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Aug. 15, 2022

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Amazon close to 10,000 Bellevue workers, as it stretches HQ1 beyond Seattle

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SEATTLE — Roughly seven years after announcing its return to the city where Jeff Bezos opened Amazon’s first office from his garage, the company has close to 10,000 Bellevue-based employees.

Compared with its 55,000-person-strong Seattle campus, Amazon’s Bellevue workforce is small but growing quickly. It will likely hit the 10,000-worker milestone this summer and plans to grow that workforce to 25,000.

With 5 million square feet of office space and significant investments in affordable housing and transportation in Bellevue, Amazon is making good on its promise to change the view of its first headquarters from Seattle to the Puget Sound region.

“Our footprint in Washington is much bigger than just our corporate jobs in Seattle,” said Guy Palumbo, Amazon’s director of public policy for HQ1. The Eastside “is going to be where the majority of our growth is in the future,” he added.

Seattle is still Amazon’s biggest campus. The company plans to create 25,000 jobs in its second headquarters in Crystal City, Virginia, just like its Bellevue location. Amazon’s 18 other North American tech hubs together include 65,000 employees.

Amazon is expanding outside of Seattle city limits to tap into tech talent already on the Eastside, meet workers where they want to live and grow in a “business-friendly” regulatory environment, Palumbo said. He didn’t mention Seattle’s new JumpStart tax, which taxes the region’s largest employers, as a reason for expanding across Lake Washington.

The allure of “urban suburbs”

The Puget Sound region tends to see growth on different sides of Lake Washington at different times, said Jon Scholes, president and CEO of the Downtown Seattle Association.

Microsoft’s growth in Redmond helped open the door for Amazon’s growth in South Lake Union, he said. Now, Amazon’s growth is opening the door for other companies — particularly those that aren’t looking to add 25,000 employees in just a few years.

“What we had was a historic period of job growth in Seattle led by a single company in a lot of ways, but it was also catalytic,” Scholes said. “The ecosystem that they’ve helped build is still very healthy and strong.”

It’s not uncommon to see this “splitting of the baby,” said Tracy Hadden Loh, a fellow with Brookings Metro, a research arm of the nonprofit Brookings Institution, who has studied Amazon’s growth. There are benefits that each location can offer, and companies like Amazon are likely to want to hold on to the benefits from Seattle while opening the door to Bellevue.

“For the really huge employers, a constellation of satellite offices can make sense,” she said. “I think this will be an indicator of things to come for distributed office locations throughout other regions in the U.S. that have — this sounds like a paradox but — urban suburbs.”

Palumbo said the expansion is an opportunity to reach more tech talent, listing off other tech giants like Microsoft, Meta and Google that are already growing in the Puget Sound region’s “innovation triangle” of Kirkland, Bellevue and Redmond.

On top of that, he said, Amazon hopes to appeal to workers — particularly those who have been with the company for several years — who want a house with space for a white picket fence and two dogs.

Palumbo didn’t list taxes or Seattle’s progressive politics as a reasons to slow expansion there, but he did say Amazon was looking for a “business-friendly environment.”

In 2020, Seattle’s City Council passed a new tax on big businesses to raise funds for economic relief during the pandemic, affordable housing projects and other community development initiatives. The tax, called the JumpStart Seattle tax, applies to businesses with at least $7 million in annual payroll.

In its first year, the JumpStart Seattle tax raised $231 million. It’s not clear how much Amazon paid..

Amazon and other businesses launched a successful campaign in 2018 to overturn a similar effort that would have taxed large corporations $275 per employee. The JumpStart tax has faced similar opposition from businesses and advocacy groups that say the new regulation will deter companies from growing in the city.

Amazon’s decision to expand in Bellevue isn’t validation that Seattle’s JumpStart tax is pushing businesses away, said Rachel Smith, president and CEO of the Seattle Metropolitan Chamber of Commerce. But it is a factor in any company’s decision, she said, like safety and affordability.

“If our region is unaffordable, that impacts our businesses wanting to stay here. If our region feels unsafe or can’t adequately support those individuals experiencing homelessness, that affects all our businesses,” Smith said. “If we impose new taxes, that affects all our businesses.”

The Seattle Chamber of Commerce sued to overturn the law, arguing it was illegal. A King County judge upheld the tax last year and an appeal from the chamber is still pending.

“A great place to call home”

Amazon arrived in South Lake Union in 2010, investing more than $4.5 billion in Seattle alone and building a campus that now includes 10 million square feet of space and room for more than 50 retailers.

It announced plans to set up in Bellevue in 2016 when it leased Centre 425, a spiffy 16-story building. In 2020 it announced plans to bring 25,000 jobs to the Eastside by 2025.

Amazon moved workers from its Seattle office on Third Avenue and Pine Street, in the former Macy’s building, in March as crime rates in the area ticked up. The company said at the time that the office’s 1,800 employees would move to other locations in South Lake Union, and that remote work was still an option. A spokesperson for Amazon said recently employees in that building were provided alternative options in Seattle and Bellevue.

“We’ve found the Eastside is a great place to call home,” Schoettler, Amazon’s vice president of global real estate and facilities, wrote in a blog post last week. “But as with any change, we recognize that our growth — and the growth around us as other companies also invest in the area — can create some challenges.”

Schoettler pointed to two critical challenges — housing affordability and transportation — while also acknowledging “macro trends” like inflation and the pandemic that have made the last few years “particularly tough.”

Amazon has committed to creating and preserving affordable housing, promoting sustainable mobility options and engaging with local communities “on the issues that matter to you,” Schoettler wrote.

Through its Housing Equity Fund, Amazon says it has created and preserved 1,157 affordable homes in Bellevue, and increased the number of affordable multifamily units in Bellevue by 20%. Each “Amazon-funded” home will maintain affordable rents for 99 years, and the rent will only increase with wage growth, according to the blog post.

Amazon also helped found a coalition to advocate for progressive housing policies on the Eastside and supported a rezoning effort to allow for taller buildings and more density in the neighborhood.

“More and more, the local governments are willing to open up their plans and say, ‘Hey, we have this other project … we want to put this on your radar,’” said Catherine Buell, director of Amazon’s Housing Equity Fund.

To minimize the traffic congestion caused by employees commuting into Bellevue, Amazon said it has planned its offices around the new light-rail station, scheduled to open in 2023, and committed $7.5 million to help finish a trail that will run from Snohomish County to Renton. Amazon gives employees free ORCA cards and up to $170 per month to spend on bike-related expenses.

A ‘dizzying’ pace of change

So far, businesses appear to be welcoming Amazon’s growth, according to Patrick Bannon, president of the Bellevue Downtown Association. The business community has concerns about Amazon’s presence raising the cost of living and housing, he said, but the company is also accelerating a timeline for growth that Bellevue was already hoping to achieve.

In Seattle, Amazon sparked a transformation, said Jeffrey Shulman, a marketing professor from the University of Washington who has studied Seattle’s growth.

Physically, houses are being remodeled and “big fancy new” buildings are replacing neighborhood restaurants and businesses. Economically, there’s more money flowing to businesses and homeowners. Culturally, business owners are changing who they are catering to.

“Instead of that dive bar with $2 beers, you see a fancy coffee shop or a boutique cocktail bar,” Shulman said.

Bellevue has already felt the impact of that transformation, like a drop of water causing a ripple in a lake, he said. Now, the epicenter of that ripple will move from Seattle to Bellevue, and the transformation will accelerate — and expand its reach even more. Shulman expected North Bend and Issaquah could start to feel the ripples soon.

“It’s good for people looking for work. It’s good for people who own their homes,” Shulman said. “It’s bad for people who are renting, and it’s bad for people who have a strong attachment to certain spaces that are in all likelihood going to be physically transformed.”

“It’s head-spinning,” he continued. “The pace of change in Seattle was dizzying and I’d expect the same to happen in Bellevue.”

Palumbo, from Amazon, is counting on it.

“You can see what’s happened in South Lake Union since we’ve grown up there,” he said, referring to the businesses that grew with Amazon. “I think you’re going to find that in Bellevue as well over time.”

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