Houston Bombs in Rankings for Cities Most Ripe for Amazon Headquarters

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Depending on how much Jeff Bezos and the folks at Amazon care about the opinion of Moody's Analytics, Houston is apparently not even close to being in the running for the new Amazon headquarters.

In rankings Moody's Analytics recently released, the country's fourth-largest city ranks an embarrassing, somewhat puzzling 49 out of 65 cities where Amazon could feasibly set up shop. Moody's used criteria including business environment, human capital, cost of living and doing business, transportation and quality of life — those last two being particularly bad for H-town — to come up with this amusing rankings list.

Amusing, we say, because for reference, Moody's criteria has landed Buffalo, New York; Pittsburgh; Grand Rapids, Michigan; Oklahoma City; Cleveland; and Milwaukee as all being better homes for Amazon than — as Mayor Sylvester Turner would almost certainly say here — the most diverse city in America. It's even more amusing given, on a five-point scale, Houston didn't even score a one for its restaurant scene (more on that).

Austin came in first place overall, while Dallas was in better but certainly not great shape at 34. Even one of Moody's own, Ed Friedman, a Texas analyst for Moody's who did not author the study, said he was surprised to see Houston so far down on the list. "I think Houston has more to offer than maybe the study reflects," Friedman said.

Let's break this down.

The only two categories in which Houston scored in the upper half of rankings was business environment and human capital, ranked 25 and 20 respectively. Nearly 350,000 people in the Houston-The Woodlands-Sugar Land metro area have bachelor's degrees in engineering or math-related fields relevant to the tech giant. But what really didn't help Houston is projected job growth in the tech sector specifically: At the five-year level, according to Moody's and the Bureau of Labor Statistics, tech jobs are expected to shrink 1 percent and at ten years they're expected to grow just 2 percent.

Bill Gilmer, director of the Institute for Regional Forecasting at the University of Houston's C. T. Bauer College of Business, said that even though Houston may be the world's largest hub for energy-industry talent, it simply doesn't have the right human capital to jibe with Amazon.

"Houston is basically a very large engineering city. It is very much geared to oil. It's geared toward producing petrochemicals and refining. It is an extremely important global complex of engineering talent for a global industry," Gilmer said. "We've tried and tried and tried to attract technology to Houston, but with fairly limited success, whether it's biotechnology or big retailers. We don't have this core of employment. You can put these folks [like Amazon] in incubators, but when they reach a certain point in that growth phase, they need capital. You don't have a knowledge loop for tech here. And you can't just create these things overnight."

Further bringing Houston down, Amazon had said in its request for proposals — which created the basis of Moody's analysis — that it was looking for a city with great access to public transportation, a major international airport and walking and biking infrastructure. All of which — besides the airport — are not by any means the strengths of Car City, where just 2 percent of people commute on public transit, 1 percent of people walk and 0.3 percent bike.

Earlier this year the U.S. Department of Defense got a tour of the Amazon Headquarters, which according to Moody's isn't coming to Houston.
Earlier this year the U.S. Department of Defense got a tour of the Amazon Headquarters, which according to Moody's isn't coming to Houston.

Still, even though Austin is often known as one of the most bike-friendly cities in the country, anybody who's been stuck on I-35 in morning rush hour knows that getting around Austin, where an equally unimpressive 3 percent take public transportation to work, isn't much easier. As both Friedman and Gilmer point out, Austin has far outgrown its infrastructure as thousands have flocked to the self-proclaimed Live Music Capital of the World and Silicon satellite every year. Is that really the kind of headache Amazon wants to have?

After all, as Friedman pointed out, Houston may not be home to tech giants like Samsung or Dell like Austin is —  which, with a reputation for innovation, undoubtedly has helped boost Austin's rankings — but both the cost of living and cost of running a business are cheaper in Houston.

"I can imagine why everyone would say Houston, that's energy — it's upstream and downstream," Friedman said. "But with the lower costs in Houston than in Austin, and just the substantial size of Houston — 40,000 to 50,000 new employees: Houston can handle that. It can absorb. People are used to, in both places, a lot of in-migration for jobs. But I think you've got enough sharp people. You've got a low enough cost. You've go a business-friendly environment. I just wonder whether it doesn't in truth rank somewhat higher."

Lastly: the quality of life. If you're feeling skeptical about Houston's low spot on the list, this won't help you feel better: Ranking 58th out of 65 in quality of life, Houston's comparatively high crime rate was basically just as damning as what Moody's thinks of Houston's restaurant scene. On a five-point scale, Houston scored 0.8 for crime (with five being the lowest crime rate) and 0.5 for restaurants, based on the amount of restaurants per 1,000 people.

Jonathan Horowitz, president of the Greater Houston Restaurant Association and CEO of Legacy Restaurant Group, said that the ranking's methodology was misleading. "Everybody locally knows the vast diversity and options available at every price range, the different countries and cultures represented in restaurants around town," Horowitz said.

He challenged Jeff Bezos to come down for a three-day tour of Houston's restaurant scene, which Horowitz was confident would be plenty to convince Amazon to head down south.

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