Amazon’s Retreat From Seattle

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Amazon is moving its presence eastward, sometimes into smaller communities.

Long before Amazon erected gleaming glass domes in downtown Seattle—and before Amazon was even named Amazon—Bellevue, Washington, was the site of the company’s headquarters. Jeff Bezos, Amazon’s founder and CEO, lived in the small King County city, and, in typical tech-leader fashion, laid the groundwork for what would become the largest e-commerce company in the world right there in his garage.

After its 1994 launch, Amazon got out of the garage quickly, moving across the lake to fill 630,000 square feet of office space in Seattle by 2001. Since then, the company has rapidly expanded downtown, growing to occupy 19 percent of all prime Seattle office space, according to a 2017 analysis by the Seattle Times. Today, according to company figures, its campus spans 8.1 million square feet.

But in recent years, as Seattle’s citizens begin taking Amazon to task for its role in driving urban inequality, and city leaders push to account for this cost with higher taxes, the company’s eyes have been wandering. In February, Amazon announced that it would back out of a downtown Seattle office tower it had once planned to fill with 3,500 to 5,000 employees. And this month, Geekwire reported that the company would be relocating an entire division from Seattle back to where it all started: Bellevue.

The move comes shortly after Amazon announced it would abandon plans to build another headquarters in New York City, while moving forward with its 25,000-employee campus outside Washington, D.C. in the smaller enclave of Crystal City, Virginia.

Amazon has long fancied itself an urban enterprise. Unlike Apple or Google, whose original corporate campuses cling to the emptier outskirts of big cities, Amazon’s downtown campus has only grown more integrated into Seattle’s cityscape. “I think it’s pretty much indisputable that urban campuses relative to suburban campuses are better,” Bezos said in a 2014 shareholder meeting. “Because there’s much less commuting and much less fuel burned.” Besides, he added, Amazon employees “appreciate the energy and dynamism of an urban environment.”

In a confluence of recent moves, however, Amazon is spreading out, and shrinking away from the biggest downtowns. Bellevue is hardly the suburb it used to be—Expedia and T-Mobile are both headquartered there, and Amazon itself employs 700 Bellevue workers, to Seattle’s 45,000. Still, it boasts a “small-town” feel, per its tourism website, and its population is only 140,000 to Seattle’s 700,000-plus.

Amazon’s pivot may simply reflect practical considerations. But it also has profound political implications.

Seattle’s downtown has evolved dramatically in the years since Amazon moved in, gripped today by an exorbitantly expensive housing market and a growing homelessness crisis. But Bellevue isn’t much better: With median home prices of about $922,000, according to Zillow, it’s pricier than Seattle’s median of $730,000 and Crystal City’s, which is closer to $680,000.

And the urban problems Amazon would escape outside of Seattle are ones that citizens have blamed Amazon for creating, worsening, and refusing to help correct.

Last year, Seattle’s city council proposed a per-employee head tax on the city’s largest businesses, intended to raise $75 million for homelessness and affordable housing initiatives. Amazon opposed the bill, threatening to stall expansion into one downtown office building and stop construction on another if it passed. The city managed to push through a shrunken version of the tax last May, which would have collected $47 million, only to reverse it a month later after a campaign of resistance from Amazon and other business interests.

The building Amazon used as one of its original bargaining chips was Rainier Square Tower, the second-tallest skyscraper in Seattle. In February, months after this battle ended in Amazon’s favor, the company said it would abandon plans to move in employees anyway. Instead, it will sublease the 722,000 available square feet to other tech companies.

“We are always evaluating our space requirements and intend to sublease Rainier Square based on current plans,” an Amazon spokesperson said in a statement to the Seattle Times.

Rainier Square was never a shrewd office location, says Redfin’s chief economist, Daryl Fairweather. “It’s far enough away [from campus] that you can’t walk to meetings, but it’s close enough that you don’t get access to more talent,” she said. “They just did the math: They’re better off subletting Rainier.”

In Bellevue, she says, the company can better compete with Microsoft, whose 47,000-employee headquarters is located in the even smaller neighboring city of Redmond. “It’s cheaper and usually more effective to poach talent locally,” said Fairweather. Current employees who live on the east side of Seattle will enjoy easier commutes, and others won’t have to move.

But the circumstances of the about-face bear a resemblance to Amazon’s recent struggle with New York City, after the company proposed building a new campus in Long Island City, Queens. After organizers and local politicians challenged the company over its hiring practices and cooperation with immigration enforcement, and a state senator threatened to veto its tax incentive package, the company decided to pull out of the project entirely. The difference is, in Seattle, the council ultimately conceded to the company. And Amazon halted some of its expansion anyway.

“The most important lesson to draw from this is that when corporate bullies bully you, backing down is not the answer,” said Kshama Sawant, a city councilmember who supported the head tax and one of two that opposed the repeal. “Because that does not stop their bullying.”

In Bellevue, Amazon may find less of the political opposition that’s mounting in Seattle, and that followed it into New York. “I think Amazon has been looking for opportunities where they wouldn’t be under the control of Seattle city council anymore,” said Redfin’s Fairweather.

Indeed, Amazon highlighted Bellevue’s agreeable business climate in its statement on the move. “It’s a city with great amenities, a high quality of life for our employees, and fantastic talent—and it’s recognized for its business-friendly environment,” said a spokesperson. King County submitted its own application to win HQ2 in 2017, signaling its desire to take on more Amazon employees even then.

Now, Bellevue’s mayor, John Chelminiak, is ready to welcome them with open arms. “As a community we’ve worked hard to anticipate this type of positive growth downtown, and Amazon is a natural fit,” he said in a statement.

That it’s so easy for Amazon to move to another location instead of reckoning with its home base may be part of the reason it felt so empowered to spar with the Seattle council, says Sawant.

“The logic of capitalism will follow it to the last dollar,” she said. “As long as there is another city, another state, another country where people are less empowered—more desperate for jobs on any terms—the corporations will do what they need to do for their bottom line, which is to maximize as much profit as possible for the major shareholders.”

On balance, says Fairweather, neither Seattle nor Bellevue will feel dramatic effects of the moves. Amazon still has about 10,000 jobs openings in Seattle, and if all goes according to plan, Rainier Square will be filled soon with similarly well-paid tech employees from different offices.

As in Crystal City, these employees will find a neighborhood that still has many urban qualities, even if it’s no longer in the urban center’s downtown.

“The fact that Amazon is locating workers in two political jurisdictions just beyond the borders of the central city is really not as important as the fact that Amazon is putting its facilities in walkable, mixed-use ‘urban places,’” said Ed McMahon, a Senior Resident Fellow at the Urban Land Institute.

A spokesperson for Amazon said that there are “several thousand” employees on the worldwide operations team that’s scheduled to move starting this month, and fully relocate by 2023. One of the major concerns residents express when faced with an influx of tech jobs to smaller cities like Bellevue—and one of the fears some New Yorkers expressed when Amazon was slated to move in—is that housing prices will rise, displacing current residents. Bellevue’s housing prices are already high, and with “a big chunk of [Amazon’s] Seattle corporate footprint” relocating, Fairweather says, they are likely to get higher.

But Amazon’s move comes as Microsoft plans to invest $500 millionin grants and loans for affordable housing assistance in the region. Some of it will target homeless residents, and $250 million of it will incentivize developers to build low-income housing. Another $225 million will go towards building housing for families in suburbs like Redmond and cities like Bellevue, earning $62,000 to $124,000 a year. While Microsoft’s goal may have been to create workforce housing for its own employees, says Fairweather, those starter-home loans could be the sweet spot for Amazon employees, too.

“What might happen is that these housing units that Microsoft initially intended to be for teachers or police officers or more middle-income earners is actually going to end up being bought up and bid up by more tech workers in the area,” said Fairweather. “I don’t know if Bellevue is going to be on a largely different trajectory than Seattle.”