as the dominant job sector in New Castle County. The federal category covers 47,000 of the county’s 248,000 workers, including about 3,500 at Amazon fulfillment centers in New Castle and Middletown.

Changes would likely be most prominent right next to the site. Twenty percent of Amazon’s Seattle workers live in the same ZIP code as their offices, Curbed.com reported.

It could spur growth in nearby restaurants, arts venues, open spaces and other after-work amenities. Amazon CEO Jeff Bezos said “the type of employees we want to hire and retain “¦ want to work, live and play in the urban core,” John Schoettler, who oversees its real estate, told The Washington Post.

The county’s average income would skyrocket from $51,000. Amazon predicts the average annual compensation for workers at the headquarters would exceed $100,000 over the next 10 to 15 years.
The influx would push up the cost of housing. Seattle’s median price for single-family homes is $700,000 – double what it was five years ago, the Seattle Times reported this spring. “Seattle condos cost a median of $434,000,” it said, and the average rent in Seattle is $1,749 a month, up 57 percent in the last six years. The median housing price in New Castle County is $225,000, the Delaware State Housing Authority calculates.

The median rent in the Wilmington area is $1,350, Trulia figures.

More office space, particularly the sustainable space that Amazon is committed to, would be needed. Amazon wants 500,000 square feet to start and up to 8 million in a decade. Downtown Wilmington only has 6.8 million (19 percent vacant), and suburban New Castle County has 8.9 million (15 percent vacant, including space at 1800 Concord Pike), CBRE figures.

A smaller boom might occur for hotels. New Castle County has about 6,000 hotel rooms. That converts to 2.2 million room nights, with about half occupied in a year. Visiting Amazonians – yes, that’s what they’re called – and their guests booked 233,000 room nights in 2016 in Seattle.

Funding for mass transit would grow. Amazon employees’ transportation benefit is more than $5 million a year for Seattle’s public transportation system. The state now budgets $87.8 million for the Delaware Transportation Corp., which runs the state’s bus systems and contracts for rail service.

The regional economy would grow. “Every dollar invested by Amazon in Seattle generated an additional $1.40 for the city’s economy overall,” its request for proposal says. That’s from other businesses supporting it and its employees The gross domestic product of the Philadelphia metropolitan area, which includes New Castle County, was $431 billion in 2016. Amazon’s 2016 revenue was $126 billion. Of course, only a fraction would come from second headquarters.

The area’s digital infrastructure would be pushed to state of the art. The state’s presentation touted an average internet speed of 25.2 mbps and 200 miles of unused fiber.

The state would also be pushed into liberal governing to support Amazon’s calls for “a compatible cultural and community environment” and “the presence and support of a diverse population.” Amazon did not delineate further, but one aspect could be pay. Washington state’s minimum wage is $11, and Seattle is raising its minimum wage to $15, but Delaware’s minimum wage is $8.25. Washington state also allows recreational marijuana use.

Delaware would be pushed more for what Amazon calls “a stable and consistent business climate.” Its pitch included testimonials from leaders of Batta Environmental, Chemours, Christiana Care, CSC and Incyte on how accessible and friendly political officials are and how nice the area is for business. To show off that friendliness, the state launched http://optionsinde.com to appeal to all businesses.

Free bananas would be a favorite snack. Bezos in 2015 started giving them away as a gesture to employees and Seattle pedestrians, and Amazon now hands out more than a million a year. The dark side of the neighborliness: lots of banana peels and a pricing problem for greengrocers. It could be easier to dole out bananas here since Wilmington is North America’s largest seaport for banana imports.

The Seattle-area’s selection in the 1990s was far simpler for Amazon. The major factors then were large numbers of tech-savvy workers, the proximity of book wholesalers and Washington’s relatively low population, which, at the time, let Amazon not charge sales taxes to most of America.

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