Amazon’s Operations Center Announcement For Nashville Means Big Plans For City’s Infrastructure, Housing And Hospitality

Amazon’s announcement that a Downtown Nashville mixed-use project will be the site of a logistics headquarters set the city in fast forward, as planning for the booming area just leveled up by 5,000 — jobs, that is.

While Amazon’s HQ2 news might have focused largely on Crystal City in Arlington and Long Island City in Queens, Nashville’s $230M “Operations Center of Excellence” will bring 5,000 executive-level jobs paying wages on average of $150K annually, according to Tennessee Gov. Bill Haslam.

“This is the largest jobs announcement in the history of the state of Tennessee,” Haslam said at a press conference.

The retail giant’s logistics headquarters will be at Nashville Yards, a 1.5M SF mixed-use center in Downtown with creative and Class-A office space, 1,000 residential units, 600K SF of retail and entertainment, and 1,100 hotel rooms.

“Nashville has been a secret for years and now the secret is no more,” Housing Fund President and CEO Marshall Crawford said.

Nashville is a vibrant city with committed residents and people interested in moving to the city on a daily basis, he said.

“There is no other place more exciting then Nashville at the moment.”

The quality of the labor force, the BNA Airport Expansion project, Tennessee’s lack of income tax and Nashville's attractiveness for young, highly educated workers likely were among the largest factors in Amazon’s decision, Avison Young Managing Director Warren Smith said.

In addition to the jobs and wage requirements, the retailer has promised to build 1M SF of energy-efficient office space with an estimated incremental tax revenue of more than $1B over the next decade.

In return, Amazon will receive performance-based direct incentives of up to $102M. This will come in the form of a cash grant from the city of $65M, up to $15M over the next seven years and a job tax credit from the state of Tennessee of $21.7M.

Is this an HQ2 rejection?

Not everyone was happy about Amazon’s announcement.

“Nashville was passed over for Amazon’s second (and third) headquarters, yet city and state officials still got scammed into giving the company more than $100M in taxpayer giveaways for a consolation prize, which includes $80M in cash handouts,” the Beacon Center’s spokesman, Mark Cunningham, said in a statement.

“Amazon, one of the world’s most valuable companies, and the government played taxpayers with this incentive deal, and it is time for us to speak up against this type of corporate welfare,” he said. “While we welcome new businesses and the jobs they create to our state, forcing middle-class Tennesseans and small businesses to give their hard-earned dollars to a multi-billion dollar business is both unfair and immoral.”

But the governor does not see the smaller project as a slight.

Haslam said being offered a smaller piece of Amazon’s pie will offer a little breathing room in a growing city that may not be ready for the 50,000 jobs HQ2 would have brought.

“If you look at all of Downtown Nashville currently, there are 70,000 jobs. That gives you an idea of the scale of the project and what it would take,” Haslam said.

“We realized, Nashville realized and Amazon realized to do something that big, as much as Nashville’s grown, would still be a challenge to the infrastructure and to the talent demand. They felt like that would be a challenge and we were aware of that as well.” 

Plans for housing and hospitality

With growth, certain aspects of city life will be impacted, Crawford said. Affordable housing may become more of a challenge if Amazon does not help address the situation.

“They can provide significant resources to help keep the cost of housing prices and rents down,” he said. “We would welcome the opportunity to discuss this with them.”

Even before the Amazon announcement, HKS had seen several new hospitality projects open in the past year, Associate and Hospitality Designer Zack Lamp said. A review of feasibility studies shows there is still room to grow, he said.

“HKS is continually asked the question, ‘Is Nashville over or underbuilt?’” he said. Nashville has added approximately 5,000 guest rooms since 2013, with plans to add more in the coming years.

“However, it’s difficult to assess if it’s enough,” he said.

In planning for the operations center, Lamp said the hospitality industry should plan to attract future local residents using approachable architectural choices.

“One design example is making the restaurant more accessible to the public and not just hotel guests,” he said. “Engaging with the street edge and the public realm has the potential to engage with more locals.”

Infrastructure and transit growth

Amazon’s choice for Nashville Yards signifies a need to re-examine a transit plan for The Gulch and Central Business District, Smith said. Nashville voters rejected a transit plan earlier this year that would have funded light rail, leaving questions about how all these new employees plan to get around town.

“The day after the transit vote failed, we started working on the steps that need to take place to build out the transit network here in Davidson County,” Nashville Mayor David Briley said at the press conference. The money will no longer come from a single source, but rather a combination of existing and new revenues.

In addition, Amazon has predicted about one-third of its workers will walk or bike to work, Briley said. Efforts to create better infrastructure for pedestrians and cyclists will take priority, and he said the city will work with the Tennessee Department of Transportation to better manage traffic in and out of town.