Amazon’s search for a second headquarters, sparks bidding war
The world’s largest online retailer doesn’t announce a new headquarters every day, and when it does it’s likely to create a stir. Amazon recently outlined its plan to launch a second headquarters to complement its Seattle base, and cities across the U.S and Canada quickly expressed their interest in playing host. While Seattle has been transformed by the tech company, mayors and city developers around the country are now hoping to secure the investment, and job creation that an Amazon office would ensure.
The Amazon Wish List
Amazon has not been coy about what it expects a host city to provide, and has provided a list of the essential facilities and characteristics that a city will need in order to secure the company’s interest. In order for the company to consider constructing HQ2 (as it has been dubbed) in a city, the location must meet some clear requirements.
Firstly, it must have a population of at least 1 million people within its metropolitan area, and it must have on-site access to mass transit. In addition, Amazon insists that any location it chooses must be within 45 minutes of an international airport, and be no more than 2 miles from a major highway.
Aside from meeting these exact criteria, any city bidding for the right to home the tech giant, must also provide proof of fiber-optic internet connections, cell phone coverage maps, and traffic congestion figures.
In an even bolder move, the company has even suggested that new laws might be required to allow it to move in to an area, stating that proposals may need “special incentive legislation”.
Tax breaks for big companies, and state subsidies are not unusual, but for a company to openly suggest that such things might be required shows how confident they are that cities will do everything they can to win Amazon over. Given the company’s track record, this is not too surprising. Amazon is the largest corporate employer in Seattle, and occupies 19% of the city’s prime office space. With $5 billion worth of construction at stake, and a proposed 50,000 new jobs, it’s understandable that cities across North America see this as a golden opportunity.
Greg LeRoy of Good Jobs First, an independent research group that tracks economic development, said “This is the trophy deal of the decade as far as I can tell…what governor or mayor doesn’t want to stand on a stage with Jeff Bezos to announce a deal like this?”
Weighing up the risks
Despite the frenzy of interest that Amazon’s proposal has created, there is room for caution for any of the cities involved. With Amazon being fairly overt about its desire for generous offers, including its reference to possible law changes, there is a risk that a host might overreach in terms of what it agrees.
Timothy J. Bartik, a senior economist at the W. E. Upjohn Institute for Employment Research, has said that if a city offers too much financial incentives it can become a “winner’s curse” where the benefits reaped never actually surpass the costs.
There is also the risk that unless the city already has a wealth of tech workers, then many of the new jobs will go to people from outside, whom simply move in to work at the new center. This could then see local people with few extra job prospects, but with house prices rocketing. However, unlike other tech companies, Amazon’s history shows that it does not create all in one office blocks that provide restaurants, gyms and cafes for its workers. In fact, it ensures that it does not provide everything under one roof, thus employees have to go outside and use local facilities.
Even with an air of caution, there is no doubt that cities will still be desperate to become home to Amazon’s HQ2, and there are several front runners at this time. Various publications have come up with their leading contenders, and the places tipped as most likely are Austin, Philadelphia, Denver and Toronto. The mayor of Kansas City even opted for a novel publicity stunt by ordering 1000 items off Amazon and then left a review of each that extolled the virtues of his city.
With more than 100 other locations also expressing an interest, it could be a close race to win the tenure for Amazon’s second home.