Berlin: Amazon HQ3? Berlin’s Greatest Fear – Gentrification and Losing Its Edge – Look to Seattle!?!

Seattle and Berlin have a lot in common esp. as pioneering cities on the edge! Seattle has been a money magnet, initially as pioneer gold diggers supplied themselves on their way to Alaska, then becoming the home for Boeing leading to the great transformation with not only the success of Microsoft, but now Amazon.

Amazon is about to chose the home for their HQ2. From Business Insider on Seattle: “We need to create a city that’s not just about Tech, Convenience, Consumption and DISRUPTION!”

This link is all about the changes and disruption caused by Amazon’s success and being headquartered in Seattle. Seattle is becoming gentrified and the counter-culture there fears its demise.

Berlin is also going through massive change and disruption since the Fall of the Wall. The Wall is now down longer than it was up and the city doesn’t yet feel finished and simply keeps evolving. This is proving to be a challenge for the current Berlin government – Red (SPD) Red (Die Linke) Green as there is a tendency to want to maintain the status quo — Berlin as an island in what was the “Sea of Communism” and now one exuding Quality of Life at affordable prices, but how much longer with the emerging gentrification. Can the status quo continue in these progressive and disruptive times, and esp. as the representative German city to the rest of the world?

Is Seattle a progressive city model?  There is tremendous wealth and job creation in Seattle mixed with the drive to maintain the old pioneering and new counter-culture spirit. Both Seattle and Berlin are confronted with rising gentrification and conflicted on whether it is welcome or not. In Berlin, zoning is a high priority and the city is proud of their “Kietz” or neighborhoods, but also of the rule that all new building proposals have to have a mix of business offices, residential housing and commercial stores–this keeps it a “living” city. There are increasing traffic problems as owning cars was more affordable after unification. In 1991, one year after unification, there was an additional 1 million cars in Berlin, a city of 3.5million people!

Seattle with its liberal routes may be the perfect model for Berlin on what to do and not to do while evolving. If progressiveness is a criteria for Amazon when they start to search for a European HQ, then Berlin makes sense. It is in the middle of Europe, a door opener to the East, well zoned and the surrounding eastern states have a modern infrastructure. Germany’s Federal Government is adding a ministry for digitalization which will attract more and more experts. Amazon in Berlin would bridge one progressive city with another!

I asked friends and family in Seattle to comment on the linked article above from Business Insider discussing the desire for the short list of 20 cities to become the home of Amazons HQ2. Here are some excerpts from Seattle:

(Resident over 40 years): “Amazon (and Bezos) are truly a phenomenon. Amazon is a revolution in every sense of the word. While I put it sometimes in the same nexus of evil as I did (at one time) with Microsoft, there has to be admiration for what they are accomplishing. It is their intentionality, ruthlessness, and drive that I find somewhat frightening.

 

” We’ve all seen the evolution since then. Here we have now an economic and technological force that has probably out-performed even its wildest ambitions. What it is now shaping and devastating in its wake is something that probably has organic consequences that can only be anticipated, not fully predicted.

 

“The results are full of awe and contradictions — as cities masturbate themselves to ecstatic expectations of new-found fortunes, damn the devastation that comes with it.

 

“Add robotics and increasing technology and you have a future whose human consequences become irrelevant. It’s pretty raw, unimpeded power that I don’t think even Amazon or Bezos have any real control over.”

(A young Australian resident over 10 years):

“There is a blunt obviousness with the permeations that Seattle has experienced with this Amazon boom. The traffic is truly terrible, there has been a huge influx of transplants that has caused the city to alter its social fabric and re-invent itself, and there are many winners and losers when the local economy shoots off like a V2 rocket.

“But, underneath all that starkness there is something happening that is US Corporation 101. For a company to become so large and so integral to a local economy they now have the clout to use that leverage and hold governments over the barrel for corporate gain. This is uniquely American and we’re seeing Amazon finally join in with the announcement of their ‘HQ2’. Cities pitted against cities, states pitted against states in a race-to-the-bottom to see who can give away as much local wealth as possible to attract some ‘jobs’.

“We’ve seen that most of the people working at Amazon aren’t exactly from Seattle, they’re from somewhere else. So what is in it for Seattle to participate in this giveaway? Yes, your city is creating more jobs, but you’re just transplanting people from other cities to fill them. So in essence you’re just growing the population at a fast clip, where even well-funded public services wouldn’t be able to catch-up, yet you’ve just had to gut them in order to pay for all of the corporate welfare you’ve given away to Amazon for them to have blessed you with their presence.

“Again, what is in it for Seattle? Our state doesn’t impose an income tax, so none there. Amazon have proved to be fine purveyors of ‘tax optimisation’, so B&O tax is probably negligible. People spend money, so the more of them the more sales tax receipts will increase. But, we’ve now seen a huge strain on public services from this unprecedented population surge. Will an increase in sales tax receipts offset this? Not in a million years; public services don’t run at a profit, they’re already subsidised by the various forms of government, and debt. So if you start taking away some of the input dollars, what happens? Yep, shortfalls — picked up by the local taxpayers.

“Don’t get me wrong, I’m not anti-Amazon and I’m not anti-corporations. This is the game they were given and they have exploited it to their full benefit, as their shareholders would demand. What’s broken is the way governments are able to pick and choose who is a tax beneficiary and who isn’t, regardless of the consequences.”

(Hungarian, former Berlin resident, now Seattle over 10 years):

“I don’t think it is just the Amazon effect what we see. If you go to Redmond, Sammamish, Issaquah, or up to Lynnwood, Everett, Kirkland, Bothel – it’s all the same. The little shops are being torn down and a year or two later you find these mixed commercial-residential huge buildings instead (1st floor you have tiny coffee shops and floor 2-5/6 you have 180+ apartments). Underground there are a few parking paces, on average 1 per apartment unit, none for hosting the customers of the shops. It it the city’s hunger for higher taxes that pushes this development without thinking what they’ve done/or doing to the traffic situation. The mayors of the above mentioned cities all signed Agenda 21 and we feel the very effect already: https://en.wikipedia.org/wiki/Agenda_21#United_States (check out the opposition section). Now all over you have to pay parking tickets. If you lived 10 min. from Downtown, now it is 45 min. because of traffic.

“They all go with the “we build it and then they come” principle. Prices go up and up, it’s ridiculous…: Of course the super low interest rates fuel these developments as well as the lots and lots of foreigners who actually own the apartment buildings.

“Then, of course, this is all part of the chain-effect. Once some tech guys come for those few thousand job places, they draw other industries with them: they need a haircut, they need food, they want to buy furniture etc. It’s like a self-running society – just look at Vancouver across the border. No real industry, yet skyrocketing prices because all these people want to live there. I’ve read a while ago, on average, 261 new people come to the Seattle metro area per day.

“Berlin is similar in some ways: new influx of people – they just had an architectural big project written out: how to design 100s of refugee centers that are integrated into the city of Berlin. The wealthy harbor their money in a safe haven. Since Berlin was the cheapest metropole, that’s where they pour the money…”

PS:  From Seeking Alpha (21March2018):

Amazon just passed Alphabet (GOOG, GOOGL) to become the world’s second most valuable company. While U.S. tech giants have rallied in the past year, Amazon’s (NASDAQ:AMZN) performance has dwarfed them all, with the stock surging 35% YTD and 85% over the past 12 months. Its market value now totals $768B, but the company has some room to catch up to Apple’s (NASDAQ:AAPL) $892B.

3 Replies to “Berlin: Amazon HQ3? Berlin’s Greatest Fear – Gentrification and Losing Its Edge – Look to Seattle!?!”

  1. […] by embracing new technologies, but also creating wealth or gentrification. As mentioned in the last post on Seattle being a model for Berlin, gentrification is controversial and some would say ruins the creative counter cultures that cities […]

  2. […] In this IAV post, I speculate on the idea of Berlin becoming HQ3 for Amazon or HQ1 in Europe. Mostly, it is about what Berlin and Seattle have in common. Now Amazon is doing rejected cities who did not make the HQ2 short list a major favor and explaining why they are missing out on the final competition. Here is the link to the WSJ story. […]

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