< Previous44 JANUARY 2019 SI T E S E L E C T IO N JANUARY 2019 SI T E S E L E C T IO Nthe negative impact the project will have on the poor in this rapidly gentrifying community. Critics point to Amazon’s record in Seattle where its highly paid workforce led to unsustainable gentrifi cation, along with skyrocketing home prices and rental rates, congestion and a sharp rise in homelessness.Crystal City puts Amazon close to tech talent, but also closer to government leaders, cloud customers and the U.S. Department of Defense.Make no mistake about it, Amazon’s , workers in Crystal City will present recruiting challenges for both Amazon and the Feds. For Amazon, the challenge will be hiring government workers that can adapt to a more competitive, fast-paced and less secure environment. For Uncle Sam, the challenge will be competing for upwardly mobile talent with goliath Amazon’s higher pay, bonuses and superior career potential.Another takeaway of the Crystal City decision is a new talking point for relocating government agencies out of Washington to other cities around the country. is is a concept which pre-dates HQ but is now gaining momentum and rare bipartisan support post-HQ. President Trump has long indicated support for moving government agencies out of Washington as a way to “drain the swamp,” and Democrats view this as a huge economic development opportunity for their home districts. ink about a move of the U.S. Weather Service to Miami or New Orleans, a move of the Food & Drug Administration to Chicago or Minneapolis, a move of the Department of Transportation to Atlanta or Memphis, a move of the Department of the Interior to Denver or Phoenix or a move of the Department of Agriculture to Kansas City or Omaha. Let’s face it, government administrators can interface with elected offi cials and participate in hearings from anywhere in the country — all they need is WiFi. A migration of federal agencies from the nation’s capital to the hinterlands would also free up millions of sq. ft. of valuable, tax-paying real estate in the very hot Washington market.Nice Win for NashvilleAlong with winners Long Island City and Crystal City, Nashville was named as the site for Amazon’s new Center of Excellence for Operations, its unit that is responsible for the company’s transportation and supply chain operations. Nashville will receive , jobs. is was not a big surprise to me. Nashville and Middle Tennessee house a universe of supply chain professionals from the auto industry, which has major facilities in the region. Our logistics-savvy client, Dell, maintained a major global supply chain unit in Nashville.What also helped Nashville win the Amazon supply chain unit is the Music City’s recent attraction of the old-line Wall Street fi nancial services company AllianceBernstein. is huge head offi ce relocation from New York City went a long way towards elevating the stature of Nashville from an executive relocation standpoint. e Wall Street fi rm is bringing over , investment professionals from Manhattan to downtown Nashville, now in the big leagues of head offi ce attraction with the likes of Atlanta, Dallas, Denver and Houston.Losers as Winners e cities that fell short — those bridesmaids — won by losing. ey got all of the public relations benefi ts of being in the mix for the largest and highest-profi le corporate headquarters move in the history of economic development, while sidestepping all the burdens Amazon would place on infrastructure, housing and recruiting. e HQ process allowed Pittsburgh to talk about its Robotics Row and Carnegie Mellon’s leading AI program to a global corporate audience. It allowed Miami, the gateway to Latin America, to talk about South Florida’s new Bright Line transit system, its multilingual skill sets and absence of a personal income tax. It allowed Raleigh to promote the world-renowned analytics program at North Carolina State University and the Tar Heel State’s restructured tax incentive program. It allowed Toronto to talk about Canada’s low corporate taxes, its liberal immigration and new free trade pacts with Europe and Asia. It allowed Newark to promote its premier fi ber-optic infrastructure and transportation assets.HQ also helped to form new coalitions among economic development operatives and local community leaders from the academic, political and business communities. e process also allowed losing cities to forge relationships with Amazon executives that could lead to new Amazon or Amazon subsidiary expansions in the months and years ahead. Post-HQ, these new coalitions will live to see another day and end up being another arrow in the quiver of these John Boyd is principal and founder of The Boyd Co., Inc., a location consulting rm based in Princeton, New Jersey. S I T E S E L E C T I O N JANUARY 2019 45industry-hunting cities.If I had to name two cities that were surprise no-shows to the list of 20 HQ2 finalists, I would name Charlotte and Minneapolis. Charlotte, still reeling from this, has fired its longtime economic development director and restructured its promotion agency. Minneapolis — the 14th largest metro in America — not making the top 20 was also surprising given Amazon’s aggressive entry into the healthcare space. Minnesota governor Mark Dayton was almost too eager to describe his state’s incentive package as “restrained,” a word heard by many as code for not really wanting HQ2 there. Other states offered modest packages but did not broadcast it. Contrast this with New York governor Mario Cuomo, who joked about changing his name to “Amazon Cuomo” in order to snag HQ2.New Social Impact NarrativeAmazon’s HQ2 site search has given birth to a new head office site selection driver that we are terming “social impact.” Politicians and the public are growing weary of large incentive packages awarded to deep-pocketed companies — especially when many of these same companies are facing potential anti-trust, data security and privacy challenges by government regulators. That said, one way these companies can mitigate backlash about incentives and curry the favor of the public and lawmakers is to promote their just business practices, i.e., those activities fostering equitable growth and social equality.We expect this to be a site selection rationale that poorer cities with first-rate head office markets — such as Detroit, Newark, Chicago and Miami — will be incorporating into their sales narratives to post-HQ2 prospects.Freeing the LogjamSome of the nation’s most prized commercial real estate assets have been in suspended animation during the long 14-month HQ2 search. These include prime real estate sites like: the Philadelphia Naval Yard, Suffolk Downs in Boston, Miami’s Innovation District, the Gulch in Atlanta, Lincoln Yards in Chicago, Pittsburgh’s Hazelwood Green, the Exposition Park site in Dallas, Denver’s Lone Tree site and others.Now that the shackles are off, we are hearing from local developers that these sites are open and very much back in business. In the days immediately after Amazon’s announcement, we have seen a flurry of previously stalled projects like San Francisco–based alternative lender Affirm announcing a 500-worker center in Pittsburgh, online retailer GoPuff.com expanding in Philadelphia and Advance Auto Parts and Honeywell relocating their headquarters to Raleigh. Norfolk Southern’s head office move to Atlanta, announced in December, was predicated on securing a deal with the city to purchase acreage in the Gulch District that was scouted by Amazon as a candidate site for HQ2. 46 JANUARY 2019 SI T E S E L E C T IO NSITE SELECT ORS SUR VEY: AMAZON HQ2What’s the real lesson of Amazon HQ ? It’s how not to conduct a site selection process, says a panel of site consultants who expressed their dismay with the public spectacle.“ at was such a public process. I see a lot of pulling back from companies,” says Ann Petersen, managing director of Cushman & Wake eld. “ ey are saying they do not want any public rumblings. ey are being very selective about who they want to meet with. Con dentiality is even greater now.” e other site consultants who spoke on a panel at TrustBelt in Detroit recently agreed. “Tim Cook is the chairman of the board at Duke University. Apple had been very quietly negotiating with North Carolina about an opportunity there,” said Derrick Mashore, senior vice president of CBRE. “ at was degrees away from what Amazon did.”Susan Arledge, president of site selection and incentives for ESRP Real Estate, said, “We all got sucked into Amazon’s PR and marketing game. It was a brilliantly played marketing strategy. What have we learned? Communities learned better ways to market themselves, but the rest of us wasted our time.”Arledge added that the pervasive opinion among her clients now is simple: “ ey want to be where Amazon is not.”Petersen concurred, noting that “everybody thought they had a shot to win Amazon, but you have to hone in on your capabilities. My advice to communities is: don’t waste your time on fruitless pursuits.”Ann Harts, executive vice president of site selection and incentives for ESRP Real Estate, said that Amazon may nd it more challenging than it thinks to secure all the talent it needs in its chosen locations. “Cerner is already struggling Site consultants use TrustBelt to call for better economic development practices.by RON S TARNERron.s tarner @site selection.comSite consultants use TrustBelt to call for better economic development by RON S TARNERron.s tarner @site selection.comGOODBYEPost-Amazon World: Say to Public AuctionsTHE ROUNDT ABLE S I T E S E L E C T I O N JANUARY 2019 47to hire 6,000 people in the Kansas City area,” she noted. “I thought Amazon could go to one of four cities across the country, but the labor market is very tight everywhere.”On other topics, the consultants dispensed advice to both companies and communities. If you represent a location trying to win a competitive project, the consultants said, you should focus on these things:• “Focus on your workforce pipeline,” said Jeff Forsythe, founder of Forsythe & Associates Inc. “Look at your workforce needs down the road, not just today.”• “Have an open line of communication between the governor’s staff and your economic development staff,” said Petersen. “Overcome hurdles for your prospects.”• “Focus like a laser beam on your competitive advantage,” said Mashore. “Every place has one. And then find a way to bridge that to talent. Talent is everything. HQ2 is going to be split between New York City and Greater Washington, D.C., and talent was the driver.” (Editor’s note: Mashore made this statement a week before Amazon officially announced its selection of Long Island City in New York and Crystal City in Northern Virginia.)• “Continue to fund incentives for the next few years,” Arledge said. “Companies need to know that your support will be there.”• “Continue to fund the commerce department in your state,” said Harts. “You lose an advantage when your state is not strong and is not solidly behind the growth.”From left are Ann Harts of ESRP Real Estate; Susan Arledge of ESRP Real Estate; Derrick Mashore of CBRE; Ann Petersen of Cushman & Wakefield; and Jeff Forsythe of Forsythe & Associates.Photo by Shay La’Vee48 JANUARY 2019 SI T E S E L E C T IO N e consultants also expressed strong views on data and their impact on site decisions. “I remember one project where a community did not make the short list,” said Arledge. “It ranked th out of locations on the list, but I knew that it still merited consideration. I can bring forth the objective data, but you (the communities) can bring forth the subjective data and show the company what you are doing to x any problems. You can’t sell around a disadvantage.”Petersen agreed, noting that “once we have done our data drill-down, that is when our experience comes into play. We may know of a market just outside of the heat map. at is where our trusted relationship with the client comes into play.”Mashore summed up the thought for the panel by stating: “Never underestimate the power of human relations. Trust the data, but don’t trust the data more than you trust your intuition.”Finally, the panel o ered frank advice on familiarization tours. Speaking for everyone on the panel, Petersen cautioned, “Don’t put us on a bus and drive us around all day. Driving us around to look at sites for six hours a day is just awful. ere is no value in that. Provide an experience that is unique to your community.”Forsythe added, “Make the best use of the time. We don’t need to meet with your elected o cials. ese are business meetings when we come to town, so let’s talk business.”Mashore advised locations to “be clear about your competitive advantage. What can you do that other areas cannot? Create a unique experience that showcases your unique value.”Arledge issued a call to action: “Make us do our job. If you need more information, tell us.”Harts closed by saying, “We treat you as trusted advisors. I like to meet you at events like this so that I can determine if you will be a trusted advisor.” We all got sucked into Amazon’s PR and marketing game. It was a brilliantly played marketing strategy. What have we learned? Communities learned better ways to market themselves, but the rest of us wasted our time.”— Susan Arledge, president of site selection and incentives for ESRP Real Estate S I T E S E L E C T I O N JANUARY 2019 49INVESTMENT PROFILE:FLORIDAHow Florida uses university-employer alliances to reshape the workforce.A recent report that blue-collar workers are now scarcer in America than white-collar workers set off alarm bells in many states, but one place that’s ahead of the curve is Florida.Ranked fourth in the nation for high-tech employment by CompTIA, Florida has nearly 237,00 high-tech workers, many of them in manufacturing and other blue-collar jobs that require special skills.This doesn’t happen by accident. Around the state, innovative programs are being developed to train the STEM workers needed by manufacturers, health-care providers and other trades.by RON S TARNERr on. s t ar ner @ site s ele c tion.c omPhotos courtesy of Enterprise Florida50 JANUARY 2019 SI T E S E L E C T IO NCase in point: BRIDG in NeoCity near Orlando. BRIDG is a not-for-profit, industry-led, public-private partnership for advanced sensors, photonics and next-generation nanoscale electronic systems. BRIDG offers the R&D capabilities and 200mm microelectronics fabrication infrastructure for manufacturing processes and materials geared toward system miniaturization and smart-sensor innovation — thus bridging the innovation development gap.Supported by Osceola County, the University of Central Florida, the Florida High-Tech Corridor Council and others, BRIDG provides the physical infrastructure and collaboration opportunities that make commercialization possible. It’s located at NeoCity, a 500-acre master-planned community in Osceola County about 20 minutes from Orlando International Airport.“In 2012, we wanted to create something new for Central Florida: a STEM-focused technology campus that would have the same impact here as it had in Austin,” says Chester Kennedy, CEO of BRIDG. “It was designed to play a leading role in the economic transformation of the region; that evolved into what we have today. Our first lot of microelectronic wafers came out last month.”Land of Magic Is a Science HavenThe breakthrough development is housed in NeoCity, a one-of-a-kind community comprised of more than $200 million in investment from public and private sources. “This is a place that allows companies to develop new microelectronic-based products,” says Kennedy, who was recently named by Orlando Magazine as one of the 50 most powerful people in the region and a “Game Changer” by the Orlando Business Journal.“We are in 109,000 square feet on five acres inside this 500-acre technology district,” he says. “Our hope is that this becomes a catalyst for the entire region from a microelectronics standpoint. How do we help this country become strong in microelectronics? It starts here.”Partnering with higher-ed resources like UCF is a start. “A Florida Polytechnic University partnership is in place too,” says Kennedy of the state’s newest four-year university just off Interstate 4 in Lakeland to the west of NeoCity. “We’re in the perfect location. As you look across this swath of Florida, from Tampa to the Space Coast, I don’t think there’s a more exciting place to be in the U.S. right now. People who are involved in autonomous vehicle testing come here. The military presence with Central Command is huge, and of course we have the space industry at Cape Canaveral. The space program is more alive today than it has ever been, and we’re right in the middle of all that.”More expansions are planned for BRIDG and NeoCity. “We have a 100,000-square-foot office building that is more than halfway complete,” Kennedy says. “We have a lot of demand for The Tampa skyline is growing thanks to expanding firms like ReliaQuest. Photo by Ryan Ketterman S I T E S E L E C T I O N JANUARY 2019 51lab space. A new STEM high school is under construction, NeoCity Academy, and several companies are considering building their own facilities here. This will be class A office space when it’s finished. About 100 people work here now; around 5,000 employees will work on campus upon buildout. This is new and not common for this area.”Just 20 minutes from Disney World and Celebration, NeoCity is changing the way people think about tropical, tourist-friendly Florida, and it’s not alone in the Sunshine State.All around this state of 21 million people, partnerships are sprouting between schools and employers to close critical skills gaps, particularly in blue-collar STEM jobs.Citigroup is partnering with the University of South Florida in Tampa to equip workers in fintech. UCF is partnering with Lockheed Martin on defense work, particularly in cybersecurity. Embry-Riddle Aeronautical University supports the rapidly changing space program on the Space Coast. The University of West Florida is working with financial institutions like Navy Federal Credit Union in Pensacola on cybersecurity and fraud prevention. Florida International University is teaming up with banks in Miami to do similar work.These kinds of partnerships have become even more important as the nation’s blue-collar workforce has shrunk consistently since the mid-1990s, according to a groundbreaking report released Dec. 13 by The Conference Board. As the report details, “growing blue-collar labor shortages result from converging demographic, educational and economic trends in the U.S. economy.” Tight labor markets are especially visible in transportation, production manufacturing and healthcare.“Over the next decade,” the report concludes, “the extent of the challenges caused by blue-collar labor shortages will depend largely on three factors: to what extent employers can further automate blue-collar jobs; how many additional individuals are brought into the labor force; and how many workers move into blue-collar jobs from other parts of the labor market.”Made in Florida: STEM-ing the TideIn Florida, employers are not waiting for demographic trends to turn around. They’re rolling up their sleeves and meeting these challenges head-on. For example, the Harris Corp. announced plans on Dec. 10 to invest $125 million in internal R&D this fiscal year in Florida, bolstering high-paying jobs and the company’s innovation leadership in the state.The announcement in Melbourne on the Space Coast includes investments in electronic warfare, robotics, avionics and smallsats, and it supports research partnerships with Florida companies and universities. Harris partners with UCF, USF and the Florida Institute of Technology in Melbourne. “These partnerships provide technological insight for Harris and increase company visibility to fill key technology positions,” the company said.Harris is one of the largest publicly traded firms based in Florida. It has 15 locations with 3.5 million sq. ft. of office and manufacturing space in the state, including the 464,000-sq.-ft. Harris Technology Center and 23,000-sq.-ft. Global Innovation Center in Brevard County.In Tampa, Siemens and Chromalloy Gas Turbine Corp. celebrated the opening of their new joint venture, Advanced Airfoil Components, in October. The partnership represents a capital investment of $139 million and creation of 350 BRIDG in NeoCity near Orlando is a unique partnership that is developing the microelectronic technology of the future. Photos courtesy of Seamus Payne/Skanska and BRIDG/NeoCity52 JANUARY 2019 SI T E S E L E C T IO Njobs in Hillsborough County. New blue-collar jobs include technical engineers, manufacturing technicians and production workers, in addition to administrative positions in fi nance, human resources, procurement and logistics.Florida ranks among the country’s top states for manufacturing and is home to more than , manufacturing companies. More than , Floridians work in manufacturing, and the state’s schools regularly produce STEM graduates at a rate far exceeding the national average. In , U.S. News & World Report ranked Florida as the No. state for higher education for the second consecutive year.Gains like these are a big reason why Florida is a national leader in workforce housing rent growth. According to a report released by CBRE last month, Orlando led the country with the highest workforce housing rent growth, . percent, for the year. A total of metros in the U.S. had growth rates of percent or more, including Tampa and Jacksonville.Tampa has long been a leader in employer-university alliances. Tampa-based enterprise security provider ReliaQuest announced in October that it teamed up with USF on the creation of a $-million cybersecurity lab. Brian Murphy, founder and CEO of ReliaQuest, said the lab will focus on teaching students the skills they need to keep pace with a fast-changing industry.“Having USF in our backyard is a huge advantage,” he says. “It is a reputable university with a large student base. ey have highly engaged professors that want the university and corporate tie-in. We’re investing in the school by helping them co-teach and co-train.”Murphy founded ReliaQuest years ago and has seen his company’s recurring revenue double each year. “Total headcount now is over companywide, and we will hire -plus people next year,” he says. “We have reached capacity in our headquarters space and have started working with brokers to fi nd our new home in Tampa. e skyline of Tampa is going to look very diff erent over the next fi ve years, and our growth will contribute to that.”Come for the Lifestyle, Stay for a Lifetime ey’re saying similar things in Jacksonville, where VyStar Credit Union bought the -story SunTrust Tower and is moving its -worker headquarters into the downtown high-rise. “VyStar started years ago on the west side of Jacksonville,” says Brian Wolfburg, president and CEO of VyStar. “We have , square feet and employees on the west side, plus an ,-square-foot call center in Fleming Island, just west of Jacksonville. We were quickly running out of space and needed to fi nd a new home. We met with the owners of the former SunTrust Tower and closed on the deal a couple weeks ago.”Wolfburg says that “Jacksonville is a hidden gem. It’s not too big, and it’s not too small. It’s central to large markets and has a lot to off er our employees and their families. We’ve been growing at over percent a year in assets and loan deposits, and our workforce has been growing in proportion to our membership and asset base. We’ll grow our workforce by percent over the next year. We’re adding new departments as we prepare to go over $ billion in assets.”VyStar’s meteoric rise would not be possible without the support the fi rm receives from local colleges and universities, particularly on the training side, he adds. “We created a chief digital offi cer position about six months ago to look at how a digital strategy can be utilized and to look at how we can use fi ntech to grow our business and better serve our members,” he says.“When I was looking for where I wanted to move to take on the role of CEO last year, Florida was not one of the locations that rose to the top of my list, and that was a shame,” Wolfburg notes. “I thought it was a very busy and touristy location. Since then, I have come to love Florida and specifi cally Northeast Florida. is is a great community that has a lot to off er. Everyone realizes that they live in an amazing place. Our employees don’t want to move away, and neither do I.” This Investment Profile was prepared under the auspices of Enterprise Florida. For more information, contact Sean Helton at 407-956-5630 or shelton@enterpriseflorida.com. On the web, go to www.enterpriseflorida.com.Jacksonville is a hidden gem. It’s not too big, and it’s not too small. It’s central to large markets and has a lot to o er our employees and their families.” — Brian Wolfburg, President and CEO, VyStar Credit Union, Jacksonville S I T E S E L E C T I O N JANUARY 2019 53WORKFORCE DEVELOPMENT RANKINGSDEVELOPMENT RANKINGSby MARK ARENDmar k .ar end@ site s ele c tion.c omWORKFORCE2019Show me a governor who doesn’t take advantage of every opportunity to invest in the next generation workforce in his or her state, and I’ll show you a state that won’t be competitive in a few years’ time. Every state has its own circumstances, of course, from population to ratio of urban to rural school systems to companies participating in apprenticeship programs and many other factors. But as much as they have diff erences in demographic and educational attainment factors, they also have some things in common. ey have legislatures that appropriate funds to education and workforce training programs, Next >