Amazon’s Seaport Expansion Could Be A Bad Sign For Boston's Suffolk Downs HQ2 Pitch

Amazon’s confirmation it will bring at least 2,000 jobs to the Seaport has many reading the tea leaves as to what this means for Boston’s HQ2 bid — and its proposed site across Boston Harbor at Suffolk Downs.

“If I was a betting man, that commitment shows how interested they are in that particular neighborhood,” Colliers International Director of Research Aaron Jodka said. “If HQ2 were to come here, this city would do whatever it takes to put them where they want to be, and that seems to be the Seaport.”

The nation is still awaiting word from Seattle as to what region will house Amazon’s 8M SF, $5B second headquarters, but the e-commerce giant announced May 1 it was bringing at least 2,000 jobs to Boston's Seaport District. The company has the option to double that number, on top of a 900-person office it is opening in nearby Fort Point, which has some in Boston’s real estate community figuring Amazon would not take City Hall’s advice to grow its second headquarters at a dormant horse track in East Boston if it decides on New England for HQ2. 

“If they do decide to do HQ2 here, they’re looking at flagship areas — namely, the Seaport and Fort Point,” UMass Donahue Institute Senior Research Manager Branner Stewart said. 

Cambridge’s Kendall Square, Amazon’s initial home in Boston before space constraints led the company to expand across the river, is seen as a place technology and life sciences companies need to be in order to network and attract younger, high-skilled labor. Stewart sees a similar tight-knit model rising in the Seaport.

“It helps companies attract the very highest skilled labor because these types of people can interact with each other by day and by evening,” he said. “That’s the type of environment that highly skilled, often young, people would prefer to work in, as opposed to a more suburban office park.”

Amazon declined to divulge more on the Seaport office apart from reiterating it was a completely separate project from HQ2. An HQ2 team from the company toured Boston, including Suffolk Downs, in March, but economic development officials did not confirm nor deny if other sites received visits.

Suffolk Downs owner HYM Investment Group didn't respond to Bisnow’s request for comment.

The city of Somerville, which is also being considered in Boston's HQ2 bid, declined to comment on what the Seaport news means apart from reiterating Amazon’s claim the two were separate projects and there was nothing to comment on. The city of Boston has only issued a statement directly relating to the Seaport expansion. 

“It’s great news for Boston that Amazon is expanding its footprint in the Seaport, bringing new jobs and economic opportunities to our city,” Boston Mayor Martin Walsh said in a prepared statement earlier this month. “This project is a tremendous vote of confidence in our economy, and will be a welcome addition to Boston’s growing and thriving workforce and business landscape.”

The Seaport has grown in popularity in the last decade and nearly doubled its office inventory. General Electric, Vertex Pharmaceuticals, Reebok and law firm Goodwin are among the variety of companies that have relocated to the waterfront neighborhood, along with the tech companies largely concentrating on its edges.

While the neighborhood is popular and increasingly a tech and life science cluster akin to Kendall Square, one Boston developer doesn’t think Amazon’s Seaport expansion should be seen as a clue in the greater HQ2 race.  

“I don’t think we should read too much into it, other than the fact they are looking for high-quality talent in a city that is known for high-quality talent,” Mount Vernon Co. Chairman and founder Bruce Percelay said. 

Even before Boston submitted its official bid for HQ2, Suffolk Downs was seen as a leading Boston site for Amazon given its two on-site Blue Line stations, 161 acres of developable land under a single owner and quick access to Boston Logan International  Airport. The state has even reopened the idea of connecting the MBTA Red and Blue lines, shortening the travel time between a hypothetical Suffolk Downs HQ2 and Kendall Square. 

It is hard for some to envision an Amazon-in-the-Seaport scenario given the trickier development path to house an 8M SF campus in the neighborhood. Its ongoing traffic situation has one developer pitching a $100M aerial gondola network to solve rush hour gridlock.

“Many people question whether it’s even a good thing if we win the big prize, because it may be one of those ‘be careful what you wish for’ scenarios, given our strained infrastructure, traffic and virtually nonexistent tech unemployment rate,” Percelay said. “I have a very difficult time picturing the traffic in and out of the Seaport with 50,000 more jobs, when today it’s not easy to navigate.”

Space constraints may be easier to overcome than initially envisioned. John Hancock announced in late March it will vacate its Seaport headquarters by the end of 2018 to consolidate operations at its 1.2M SF Back Bay campus, opening up nearly 500M SF of office. Amazon calls for 500M SF for the first phase of HQ2 by the end of 2019.

While the building’s owner, Toronto-based Manulife Financial, is still evaluating whether to lease or sell the property, Jodka points to other areas where Amazon could scale up in the neighborhood. 

Rezoning could free up space in the Raymond L. Flynn Marine Park, where MP Boston and Cargo Ventures are pursuing 1.8M SF of development, along with the aerial gondola proposal. There could also be opportunities to rezone Fort Point and enable development above the existing warehouses, like Boston Properties built across the channel at Atlantic Wharf and that Related Beal is developing at Congress Square in the Financial District.

“The tricky part is: Do developers take the Amazon option and sit around for a multiyear or multi-decade build-out?” Jodka said. “It’s a fairly unique scenario, but we haven’t seen a 50,000-job, 8M SF commitment like this before. It would create a lot of firsts, which isn’t a bad thing.”

Percelay is not ready to view the Seaport news as anything but a testament to Boston’s extremely educated workforce and talent pipeline. But he does point to the advantage in last week’s win over the greater HQ2 prize.

“It’s impossible to determine what they’re thinking,” Percelay said. “But for those who believe in slower, more deliberate growth, the Amazon move in the Seaport is much easier to process than all of a sudden having a company the size of a small city move in overnight.”