Categories Narrative, Tech Industry

Amazon Headquarters Selection Process

Over the past few months, Amazon has been very public about their search for a second headquarters. (They have looked at 238 different cities.)  I wanted to share a bit of this process and what it might mean to the economic development communities across the country. The Amazon announcement will play out over the next year, but the process is what interests me. Below is the summary page of a great whitepaper on the site selection.  (Read the full report here: “Amazon HQ2: A Reset Button for Site Selection.“)
At the same time, Apple is looking for a similar requirement.  Bet you didn’t know that.  Why? Because they are doing their search completely different than Amazon. They are looking at a short list and doing it very confidentially.  I’ve linked to two articles to find out why and how:  article 1 and article 2.
I have not had the opportunity to represent either firm, but we have been blessed to work with other corporate headquarters relocations and have dealt with state and city government and economic development incentive packages.  Here are some takeaways from my experiences:
–The economic development process is getting disrupted in numerous ways.  Traditional business is changing, new types of companies and the type of employees they hire are miles from what we have seen over the last two decades.  –The only answer is workforce.  The only question is:  where can I hire the employees I need to grow my business?  If you can’t answer this question, your community will not grow.

–Individual companies will decide how they want the search to proceed.  New companies can dictate how they want their process to unfold as cities and states now understand the value of a vibrant growing community.

–Hiring a local advisor is paramount.  Neither the market nor the requirement matter; each company needs a local advisor to work with them on the nuances and specific issues for each market AND submarket in the finalist cities they are pursuing. 

We know the ins and outs of Metro Phoenix and its submarkets. We’ve been working in them for over 25 years. If you need a local advisor to help with your company’s relocation, big or small, call me.


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amazon's key ideas
Categories Economy, Narrative

Rules for Capital

When writing my LIFEies (my weekly blog on personal development) I get to share very complex ideas that are made simple by lots of people. Like Albert Einstein said, “The definition of genius is taking the complex and making it simple.”

For this narrative, however, I focus on more complex Commercial Real Estate developments. But every now and then someone like Brian Watson (below) catches my eye with ideas that are pretty profound and simple. 
Brian wrote four simple rules for capital:
Capital will flow to:
1– Where it’s most wanted
2– Where it’s respected
3– Where it’s safe
4– Where it has the highest probability of market-rate adjusted returns.
This is exactly what we do with our tenant advisory clients; turn a complex, highly stressful renewal or relocation into our proven unique process (for more info, check out our website:   Call us if you have a need, or just want to start a relationship.

As always, thank you for reading my narrative.






Smaller American cities are attracting investment capital from overseas
Brian Watson

There are four simple rules about capital investment, especially in commercial real estate: It will flow to where it’s most wanted, where it’s respected, where it’s safe, and where it has the highest probability of market-rate adjusted returns.

And that’s exactly what’s driving international capital into commercial real estate right now in the U.S., in ways that will impact everything from rents to the eventual shape of our skylines.

Global investors, concerned by a cooling Chinese economy and ongoing concerns related to Brexit and the future of the European Union, are increasingly turning their attention to the U.S. for safety, cash-flow, higher returns and stability, bringing much of the investment capital that used to flow into Europe and China with them.

Some investment is even coming in from Venezuela, which is mired in strife and turmoil, and many other South American countries.

The result?

The big gateway city markets in this country—New York, L.A., and Miami, for example —where international investors tend to focus their attention, may be overheated. Prices in those cities, particularly in real estate, are reaching all-time highs, reducing the potential upside and pricing out even deep-pocketed investors.

As a result, major metros like New York may be in the 9th inning for investors — everyone is getting in their last at-bats. But the music could be over soon. All markets eventually cool off or plateau, as what goes up, comes down eventually.

Yet, there is another side to this trend that’s worth noting.

Given the overheated gateway markets, international capital is now seeking purchase in second-  and third-tier American cities —places like Denver, Phoenix and Nashville​.  In communities like these, the economic impact from energy (think fracking) and manufacturing (think self-driving cars) are likely to mean rising incomes and values. 

Some of these cities are just plain hot. The cost of doing business ​in Nashville, for example, is 20% less than the rest of the country. Others are experiencing population and job growth where investors are finding greater value and greater potential returns.

Salt Lake City, for instance, posted some of the fastest job growth in the nation last year at 3.4 percent and payrolls were at an all-time high. ​ And in Raleigh, N.C., highly paid millennials now account for more than 23 percent of the city’s population.  They need places to spend that income and their spending will help other local businesses as well.

On the one hand, this is great news for the U.S. as more capital is infused into local markets, which creates construction jobs, provides new space for companies, and frees up capital for sellers of existing assets to deploy into other investment opportunities.

But the impact on prices in the tertiary markets remains a question. Excess capital has been inflating real estate prices in gateway cities for a variety of reasons, including foreign investors viewing them as more stable when held up against other, riskier overseas markets. This risk can take the form of both economic and political.

Over time, this trend may begin happening in places such as Oakland and Tulsa as overseas investors pile in, creating opportunity for the average American seller, and more competition for local buyers seeking to buy property in their own city. The potential is there to begin pricing out domestic buyers in mid-sized cities, much as they have been priced out of many major markets.

But one thing is clear: international interest in the U.S. is not going away.

In fact, the potential changes that are coming to domestic regulations, infrastructure spending, energy development and more all point to a U.S. market that will continue to be very attractive for overseas capital for the foreseeable future.

Brian Watson is Chairman and Chief Executive Officer of  Northstar Commercial Partners