Which Building Site in Indianapolis is Right for Amazon HQ2?

Indianapolis is getting a lot of attention related to the selection city of Amazon for their HQ2 location. The city is uniquely positioned with a great geographical location in terms of proximity to the rest of the country, a low cost of living relative to other cities in the US top 20 by population, and a burgeoning reputation for technology. However, before promoting a specific location, it would be good to understand why Amazon is seeking a location for an HQ2.

Traditional Tech Hotbeds are Saturated

The Seattle area is basically saturated. Tech companies like Microsoft and Amazon, along with the plethora of partner companies that grow around them, are enough to change the landscape of a city. Not to mention that there are plenty of other large companies, like Costco and Starbucks, that call the metro area home.

Housing costs have gone through the roof. Amazon has begun taking a hand in attempting to solve the issue by purchasing older homes and razing them and replacing them with multi-unit housing. The existing population of workers has been tapped out and relocation is a requirement. It is just getting too difficult to relocate employees to the area. Housing and other costs are surely a big factor in these difficulties.

We see the same thing happening in the San Francisco area. Salesforce acquired Exact Target in Indianapolis several years ago and has used the location as their own sort of HQ2, having recently moved into the tallest building in Indianapolis and putting their name on it, now the Salesforce Tower. Apple, in the wake of the recent tax law changes, has announced plans to invest in another sort of HQ2 after unveiling their spaceship like hub last year.

The cluster effect that has impacted these tech towns has likely reached a bit of a maximum. It just has too much friction to continue growing in these areas. You need talent, the talent has to want to live there, and they have to benefit financially, which is difficult when the cost of living is too high.

How Does This Relate to the Specific Location?

Indianapolis has had some difficulties in trying to redevelop the old GM steel stamping factory just west of downtown for a number of years, having considered it for a criminal justice center. It is basically a sticking point in the mind of city officials and they just want to put something there.

I would argue that this is a poor choice unless the city is ready to undertake a major redevelopment of the entire western perimeter of downtown. There are already a number of factors. Downtown has undergone a revitalization over the past several years which has spurred development of real estate for business and residential construction. This has already begun to show signs of strain in the central area. In addition, IUPUI, a joint campus of Indiana University and Purdue University (operated by IU) is also located just to the west of downtown; it is the third largest campus in the state, 3rd to the main campuses for IU and Purdue. It is a globally renowned campus for medicine with partnerships with Eskanazi Hospital (formerly Wishard, the county hospital for Indianapolis-Marion County) and local IU hospitals.

Downtown Indianapolis is enclosed on three sides by highways, almost creating an inner loop:

However, there is no completion to this loop. The site encircled with red with an X is the proposed site. It could be rather ideal for the location of HQ2, itself, if the inner loop is completed. However, this does not offer much for the supporting businesses and establishments that would necessarily need to fill in the area. It would require redevelopment of a lot of adjacent residential land, although this would not be horribly expensive as the housing is much lower cost around the site. But where does the highway go? The traffic in the area is already bad just with respect to IUPUI. It would be a requirement.

What Would Be a Better Location?

There is another location that I would call ideal that has not received a ton of attention, the old Indianapolis International Airport terminal. In 2008, a new terminal was opened off of I-70, west of I-465, adjacent to the existing runways that were used by the old terminal. The old terminal is located just off of I-465 and has its own exit at the Sam Jones Expressway (formerly the Airport Expressway), a leg off of I-70 from downtown that essentially drops off at the front door of the old terminal. The infrastructure is already in place. The broader area has essentially been abandoned, no only the old terminal. This offers exceptional opportunity for the additional growth that would follow an HQ2 site.

The area is already home to the 2nd largest FedEx hub, is adjacent to the airport, and has the infrastructure in place. I-70 and the Sam Jones Expressway offer a quick trip to downtown, and I-465 is attached to to many other highways, including I-70, I-65, I-74, and I-69. With the recent announcements of more non-stop flights to/from Seattle, travelers from the HQ1 location would have a very convenient time with arriving at HQ2.

The extended area is also home to many existing Amazon warehouses.

There are also many good areas nearby for housing. For instance, west of the area includes growing communities like Plainfield, Avon, Brownsburg, and Danville. To the south exists Mooresville in the west and the large southern suburb of Greenwood to the east which will soon have the SR37 corridor redeveloped into the final stretch of I-69 connecting Evansville directly to Indianapolis.

I would propose that using the old terminal would be preferable, but the old GM steel stamping plant location could be used with enough investment in infrastructure.

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