The bids are in. Metropolitan areas throughout North America competing for Amazon’s second headquarters were required to submit their proposals by October 19, 2017. What city wouldn’t want 50,000 new high-paying jobs, more than five billion dollars of investment, and secondary economic benefits for their region? Very few. The harder question is what kind of city is likely to win the bid? The answer may lay in the old real estate adage: “Location! Location! Location!” Just look to Amazon’s headquarters in Seattle for the advantage of cities with urban and environmental appeal.
A multi-billion dollar company creatively disrupting the retail industry, Amazon is one of the largest private employers in the United States. Its headquarters in Seattle is a boon to the local economy. According to its own estimates, Amazon employs more than 40,000 staff and helped create 53,000 indirect jobs in the area. Amazon also estimates that for every dollar from the company another $1.40 is generated locally, contributing approximately $38 billion to the area’s economy (2010 to 2016).
So what does a city need to compete for the second HQ? Amazon’s Request for Proposals (RFP) outlines the criteria. The RFP lists eight “key preferences and decision drivers”: 1) a suitable site/building; 2) a stable business-friendly environment and tax structure; 3) incentive programs; 4) a sufficient pool of highly-educated workers; 5) ease of business logistics; 6) time to operations; 7) cultural community fit; and 8) community/quality of life.
Although the preferences are unranked, it is reasonable to assume that cities without the education, transport, and business environment attributes to meet numbers two, four, and five are unlikely to be in contention. Those who do have the economic infrastructure must design competitive packages to meet numbers one, three, six, and seven to bring themselves to the next tier. Although criterion eight is more intangible than the rest, it is arguably what will distinguish the ultimate winner from among the best contenders.
How does a city excel in “community/quality of life”? The RFP states, “we want to invest in a community where our employees will enjoy living, recreational opportunities, educational opportunities, and an overall high quality of life.” Quality of life is subjective but Seattle consistently ranks as one of the best places to live in the United States. Not only does the city offer diverse cultural and culinary attractions but is blessed with a stunning Pacific coastline, mountains, and forests that allow for many outdoor recreational activities. So it is reasonable to assume that a similarly appealing urban and natural locale would be expected for HQ2.
Also instructive is Amazon’s decision to stay in downtown Seattle instead of moving to the suburbs when it outgrew its original space. If cost efficiency wasn’t a primary driver then what was? Perhaps the company wanted a vibrant urban setting to maintain its “Day 1” mentality. Maybe the company saw that happy employees with work-life balance are more productive. Or did Amazon realize that the location was too perfect to give up and it had the resources and scale to build to its own vision? In fact, the RFP quote above says “we want to invest.” So an adequate building site could be acceptable since it will be transformed anyways but a less than ideal locale won’t be since its more permanent.
To answer the question posed at the start, the metropolitan areas most likely to win the bid are arguably those who fully meet the bid criteria but are exemplary in criterion eight and possess unrivaled urban and natural appeal. Locales that fit this profile are: Austin, Boston, Raleigh-Durham, Toronto, and the Washington DC-Maryland-Virginia region. To be fair, this list reflects two other filters recommended for Amazon to consider - 1) a central or east coast North American presence to complement and not duplicate Seattle’s and 2) climates less vulnerable to extreme weather disruptions (the latter will be the subject of a future blog).
Amazon’s competitive bid process has been good for reviving American optimism. The process brought to light a diversity of U.S. cities eager and primed to host innovative and tech-pioneering companies that comprise the new economy. Even if they don’t win the Amazon bid, these cities have positioned themselves for future growth opportunities. The city that ultimately wins the bid will begin a new economic trajectory, having capitalized on its educational, business, local leadership, and locale appeal ideal for any company wanting to build its next home.