EXCLUSIVE: Amazon Real Estate Head Holly Sullivan Has No Regrets About The HQ2 Search

Uncategorized

Hear From Amazon Global Head Of Economic Development Holly Sullivan At Amazon HQ2-Apalooza Thursday Feb. 28!

Amazon changed the rules of economic development when it announced a 50,000-job HQ2 sweepstakes in 2017. While most searches for large facilities happen behind closed doors, the Seattle tech giant kicked off an unprecedented, high-stakes, public battle for its next corporate home.

At the center of that battle was Holly Sullivan, Amazon’s global head of economic development, who helped lead the search from the big announcement to narrowing the candidates down to a 20-city shortlist to picking Northern Virginia and New York City as the big winners. Each was promised 25,000 jobs over the next decade, and Amazon committed to opening a 5,000-job “operations center of excellence” in Nashville at the same time.

Sullivan, a former economic development official in Maryland and Tennessee, started working for Amazon in April 2016. The Nashville native said the search started out as geographically agnostic, despite perceptions that Amazon had favored the D.C. area from the beginning, and wound up boiling down to one factor above all others: talent.

“The primary factor that we really looked at was the labor market,” Sullivan told Bisnow Thursday in an interview. “If you look at the RFP, it was fairly concise, but direct on what we were looking for. And that was a location where we could have the talent on day one, but also an opportunity to build that talent pipeline. We specifically referenced a tech talent pipeline.”

The company found that talent hub in Arlington. Amazon will build a 4M SF campus in the newly christened “National Landing” headquarters, and, as part of the deal with Virginia, Virginia Tech has committed to open a $1B satellite campus for innovation 2 miles away.

The public process naturally led to a trial in the court of public opinion, where Amazon has taken its lumps. After months of dealing with staunch opposition in New York City, the company decided to pull out of its agreement to open half of HQ2 in Queens. Amazon wanted a good, long-term partner, Sullivan said, and it lost confidence that it could find one in New York.

“When you look at it, the investment and the commitment that we’re making — I think we’re the only company that has made this type of jobs commitment ever,” she said. “And you want to make sure that you have those good relationships today, but also five to 10 years from now. We felt very confident that we’re going to have those relationships with Arlington County and the commonwealth [of Virginia]. We didn’t feel as confident in New York.”

While Amazon faced public backlash and has already changed course since its November decision, Sullivan said there was not a single thing she would have done differently throughout the process.

"I think it was rewarding for us internally," Sullivan said. "And we developed a lot of new relationships. Now we have relationships with economic developers and community leaders all across North America. It’s been a great process for, I think, everybody, and I think communities had a chance to learn about themselves too."

Sullivan will speak on stage Feb. 28 with JBG Smith CEO Matt Kelly at Bisnow’s Amazon HQ2-Apalooza event close to the company’s future home in Arlington. Before her on-stage conversation, Sullivan spoke to Bisnow over the phone about the entire HQ2 process, decision and where the company will go from here — including who might get the 25,000 jobs once promised to New York. The interview below has been lightly edited for clarity.

Bisnow: To start from the beginning, when did Amazon decide that it wanted to establish a second headquarters, and why did it make that decision?

Sullivan: We have multiple corporate offices across North America. And as we started looking around the corners, and as our headcount grew, we started studying the locations that might be the best, where we had good success. But at the same time, how do we make a more strategic decision on that? In Seattle, we have over 40,000 employees on our campus there. And when we look at the type of growth we’ve had over the last decade, it started to make sense to be more concentrated and really build a relationship with a state and a community where we can start building a tech talent pipeline and develop a deep relationship.

Bisnow: When you put out the RFP, over 230 jurisdictions submitted bids —

Sullivan: 238.

Bisnow: Yes 238, exactly. Can you talk about how you went about narrowing it down, what the process was like and how many people you had working on that?

Sullivan: Let me back up a little on that. One of the questions I get asked a lot that’s not very apparent to everyone is why we did a public RFP. And the primary reason when you look at a headquarters, 25,000 or 50,000 people, that will have an impact on a community. So we wanted to make sure we were having open dialogue and receiving invitations from locations that wanted to partner with us for the long term.

Now, on narrowing it down from 238 to 20, if you look at the RFP, it was fairly concise, but direct on what we were looking for. And that was a location where we could have the talent on day one, but also an opportunity to build that talent pipeline. We specifically referenced a tech talent pipeline. We also referenced a community where we could have those relationships and a community that wanted us. So we started looking at those opportunities with a heavy emphasis on the labor market within those areas, and that’s how we concluded the 20. We wanted to be geographically agnostic as we started to narrow it down, so we could really make an informed decision.

A rendering from November of the north section of Amazon’s National Landing, including parts of Pentagon City and Crystal City

Bisnow: How did you ultimately come to select Northern Virginia and the National Landing area in particular? What were some of the key factors that led you to that site?

Sullivan: How much time do you have? (laughs) So, the primary factor that we really looked at was the labor market. I’ll talk about it not only in Northern Virginia, but in the D.C. metro. You have a large concentration of top-ranked universities. Even further, beyond the D.C. metro area, with Virginia Tech, UVA, etc., all within this region. You have that opportunity for the immediate day one talent, but you also have the opportunity to build that talent pipeline for Amazon, but also for other companies.

Drilling down on the site visits we did during the springtime, we met with a lot of community leaders and education leaders. We also focused on the real estate. When you look at the Crystal City and Pentagon City market, and I live here, but, quite frankly, had not spent much time in Crystal City. I was aware of it, but had no reason to ever go to Crystal City, unless you were going to the airport in Arlington, which I do all the time. And when we were walking around, we noticed there’s obviously a lot of vacant office buildings, but you could tell that the county, along with the developer, JBG Smith, had a vision, and there were seeds being planted for that vision.

Arlington County gave us a lot of great facts about jobs — about the 34,000 jobs that had been lost in the area due to BRAC and federal contractors closing or moving out of the area or downsizing. And all those pieces of the puzzle started fitting together that with the vision of the county had of bringing jobs into the market, with the vision the state had of diversifying Northern Virginia into more of a tech hub, our project seemed to really fit hand-in-glove with the county’s vision, the commonwealth’s vision and then our vision.

Bisnow: I know before you were at Amazon you worked on the other side for Montgomery County —

Sullivan: I did.

Bisnow: So as you were going through this process and working with Arlington County, and obviously the shortlist jurisdictions that you did site visits with, what struck you about the process being on the private sector side? And you worked with Montgomery County, so some of your colleagues were in those meetings. What was that like for you, that role reversal?

Sullivan: I worked in a few different markets that were on the shortlist, and I had a lot of peers and colleagues that were involved in the process. The way that we approached this was pretend that I know nothing and have never been here, because I need to look at it with a fresh set of eyes. Things change in this region. Real estate sites change and leadership changes. So we really had to be looking not only at day one, but really in the long term.

I’ll tell you the one thing that struck me with the region is the collaboration. There’s been a lot of discussion previously about sometimes the lack of collaboration. We really experienced a deep collaboration between Northern Virginia, Washington, D.C., and the suburban Maryland community working together to tell the story about how the region works together, how the infrastructure works together and how the labor market is strong.

Bisnow: And it’s not just perception, you worked for Montgomery County. You know that that was pretty revolutionary that it came together the way it did.

Sullivan: Yeah, if you go back to the RFP, and that was something we really tried to emphasize, too, was the importance of regional collaboration. We know we’re going to locate and create the jobs specifically in National Landing, which locals also know as Crystal City and Pentagon City, but it will have a regional impact. Our employees are going to live all throughout the region. So it was important for us to be very knowledgeable and also be supported by the region as a whole.

Bisnow: You mentioned JBG Smith. How big of a factor was the fact that you had this one company that owned so many of these buildings in Crystal City and Pentagon City, being able to work directly with a single landlord rather than a bunch of landlords. Did those factor into your decision?

Sullivan: I’m sitting here taking a toll of all the sites we visited. The majority of the sites that we visited across North America we would have been working with a single or maybe two development partners. So that certainly makes it easier. I can’t say that it was part of our initial decision-making as we really did focus on the tech talent, the overall talent and looking at how we can be successful as a company with that diversity of talent, and also the culture of the community really played more into it.

As conversations got more granular, the biggest thing I can say is being able to hire people this year was very important to us. That was a priority as we continued the process.

Bisnow: As someone who lives around here and has worked around here, you know the area well. How much of an impact do you expect Amazon to have on the area? When you think about turning Arlington and the D.C. area into an even bigger technology hub, sort of the way that it happened around Amazon in Seattle, do you expect that type of growth?

Sullivan: You’ve got a couple questions bundled in there so let me unpack them one by one. I think, first of all, it’s important to realize that the 25,000 jobs will be created over a decade. So there’s a lot of steps along that process. There’s a lot of opportunity for engagement with the policymakers at the local level, at the state level and at the regional level. There’s a lot of opportunity for engagement, too, with the community, with the nonprofit community, with the neighborhoods and with the neighborhood that we’re going to call home.

The second part of your question is really the diversity of that labor market. That was something that the commonwealth, and Victor [Hoskins] and Christina [Winn] in Arlington and Stephanie [Landrum] in Alexandria, they really emphasized how excited they were about this project because it would give them an opportunity to really diversify and make their mark as an emerging tech hub. Washington, D.C., has been primarily known as place of government and as a place of federal contractors, which are very good jobs. But this gives the region a different opportunity to create that clustering impact of technology jobs.

One part I wanted to back up to on the regional part, too, we were talking about Maryland, D.C. and Virginia working together. But I think it was also while we’re not putting our buildings in Alexandria, Stephanie Landrum was engaged in the process the entire way. Even once the decision had been made on the specific real estate side. I think that having Arlington County and Alexandria really work together was just such a seamless process, they really should be championed for laying down the competition stakes and working together to ensure that their residents and their communities were part of the process.

Bisnow: You’ve talked about the labor market and everything. Of these 25,000 jobs over the next decade, roughly how many of those do you think will be local hires versus Amazon employees that are relocating from other offices?

Sullivan: This won’t be a relocation of Seattle employees. Will there be a few that relocate? Probably, because we’ll need to create the culture. And we’ll have some mid-level management that wants to move over. But the idea, and why we chose this location, was the opportunity to hire locally and hire regionally. This would be a terrible loss if we were just relocating employees.

Bisnow: So now you’re transitioning from what was a lengthy selection process to the actual development and opening of this HQ2. What type of challenges do you expect to face in this next phase of this process as you look to build it out and ultimately open the campus?

Sullivan: You don’t know what you don’t know. So I will say that we have great partners at the county level. We’ve already met with the planning staff, the county manager and a lot of the department heads talking initially to get their feedback on important design elements. Their vision of Crystal City is important to us and how we develop our specific real estate site, we want to take all those elements. There was also a long-range design plan that the county did, so we did a deep dive on that.

There’s always going to be challenges but I think the positive is that we’re being up front about things. This is how we’re going to hire, these are our plans to hire on an annual basis, so a lot of those challenges get mitigated because we gave the information up front and we can plan and work together.

Bisnow: That’s an interesting point you bring up, I mean obviously you’ve been very up front with exactly what you’re planning to do, what you’re planning to bring, unlike a lot of other processes like this which happen kind of below the surface. And obviously Amazon has received a lot of public discussion. You were, I would say, the No. 1 story in commercial real estate from the day you announced to today still. How much did you expect that buzz factor, that discussion factor? How much was intentional of creating the conversation, and how much took you by surprise by just how much coverage Amazon got throughout the whole process?

Sullivan: I’m in economic development, so my head tends to stay pretty focused on the project. And realizing that when a lot of news stories were coming out, myself and the team internally were visiting two to three locations a week. So I have to say that I didn’t pay a lot of attention to the media noise. I think it’s always about managing expectations. We just really have stayed focused on the project. We’re a business, so we’ve had to focus on how we’re going to create these jobs and where we’re going to create these jobs, and that was really our primary focus over the last 15 months. I know that sounds a little cliché, but it’s true.

Bisnow: You mention visiting two to three sites a week. There’s been a lot of discussion about the decision in Northern Virginia and New York City, but there hasn’t been too much discussion of the runners-up. I mean, Nashville got a 5,000-job hub. Can you talk about the process with the 20? There was a lot of discussion that Amazon might want to go to a Columbus or an Indianapolis because of the impact you could have on a city there. There hasn’t been too much discussion about who were the first or second runners-up. Can you talk about what you liked about other markets or what you realized you wanted in an HQ2 city as you were going through this process?

Sullivan: I’m going to answer that in a couple different ways because I think it’s an important part of the conversation. So there were 20 locations, and we did a much deeper dive than the original RFP on those locations. We worked primarily with the economic development entities or the regional organizations that would represent those 20 locations. And we received a lot of information on real estate sites and talent, the culture of their community, their public school system, so we could make a very informed decision. But the information we received is really the information that any company can request, and that’s why economic development organizations are so good at what they do. It’s the one location you can go to find comprehensive local and regional and state information without having to go through multiple agencies and organizations.

From that process, we have the information and that has informed us on other investment decisions. The center of excellence is a great example in Nashville. That’s going to bring 5,000 jobs to the middle Tennessee market. We also located a fulfillment center in Birmingham, Alabama, which is over 2,000 jobs to that community. We also expanded our San Diego corporate office with a few hundred jobs. And there are some other locations that are not announced, or we’re in the early process, that we learned that we thought might be a good fit for some of these other locations.

So it really was an educational process for us. While we were very focused on HQ2, many of the locations submitted industrial and other types of uses on their real estate, which was good because it gave us a wider range of while this might not be a great fit for an HQ2, it could be great fit for this.

Bisnow: About that decision to ultimately go with very urban locations. Not just D.C. and New York being two of the biggest cities in the world, but where Crystal City is, it’s got two Metro stops, you’re inside the Beltway and you can literally walk to an airport. And some of the other locations pitched in this region, Montgomery County pitched a suburban site, Fairfax and Loudoun pitched a suburban site. Amazon in Seattle is very urban. Did you have that idea going in that you wanted to be more part of an urban footprint? Because I know you asked for both in the initial RFP.

Sullivan: We didn’t. We really wanted to keep it open. We learned a lot about ourselves in this process too, and I think that’s sometimes been lost in the conversation. We were completely open to urban, suburban or even potentially more rural locations, but near a major metropolitan area. Through our discussions and learning about what was best for our employees, we have a very vocal employee base, and they also voiced their opinion and we wanted to listen to them.

It does seem that we are more of an urban location. That’s a good fit for us. And the type of employees that come to work at Amazon seem to prefer urban living. But then a large percentage of them like the suburban and rural settings, too. I think the great thing about the Northern Virginia location is you really have an opportunity for a choice of living.

Bisnow: You mentioned that you learned a lot about yourselves in this process. As you look back on the last 15 or 18 months, is there anything that you would have done differently with the process, either internally or the public-facing side of it?

Sullivan: You know, no. I think it was rewarding for us internally. And we developed a lot of new relationships. Now we have relationships with economic developers and community leaders all across North America. It’s been a great process for, I think, everybody, and I think communities had a chance to learn about themselves, too.

Bisnow: You mentioned that there are future sites that you’re not going to get into. One thing I wanted to ask was obviously the Amazon [incentive] package in Northern Virginia was you have the option to go up to about 37,000 jobs. There were plans to bring 25,000 jobs to New York, and obviously those plans have been canceled. I’m assuming Amazon has not changed its own internal estimates about what kind of hiring it needs. So somewhere is going to get a lot of jobs that New York was going to get. So is the idea to expand to that 37,000 in Arlington or to just grow more organically elsewhere?

Sullivan: Nothing has changed for Northern Virginia. We’re still committed to the 25,000 jobs. What we plan to do with the additional 25,000 jobs — realizing that growth was over a decade — incremental headcount growth is something that you can plan for, but we also don’t have a crystal ball. So what we plan to do now is we have over 30 corporate offices in North America, and we’re going to be strategic on how we can locate that additional headcount growth beyond Nashville and beyond Northern Virginia in those 30 existing offices.

Bisnow: A story came out in ARLnow yesterday about [Arlington] County Board members who said they haven’t had much interaction with Amazon so far. You said you’ve been meeting a lot with the planning staff and obviously lots of economic development meetings. Can you speak to what kind of outreach you’ve had in Arlington and what you plan on doing in the future, and address some of the criticism that Amazon hasn’t been reaching out to the members of the community?

Sullivan: I guess we need to hire a small army, because we’ve had a lot of outreach. Realizing that this is still early in the process, we announced in November, we started our outreach the week after our announcement. We’ve met with over 50 of the nonprofits. We’ve met with several of the community business organizations. We’ve done multiple presentations for the [Crystal City Business Improvement District], for the chambers of commerce, we met with Northern Virginia Tech, we met with Virginia Tech, we’ve met with a lot of leadership in Richmond that represents Northern Virginia, we’ve met with all the County Board members. And we have met with several of the school superintendents, and we also have meetings scheduled next week to continue those conversations with the K-12 system. And there’s still more work to be done. We’ve done all of this, but there is still work to be done.

Most companies when they make site selection decisions, they come in, they already have plans [they’ve] drawn, and they just come in and start developing. We actually chose our location, and now we’re working backwards from that decision on what our buildings will look like. Obviously JBG Smith has designs already, but how do we integrate our vision with the vision that had already been planned for the county. And we’re taking a lot of the information that we learn in these buildings and integrating that and understanding the priorities of the community so we can make very informed decisions, and showcase and highlight some of the attributes of Crystal City and Pentagon City.

Bisnow: So you said that you’ve met with a lot of elected officials. Does it seem like there’s generally more support for Amazon here in Northern Virginia than there was in New York City? Does it seem like it’s going to be a smoother process?

Sullivan: I wouldn’t want to compare the two because they’re very different. Everything structurally is different about way the governments at the local and state level are set up. But what I think is important to note is that the policymakers at the local and state level, they have asked a lot of the tough questions, which I think is prudent. They’re representing their constituents, they’re representing some of the priorities that their residents are concerned about or are excited about. And we’re taking all that feedback and really being thoughtful about how we continue to engage the community.

Bisnow: Can you shed any additional light on the decision to pull out of New York City? I know there was a statement put out, but can you go any more into your thinking of why you made that reversal?

Sullivan: I’ll go back to our original RFP where we really talked about being in a community that not only welcomed us, but also supported us. When you look at it, the investment and the commitment that we’re making, I think we’re the only company that has made this type of jobs commitment ever. That’s a long-term commitment. And you want to make sure that you have those good relationships, today, but also five to 10 years from now. We felt very confident that we’re going to have those relationships with Arlington County and the commonwealth. We didn’t feel as confident in New York.

Source Article