By Jeff Clemetson | Editor
When Amazon owner Jeff Bezos announced in December 2017 that the company was looking for a new city to establish a second headquarters, San Diego was a longshot in getting the company to land here. And sure enough, when Amazon narrowed the list of cities down to 20 this January, San Diego didn’t make the cut.
But the long odds didn’t dissuade the San Diego Region Economic Development Corporation (SDREDC) from trying to draw Amazon’s lucrative “HQ2” to the city, and the process itself revealed some positive news for the future of San Diego’s business climate, and Mission Valley’s in particular.
On Feb. 7, SDREDC director Mark Cafferty gave a presentation to the Mission Valley Planning Group on the criteria Amazon was looking for in a city, the proposal SDREDC presented to Amazon, and the company’s feedback on what was good and bad in San Diego’s proposal.
Cafferty said that although San Diego, and cities in California in general, are not perceived as business-friendly, that is not always the case. And so while enticing Amazon to the Golden State seemed unlikely, it was still a possibility in his mind because of the number of other businesses that are interested in locating here.
“On a regular basis, the state of California, or the city of San Diego, or the county of San Diego, or the city of Poway or any number of groups may receive information from a business or from a site selector who says, ‘We’d like to contemplate bringing a business to your region.’ There may be a perception that that doesn’t happen in California because this must be such a hard place to do business, but I can tell you that every day we get an email, a phone call or something about someone interested in knowing more about our San Diego market,” Cafferty said.
Industries that regularly look at San Diego include bioscience, defense, anything related to the ocean and businesses that rely on proximity to the border with Mexico.
“But if they come in and they’re looking for what is essentially the lowest cost place to do business somewhere in the country, we pretty much know we’re not going to be competitive in that process,” he added.
So when Amazon announced its unusually public request for proposals from cities for HQ2 that would bring with it close to 50,000 good paying jobs, there were reasons to not be overly optimistic about San Diego’s chances, but to also be hopeful.
“By maybe 9 o’clock that morning, I think I had about 120 different messages that came by way of email, text or phone call asking if it was real and if San Diego was going to respond,” Cafferty said.
San Diego was one of 248 regions that did respond after many areas were weeded out for not meeting Amazon’s criteria: 500,000 square feet ready to be moved into by 2019, 8 million square feet to grow into by 2027, connection to mass transit and proximity to a major airport and freeways.
Three areas in San Diego were chosen for the proposal — Downtown, Chula Vista and Mission Valley. Downtown offered the urban vitality similar to Amazon’s first headquarters in Seattle; Chula Vista offered proximity to the border in case Amazon saw value in expanding the Latin American market; and Mission Valley offered a blank canvas in what was then the Qualcomm Stadium site. Both the SoccerCity and SDSU West proposals would allow for a large company like Amazon to move into the needed office space.
“Here’s a spot where if you are looking down at it from 30,000 feet, you could actually see Amazon’s future, you could see it in one place,” Cafferty said, adding that housing, public transportation, and the rest of the criteria are all present at or near the Qualcomm site. “All those things checked out very strongly for Mission Valley.”
Other positives for San Diego include a high level of entrepreneurship, a high number of engineering graduates, and some proximity to Hollywood which factors into Amazon’s entertainment division.
However, when the list of 20 cities still up for consideration was announced on Jan. 20, San Diego did not make the cut — despite a Jan. 16 article in Forbes citing “Five Reasons Why Amazon Will Choose San Diego For Its HQ2.”
“We had heard all through the process from the day we started two things: The inside narrative was they would not choose a city on the West Coast, because they’re already on the West Coast, and they were looking for geographical diversity,” Cafferty said. “The other was Amazon wanted to know what incentives it would get from the state. And if you know and understand the state of California well then you know that our governor doesn’t play that game. We tried to make up for that locally as best we could and came up with some creative ideas.”
Despite the usual policy, Governor Brown did offer “cover” to cities applying for HQ2 by promising them some incentive could be worked out that fits Amazon, just not a cash guarantee, Cafferty added.
The good news
“We’re not in the 20 cities, and we kind of knew out of the gate we might not be, but what we were hoping is that Amazon would come back and say, ‘Here’s what we see as future opportunities in San Diego.’ And they’ve done exactly that,” Cafferty said.
In a follow-up phone call with Amazon representative Holly Sullivan, Cafferty learned what Amazon liked and didn’t like about San Diego. The top positive was that Amazon has had luck in finding talent here, which is why the company plans on growing its engineering efforts in the region.
“She talked about the Mission Valley site as a location that was really interesting to them,” Cafferty said. “She talked about two or three other cities that they want to have long-term relationships with, but for certain political reasons that she wouldn’t go into aren’t in their top 20 and she told us that San Diego is one of those cities.”
One of the downsides to San Diego that Amazon mentioned is the lack of what Sullivan described as “workforce housing,” Cafferty said. Because the jobs that HQ2 would have brought pay in the six-figure range, lots of housing for first-time homebuyers in areas with good schools was found to be lacking in San Diego.
Even though Amazon didn’t chose to build HQ2 in San Diego, Cafferty said it was worth the shot and still beneficial to the region by getting the marketing material ready and circulated in the business world. The work on the Amazon proposal is public so other businesses can now see the region’s demographic information, educational attainment information, land-use information and possible incentive information.
“That’s why I think Amazon wants to keep the door open here for future opportunities, future growth,” Cafferty said.
Even though the Amazon proposal will get the word out about opportunities in San Diego, the focus for Cafferty and the SDREDC will now be helping to grow the companies that are already here.
“Amazon’s come and gone. The real economic development work in this region that we should be thinking about is, ‘Who’s here already growing?’” he said. “And when we really look around, there’s probably two or three strategic sites in this region where if someone was asking us, ‘Where is the future of San Diego’s economy?’ For us, Mission Valley is really the heart of it.”
— Reach Jeff Clemetson at email@example.com.