Amazon’s Feb. 13 announcement that it plans to open a 4 million-square-foot fulfillment center in Colorado Springs has stirred excitement in the economic development community.
The project has broken ground and the facility is scheduled to open in the summer of 2021. It’s expected to bring more than 1,000 new full-time jobs starting at $15 an hour, with full benefits.
Colorado Springs Economic Development Manager Bob Cope said the new fulfillment center will produce major economic benefits.
“Economic development in Colorado Springs has never been better than it is right now,” Cope said. “This is just another example of our economic development success. We are going to be a growing community because of our quality of life and people wanting to move here, and these types of projects are going to provide the employment base that we will need going forward in the future and diversify our job base for our citizens. … And we’ll be able to better withstand any downturn. I think it’s very good news.”
JOBS, JOBS AND MORE JOBS
Construction jobs and construction spending will generate sales and use taxes and jobs while the new facility is being built, but the biggest impact will be from the wages those thousand employees will inject into the economy.
“All the consumer spending that will be a result, that’s huge,” Cope said. “But we’re also going to have a significant amount of spin-off jobs as the result of this project.”
New businesses will be formed and existing businesses will grow to support the facility.
“There’s two types of spin-off employment,” Cope said. “The first is indirect business-to-business. They will need machinery technicians and building maintenance and bankers and insurance, just as any business needs to operate. Then you have the induced jobs — restaurants, retail stores, clothing stores, entertainment venues.”
Employees will want to go out for lunch; they’re going to want retail close by.
“So I think you’re going to see new retail development to support that,” Cope said.
Businesses in other parts of town also might be involved in support capacities, he said.
“It’s hard to predict what type of technical support they might need and what might not be in-house,” Cope said. “But from what I understand about this facility, it’s going to be very high-tech, and there is a definite possibility for different support businesses throughout the community.”
Amazon’s announcement stated that its minimum wage is $15 an hour with full benefits, but Cope said he assumes that there will be wages across the spectrum. Some jobs will be high-tech and well paid, and likely will be filled by existing Amazon employees.
But he expects that many of the jobs on the lower end of the pay scale will be filled by local residents.
“Those will be people in our community who are currently underemployed, maybe working in retail or service industries,” he said. “This will be a step up the career ladder for those people.”
Cope said he expects many applicants for Amazon jobs will be southeast Colorado Springs residents. Other new hires will want to move closer to their work.
“That could result in increased apartments being constructed, increased home building in that area,” he said.
WHY COLORADO SPRINGS?
Amazon’s first foray into Colorado Springs was a temporary delivery station housed in a large tent on airport property. That facility opened in late 2018.
In November 2019, Amazon moved its operations to a 66,000-square-foot building in Peak Innovation Park.
Cope said that Amazon has never asked the city for incentives, which have been offered in the past to businesses like Scheels All Sports. In Amazon’s case, those incentives could include sales and use tax rebates on purchases of equipment.
“They have to make huge investments in construction materials and equipment,” Cope said. “Under that scenario, they would get a rebate of some of the new taxes generated by that [facility].”
Amazon is aware of those incentives, which would have to be approved by City Council, but has not taken any steps to request them, Cope said.
Cope thinks Amazon chose to come to Colorado Springs to tap into its talented workforce and to tighten the network of more than 45,000 authors, small- and medium-sized businesses and developers in Colorado that sell their products and services through the online giant.
According to a press release from Amazon, the company has invested $1.5 billion in Colorado, including fulfillment and cloud infrastructure, research facilities and employee compensation.
“[As] a result of Amazon’s investments in Colorado, more than $1 billion has been added into the state GDP,” the release stated.
“I really don’t see any challenges with this at all,” Cope said. “I think that this creates more economic opportunity for all of our citizens.”
GROWTH AT THE AIRPORT
Greg Phillips, director of aviation at Colorado Springs Airport, expects the new Amazon center to spur growth in both the airport’s business and in Peak Innovation Park.
“Natural growth in the community leads to increased use of the flights out of Colorado Springs,” Phillips said. “We’ve certainly seen significant growth in the last few years because of that, at least in part.”
Some of the people Amazon will employ will be new to the community, he noted, and that will stimulate more growth.
“I would expect to see some business and some leisure travel will come from it, but I don’t know that it will be big,” he said.
Phillips said there hasn’t been any serious conversation with Amazon about increased commercial flights into the airport.
“There’s no question we’re watching what Amazon Air [Amazon’s cargo airline] is doing and how they’re growing,” he said. “It would seem to make some sense. … I think that’s one of the advantages of having an airport right here next to the facility is that it could support them if it meets their business goals. But I certainly can’t point to anything solid at this point.”
Phillips said he does expect additional traffic to be generated by those 1,000 employees.
“One of the things we hope for, and I’m going to push pretty hard for, is bus service to the airport,” he said.
Several years ago, Mountain Metropolitan Transit ran bus service to the airport from downtown Colorado Springs.
“They averaged 0.5 riders per trip,” Phillips said. “That made it tough to continue. But that’s something we’d really like to have.”
BUSINESS PARK EXPANSION
The greater impact, Phillips said, will be to Peak Innovation Park.
“One of the challenges at the Colorado Springs Airport where it sits right now is there just aren’t a lot of amenities real close,” he said. “You have to drive up a ways north on Powers to get to restaurants, gas stations, grocery stores and that sort of thing, or you have to go south to Fountain. To have something closer, it would certainly be an advantage.”
Garrett Baum, managing partner of Urban Frontier, the business park’s master developer, said Amazon’s arrival is a big step in fulfilling his plan to diversify the industries around the airport.
“With south Springs, you see a lot of defense contractors and a lot of military, and we wanted to make sure we were attracting industrial and office and hospitality and retail and research and development — a number of different types of industries but also financial services, health care, technology, telecom, as well as those types of companies that typically have located down there.”
Thanks to Amazon, he said, “the plan is really coming together. We are moving forward and working with Olive Real Estate and Hotel Equities [Group] to construct two hotels at the airport.”
The first of these, a 190-room Marriott Courtyard-branded hotel, is expected to break ground this summer.
In addition, “we are in discussion and dialogue on a couple of office buildings right now,” Baum said.
Those projects could bring in hundreds or potentially thousands of new employees, he said.
The Amazon and hotel projects have facilitated about $23 million worth of infrastructure improvements that are under construction at the business park, including new roads and extensions of water, sewer and stormwater utilities, he said.
“We have parks and trails and green-ways that’ll be going in,” Baum said. “We expect to see the construction of those occurring this year as well.”
Those improvements “allow us to bring in other tenants without having to bear the burden of all that,” Phillips said. “That helps in a big way.”
Phillips said he thinks the business park is on the verge of a “catalytic moment where things come together and the amenities start to arrive. We have had some conversations about a possible gas station convenience store, a restaurant.
“I’m just going to put a marker in the sand that by summer of 2022, I think the landscape in the business park is going to look significantly different.”