Downtown Seattle pins its hopes on Amazon’s May Day office mandate

May Day is typically a chance for union members to flex their labor muscles. This year, though, business boosters are praying another sort of worker will begin to pack Seattle’s streets.

Ever since Amazon announced a May 1 deadline for workers to be back in the office three days a week, hopes have been high among Seattle business leaders and politicians that the move could kick-start downtown’s stalled pandemic recovery. 

The deadline has moved a bit since then — Amazon’s office buildings won’t be fully ready until Tuesday or later. But the fact remains that the return of downtown’s biggest employer is arguably the biggest economic event since COVID-19 emptied office towers in March 2020.

The presence of roughly 55,000 well-paid workers will be a huge boost to the hundreds of restaurants, retailers and other businesses that have survived on an office population barely 40% of its pre-pandemic size. Meanwhile, city leaders are looking for ways to leverage that surge into improved public safety, foot traffic and revenues.

More broadly, Amazon’s move could motivate other employers, especially tech firms, “that are struggling to bring workers back,” says Trevor Youngren, an office leasing expert with commercial real estate firm Cushman & Wakefield.

But Youngren and others want to keep expectations in line with reality.

It’s far from clear how much impact Amazon itself will have — most of its offices are clustered in South Lake Union, blocks from Seattle’s hard-hit commercial district. A stretch of Third Avenue near Pine Street saw a rise in crime during the pandemic.

Nor is it clear how any Amazon Effect downtown will be influenced by broader trends in a local labor market that continues to emphasize remote work. 

“If workers really preferred to go to the office, companies wouldn’t have to force them to,” says Jacob Vigdor, an economist with the University of Washington Evans School of Public Policy who follows state and local job markets. “That’s a fundamental starting point here.”

Indeed, it’s hardly certain whether Amazon can meet its own ambitious return-to-office goals. 

“I’m hearing a huge amount of discontent about Amazon’s policy change, which I believe will cause a sizable amount of resignations,” says Albert Squiers, who runs technology recruitment for Seattle-based Fuel Talent. “I don’t see this being the fix-all that political leaders are hoping for.”

“A lot at stake”

It’s hardly surprising that Seattle’s business and political leaders have hung such hopes on Amazon. Pre-pandemic, downtown Seattle was the city’s economic engine, generating a massive share of its jobs, sales revenue and taxes. 

Predictions that a recovery was just around the corner have repeatedly fallen short. While parts of the downtown’s nightlife and tourist industries have come back, the office economy has been stuck in second gear.

Since mid-February, the number of workers in downtown offices has averaged just 43% of its pre-pandemic levels, according to the Downtown Seattle Association. 

The persistence of remote work has led many employers to shrink their offices, which has helped boost vacancy rates. 

In the first quarter of the year, 26.3% of the office space in Seattle’s central business district was either vacant or had been subleased by tenants who no longer need as much, according to commercial real estate agency Colliers.

The Seattle Metropolitan Chamber of Commerce says the city must focus on attracting new businesses to rebuild a lively downtown.

“We need to encourage new small businesses to set up shop downtown and make it easier, not harder, to stay in business,” spokesperson Jillian Henze said by email.

Those businesses need to be heavily trafficked brick-and-mortar.

“So there’s a lot at stake — we built a physical economy, not a virtual one,” Jon Scholes, Downtown Seattle Association president and CEO, told city leaders in March.

And the city recognizes those stakes.

Mayor Bruce Harrell recently doubled down on his efforts to “reactivate” Seattle’s downtown, committing to filling storefronts and incentivizing foot traffic through a litany of public safety efforts and attempts to be “cool,” like asking the state to allow art walk attendees to carry alcoholic drinks.

Harrell has pushed to bring city workers in since taking office in early 2022, calling the first wave back downtown that March. 

An effort last summer to bring remaining remote workers to the office was stalled by labor unions that identified remote work as a critical bargaining issue. But now, the mayor’s office says about 98% of the city’s employees are returning to the office at least twice a week.

Harrell’s reactivation plan hinges on luring workers back.

“We’re really focusing on trying to explain the benefits of working in-person both for collaboration and mentorship, but also how it stimulates the local economy,” Markham McIntyre, director of Seattle’s Office of Economic Development, said after an April news conference. 

McIntyre explained that the city is helping businesses market the value of in-person work to personnel while striking the right balance between flexibility and days in the office. 

But Scholes and other boosters have urged the city to do more, asking for explicit incentives for downtown businesses.

In a March letter, the downtown association, chamber of commerce and the local chapter of the NAIOP, a commercial real estate association, asked the city to bring its own employees back to the office more frequently in May, expand efforts to fill vacant storefronts and provide financial incentives for businesses downtown.

The organizations asked the city for three-year tax holidays that would allow new businesses to skirt some city taxes, and allow all downtown businesses to skip paying the JumpStart payroll tax, which only impacts the city’s largest employers.

JumpStart, which requires employers with at least $7 million in annual payroll to pay a 0.7% to 2.4% tax on salaries over $150,000, has brought hundreds of millions into the city’s recently strained budgets. The letter writers, several of which opposed the tax at its inception, contend better budgeting and increased business revenues are a more sustainable path.

While Harrell has answered several of those requests, the city has not suggested any sort of tax incentive.

A spokesperson for Harrell said Friday that the city is not considering any incentives for people who bring workers back to the office specifically, but is “looking at other options to encourage new businesses opening downtown.”

A tipping point?

By some accounts, the push by City Hall comes as broader trends may finally favor an office return. 

COVID cases are down and pandemic-related restrictions have all but disappeared. 

Recession fears and a slowdown in the tech market — underscored by tens of thousands of layoffs — have given some employers more leverage on remote work.

Amazon announced 9,000 more layoffs, in addition to the 18,000 layoffs announced late last year, in the week leading up to its May 1 deadline.

As the job market becomes less “candidate dominated,” employers have been emboldened to push workers to come in a few days a week, says Squiers.

In that economic context, Amazon’s back-to-office move could finally tip downtown Seattle into an actual recovery. 

“Amazon’s identification and ‘stake in the ground’ of a May 1 return for three days a week gives us all something to rally towards,” Scholes told a gathering of downtown business leaders March 14.

Amazon, by the numbers

So many downtown business owners are watching what Amazon does because, put simply, it’s huge. 

With somewhere between 65,000 and 68,000 workers in the Puget Sound region and more than 50 buildings covering 15 million square feet, Amazon is the area’s largest employer.

“We know that we have an important role to play here,” said John Schoettler, vice president of global real estate and facilities at Amazon. “We know that our workforce has a significant impact on the vitality of our downtown areas.”

Since 2010, when Amazon first moved its corporate offices to South Lake Union, the company has invested more than $169 billion in the Puget Sound region, according to data from third-party consultancy Keystone Strategy shared with The Seattle Times by Amazon. 

That $169 billion includes infrastructure, construction, corporate office leases, physical retail locations and employee compensation.

Amazon had about 55,000 employees in its South Lake Union headquarters and an additional 10,000 in its Bellevue and Eastside offices. Those numbers have shifted since Amazon began job cuts in November. The total impact of layoffs on Amazon’s Puget Sound headquarters is still not clear. 

It’s also unclear just how much Amazonians make in Seattle. The company generally reports wage information that includes both tech and corporate workers as well those employees who work in Amazon’s warehouses.

Outside of its corporate workforce, Amazon says its investments in the region indirectly supported 298,000 jobs in 2021 in construction, logistics and other professional services. In 2022, Amazon employees spent over 325,000 nights at hotels in Seattle.

To help the restaurants and retailers that are housed within or around Amazon’s HQ buildings, the company said it provided more than $20 million in cash grants and rent relief between 2020 and 2022. Beyond that, Amazon said its charitable giving in the region totaled $78 million in 2022.

“We believe we’ve helped propel and diversify the region’s economy,” Schoettler said. “We also know that our growth here needs to be inclusive of everyone in the region, and that our success comes with added responsibility.”

Amazon was the largest property-tax payer in Seattle in 2021 — with a valuation more than double the next highest taxpayer on the city’s list.

Amazon’s offices are open to employees already but it will take some time until each building has been “verified” to support workers returning at least three days a week, according to an internal memo viewed by The Seattle Times. 

In the Puget Sound, most buildings will be ready sometime in May, while one has a readiness date of June 5. But around the country — and the world — some offices won’t be ready until September or October. 

Wait and see

No one disputes the argument that so many Amazon workers will help move the needle downtown. 

But three years of overly optimistic expectations have left many observers skeptical. 

They note that many of the barriers to a widespread return are still in place.

Many employers have given up office space. Many remote workers have moved beyond commuting distance. The job market isn’t entirely ready to embrace the office again, especially in tech, where there are “still a huge amount of remote opportunities available,” says Squiers.  

The bigger concern is momentum. 

Damian Sevilla, a Seattle-area retail sales and leasing specialist for First Western Properties, thinks the short-term impact of Amazon’s return will be massive, but wonders how the company can enforce the policy. 

“Realistically, it’s got to be a sustainable momentum,” Sevilla says.

In the end, the biggest factor in any broad office return or downtown recovery may be the attitudes of the office workers themselves.

While many enjoy the absence of a commute and the relaxed home environment, many also miss the energy of in-person collaboration — or, at the very least, of being in a bustling downtown, says Margaret O’Mara, a UW historian who writes about tech hubs. 

Having thousands of Amazonians downtown will simply put “life on the street,” O’Mara says. In turn, she says, that will motivate other workers to “get in your car, get on the train and come into the office.”