Competing for residents rather than businesses

Amazon is pulling back from its second headquarters expansion in Crystal City (yes I still call it that), and this will herald a new age of lesser competition for businesses and their main offices:

…the growing difficulty of courting corporations. If Amazon stiffs Northern Virginia, future politicians elsewhere may be less eager to promise tax breaks and infrastructure investments, not to mention spend their reputational capital. Politically speaking, it will be harder for urban and suburban leaders to rise to the top by attracting a new major corporate tenants. “Pro-business” local governments may be less common in the years to come.

Another relevant trend is the work-from-home and hybrid models. Why should a major corporation invest in more office space if a lot of that space will be used only part of the time?

It is worth thinking through how remote and hybrid work will affect regional evolution. There have already been “booms” in some relatively small resort areas, such as parts of Maine, Long Island and West Virginia. But there will be a more general impact as well. To the extent corporations give up on clustering their talent in big office buildings, people will spread out where they live. Not everyone will set down stake in the Hamptons or along the Irish coast. Plenty of people will want to live near family or where they were born, or perhaps a few hours away from the main office as part of a hybrid arrangement.

In this new world, it will be much harder for a well-governed region to rise to the top. Even if its leaders succeed in convincing a company to relocate, for instance, there may be fewer workers who do so. Or perhaps there will be the same number of workers but they will come into the office less frequently and live scattered in many directions, sometimes in other states or metropolitan areas.

There is nothing necessarily wrong with this outcome. But the potential parvenu region just won’t feel that exciting, and the level of activity won’t feed upon itself in terms of attracting more retail and cultural amenities.

And:

Overall, there may be less competition to attract corporations. At the same time, political competition for residents may become more intense, because more people will be able to choose where to live regardless of where they work. This competition could lead to improvements in schools and parks.

Here is the rest of my Bloomberg column.