Amazon's struggle to revive a Seattle neighborhood could be a worrying omen for its second headquarters

  • Amazon has brought economic growth to Seattle over the past 20 years, but it hasn't figured out how to create a thriving neighborhood.
  • Businesses are booming during lunch hours and happy hours, but dead at night.
  • The company's new headquarters, HQ2, could bring similar challenges to a new city.

Thanks to Amazon, Seattle may very well be America's largest company town. But as the nation's largest retailer seeks to expand to a yet-undecided US city, one shortcoming of Amazon's growth stands out.

The company has proven it can create a bustling office park, just not a thriving neighborhood.


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The best case study for Amazon's attempt — and struggle — to revitalize a rundown portion of Seattle is the neighborhood of South Lake Union. An old warehouse district through most of the 20th century, a slew of local businesses tried to breathe new life into the neighborhood in the 1990s. Many failed.

It wasn't until Amazon began consolidating its buildings there in 2010, joining a small cluster of biotech companies, that South Lake Union began to see an economic boom of its own. Amazon has since purchased a number of buildings in the neighborhood that it rents out to some 32 local businesses, 24 of which are restaurants or cafes, the Seattle Times reports.

In total, Amazon owns 20% of Seattle's prime office space. Most of its 8.1 million square feet of property are located in South Lake Union.

Only loyal during the daytime

These days, the businesses that rent space from Amazon in South Lake Union have no problem putting people in seats during lunchtime and happy hour. Some 40,000 Seattleites (and counting) work for Amazon; many venture beyond the office for food.

Then comes the dinner rush, or lack thereof. South Lake Union's businesses have struggled to convert daytime patrons into loyal evening crowds. Many restaurants have had to revamp their menus or change their focus entirely in an ongoing battle to stay relevant to customers, according to the Seattle Times. This is a challenge for Amazon, not just the city, since the company leases out so much property that it has a vested interest in those businesses thriving.

This challenge — energizing a neighborhood to make it enticing for the larger population beyond the Amazon employees who show up mid-day — is one the online retail giant is likely to face again depending on where it builds its second headquarters. 

Early plans for HQ2, as the company is calling it, include bringing 50,000 high-paying jobs to a new city at a cost of $5 billion. Amazon has said the office space will be "a full equal" to the existing HQ in Seattle. The company's requirements for its new location: a population of at least 1 million people, an international airport, and a stable business environment. Philadelphia, Chicago, Boston, and Denver are all in the running, among many other cities.

A sign of things to come

Urban planning experts have voiced concerns —and in some cases direct criticisms — related to the possibility that Amazon's influx of high-wage earners will cause housing prices to rise dramatically, exacerbate congestion on roadways, and hurt local businesses.

"While a new Amazon headquarters could be a boon for many communities," Brooks Rainwater, director of the City Solutions and Applied Research Center at the National League of Cities, told Business Insider, "city officials will have to weigh the impact it could have on the broader economy and ensure that the economic growth it brings would be both equitable and sustainable."

Neighborhoods tend to function best when people from many socioeconomic groups have a chance to interact with one another, research suggests

The wisdom from urban planners is that HQ2 could go either way. Depending on how city government works to shape Amazon's inevitable growth, businesses could stay buzzing during peak hours or fall flat. No matter what happens, however, Amazon will change the face of whatever city it chooses.

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7.5 percent of Seattle's working-age population are Amazon employees

Amazon has more than 300,000 employees worldwide, and 40,000 in Seattle alone.

As a portion of the city's working-age population — roughly 528,000 — that comes out to 7.5% of the city working at Amazon.

For perspective, if the same portion of New York City's adults worked for one company, that company would have about 488,000 locals on staff.

Amazon accounts for 43% of all online sales

Amazon used to be a way to buy books online; today, it's the default buying site for just about everything, especially for people who have Amazon Prime.

An analysis by Slice Intelligence released in February found that 43% of all US online retail sales were done through Amazon in 2016.

That's up from 33% in 2015 and 25% in 2012.

1 out of every 4 US adults has Amazon Prime.

Speaking of Amazon Prime, the company now counts approximately 63 million people among its subscriber base, or about 25% of the total US adult population.

That number may underestimate the true coverage, however, since it doesn't account for multiple adults in one household all sharing the same Prime account.

Amazon ships 1.6 million packages a day

Amazon fulfillment is a beast of its own.

A report from 2013 (the latest year for which data are available) found Amazon shipped 608 million packages that year, or 1.6 million packages a day.

As of 2015, Amazon estimated its fulfillment centers were within 20 miles of 31% of the US population, and within 20 miles of 50-65% of its core, same-day-accessible market.

That's enough cardboard to span all of West Virginia

A back-of-the-envelope calculation reveals all those packages (not including padded envelopes) yield roughly 26,400 square miles of cardboard.

The total land area of West Virginia, meanwhile, is just north of 24,000 square miles.

Given the speed of Amazon's shipments, the company could blanket the whole US in cardboard in about five months.

45,000 robots roam the floors of Amazon's warehouses

To help those shipments leave the warehouses on time, Amazon relies on a growing fleet of autonomous robots that fetch packages from their shelves and bring them to human employees.

The 45,000 robots live across 20 fulfillment centers in the US. In 2016, the company increased the fleet 50% from its prior head count of 30,000.

Amazon is more valuable than all major brick-and-mortar retailers combined

The sum total of those investments in infrastructure and supply chain management have made Amazon by far the most valuable retailer in the United States.

Amazon's $356 billion valuation is so big, it's larger than Wal-Mart, Target, Best Buy, Macy's, Kohl's, JCPenney, and Sears combined.

With the recent acquisition of Whole Foods, there are no signs the retailer has any plans of slowing down.


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