I was on WOSU-FM in Columbus, Ohio last week talking about that city’s chances of landing Amazon’s HQ2. Though the short segment focuses on Columbus, I talk a little bit about what criteria I’d be using to make the choice. If the audio doesn’t display for you, click over to listen on Soundcloud.
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Look for Port Covington in Baltimore to rise to the top.
Aaron gave some good objective analysis, however I think a lot of these corporate HQ locating decisions are made by the CEOs. That is why a lot of Corporate HQs moved out of the Cities into suburban office parks in the late 20th Century (to be closer to the CEO’s suburban home). Now important Corporate HQs are often being located in the type of city that the CEO would like to live in.
So with this in mine these are my picks of where Jeff Bezos will locate the 2nd HQ:
Washington DC. Jeff owns the Washington Post and has received a lot of goodwill from Washington regulars for his mostly hands off approach to managing the flagship paper. Also it would place Amazon close to potential regulators and thus able to head off any brewing trouble.
Austin, Texas. Based on what I know about Jeff Bezos the city he would want to live in if he was still a regular professional guy. His family is from the southwest and a lot of his childhood was spent in Texas. He is currently one of the largest landowners in Texas. With its liberal ethos and tech base I think Austin is a natural fit for Bezos.
This is a corporate HQ not a widget factory. This decision will not be made accountants looking for the best tax deal.
This is probably a special case, though. Bezos is one of the two or three richest men on the planet and can literally buy any place he wants to live. Or all the places.
I think this one will be decided a level down by his senior staff, who are probably more like CEOs of other companies in terms of their personal wealth, taste, and preferred living style.
They will probably not choose to join Warren Buffett in Omaha. I suspect they will look hard at Philadelphia and Chicago, and probably DC for strictly political reasons. All are fairly immune from natural disasters and all well-endowed with legacy transit and urban amenities.
Aaron, I think you hit the nail on the head when you made the comment about Amazon wanting to be the Big Dog, so to speak, in the city they choose for HQ2.
They clearly want something more than they listed in their RFP. If they just wanted the place that best fits the laundry list, they would have chosen one of the large legacy cities and been done with it. Why didn’t they? They could just be trying to throw it open to see who gives away the farm, but I don’t think so.
Instead I think they are looking for a place-where they don’t know yet- which has enough of the things on that list to be viable but where they can also be the Big Dog. There’s a few reasons why:
-If they go to an established tech hub, like SF or Boston, they have to compete with other tech companies for talent.
-If they go to a place with a dominant established industry, think Houston, Las Vegas, New York, they have to play second fiddle to that industry
-If they go to a large legacy city, NY, LA, Chicago, they have to try to shoe-horn themselves into the existing fabric, and risk having the same problems they are experiencing in Seattle.
Essentially I think they are looking for Seattle 2.0. Where’s that city that’s big enough to accommodate them, small enough that they can kind of take over the reins and mold the city around their needs, and a place where they can attract and retain talent.
Just look at one example-transit. If they went to say Boston for example, they would incur a huge cost and terrible blowback trying to acquire 18+ acres of land near any transit stop. There’s just not that much land near transit stops available in Boston. Even the South Waterfront area, which is developing rapidly, has land, but it’s not really accessible to the subway like other areas are.
Now take a smaller city like Denver. It would be much easier to find available land near downtown Denver. You may have to be creative, but I’m betting it could be done. Denver is still building out it’s transit system, so it could be modified to meet Amazon’s needs. Some slightly smaller cities like Nashville or Charlotte would be even more able to mold their transit system around Amazon. Don’t count that out as a powerful incentive for them.
Other than that the next thing I think will be important is air service. You can build a transit system around Amazon. And Amazon will generate demand for certain locations, like Seattle. But if they feel the need to have access to international flights (and not just Canada), then a city like Denver or Charlotte may be favored.
Finally, for talent retention, universities will be very important. Look at cities that have large research universities or large student populations.
When you take these things into consideration, I think a 2-4 million person city with a large university, without a dominant industry and with a willing government/business community will probably win out.
Finally there’s the chance that they decide to split up HQ2 and move different operations to different cities. That could happen.
Ok, which cities best meet the criteria I listed above? I do think Denver and Charlotte would be high on the list. Raleigh too. Also Minneapolis/St. Paul, and Nashville. Maybe Pittsburgh although their air service is a bit weaker. Austin certainly fits, although for some reason that feels too easy, and I have to imagine they already looked there. Maybe Salt Lake, although the Morman presence could be considered similar to a major industry that would take away the Big Dog factor. Kansas City had decent domestic air service and U of Kansas is not that far away, so it could be a possibility. St. Louis would also come our fairly high using this criteria. Portland is in the same earthquake zone as Seattle, and I think that’s a big risk, although if theu don’t feel that way it would probably be a strong contender.
If they do want a bigger city I imagine Atlanta and Dallas/Fort Worth would rise to the top. Both have basically everything on the list, are spread out enough to have land, aren’t dominated by one industry and would likely be fairly willing to let Amazon do some molding around themselves. But there is a risk in plopping a major economic generator in a place that’s already really hot and struggling with growth. I would also put Baltimore in this category, since its nor a huge metro in itself but it’s so close to DC you still have the growth issue.
If air service is s bit less critical I think that opens up several more cities, mostly in the Midwest. The 3C’s in Ohio become much more competitive, add does Indianapolis (although it doesn’t have a big research institution close, it’s a magnet for IU and Purdue students), OKC, Pittsburgh.
Then there’s the few what I would think of as wild cards. Detroit, because they can probably be a big dog, even with the auto industry. Maybe Milwaukee, since its close enough to Chicago to use its world class facilities, but also far enough away to allow for growth and be the big dog. Richmond for the same reasons with its proximity to DC.
Portland’s out because it’s too small as a city and talent pool. Housing prices would shoot through the roof, as they would in most of these other places. Cities have to have the capacity to absorb 40,000 imports without going crazy. That rules out mid-size metros. I’m also thinking that the Dallas/ Atlanta’s/ Phoenixes/ Kansas City’s of the world are not in the running because they offer little in the way of lifestyle outsize of malls and cheap housing. Sure, Houston draws people, but a whole lot of those jobs are very middle income. Amazon’s fighting for talent, and those people have choices. Maybe, though, we’ll see a shift here where Bezos goes pure foreign, and simply promises the American consumer dream on the cheap, but in that case he’s got to turn around immigration policy, and good luck with that.
There is a political dimension to this that I haven’t read about anywhere. The bigger Amazon gets the more government scrutiny it receives. Spreading around its facilities and employees could be very helpful for getting politicians on its side when needed. With that in mind, which state’s Congressional delegation would be useful to lock up? California is too big and full of tech companies to lock up. Washington DC proper would be useless (no Senators, etc). Texas is big, but Amazon in Dallas would be a big deal. It’s something to think about. I’m keeping an eye on this aspect as the HQ2 story develops.
Never underestimate the purely mercantile nature of Amazon, but my guess is that Dallas is too corporate and boring to be in the running.
I wonder if legal marijuana will factor at all into Amazon’s decision. My impression is that legal recreational weed would be a selling point for the type of employees Amazon wants to recruit (and also contribute to having a metro culturally similar to Seattle). I would think that DC and its environs would be too much of a company town and small “c” conservative for Amazon as well.
Weed isn’t a big deal here. REI is.
Where is here? Seattle, Denver, or somewhere else? Also, assuming that REI refers to the outdoor clothing/equipment retailer, they have locations in DC, Columbus, and Cincinnati, none of which strike as places that are magnets for outdoorsy types in the same way that say the Pacific Northwest and the Rockies are.
Seattle. I’m using REI in the generic sense of Outdoor Magazine outdoorsy. REI may have outposts in other places, but the people I know want mountains, ocean and wilderness nearby, things that made Denver, the Research Triangle and Sacramento destinations for tech companies. When HP moved to Roseville in 1979, the first move out of Silicon Valley, the company was afraid no one would move. The first generation of engineers was drawn by skiing in the Sierras, rock climbing in Yosemite, and white water kayaking in the Foothills, all an hour to two away. “Silicon Forest” in Portland has Mt. Hood 90 minutes away, the Gorge 45 minutes away, and the Oregon Coast 70 minutes away. Seattle has Mt. Rainier two hours away, and Puget Sound on the door step. These calculations are important to tech engineers coming out of Silicon Valley who have been tempted by California’s scenery but frustrated by the traffic getting out of the Bay Area on a Friday afternoon.
Thanks for the reply. I too wonder how much the accessibility of outdoor pursuits will factor into Amazon’s decision. If it does figure heavily, I would think that would rule out the cities in Texas, Chicago, and the East Coast legacy cities as well.
My top cities are Toronto, because they can get around visa restrictions that way; Denver, because it is close by airline and possible to draw existing employees there from Seattle; Boston, because of the tech base and employees; Minneapolis, because it has good government; and Austin, because of the tech base. I’m betting that Amazon itself is making this up as it goes along, the ability to draw talent being the biggest consideration.
As someone who lives here in Seattle, I’ve met employees who have happily moved here from around the world. On the Olympic Coast last year, I met young college graduates from China decked out with the latest outdoor gear. Amazon isn’t moving because of any real problem with the city government, which has happily extended transit to Amazon’s neighborhood, and which has gotten most things it has asked for, but because it has brought in so many tens of thousands of people that it has driven up housing prices and commute times to the point that it can no longer draw tech talent up from the Bay Area. (My best friends son, now a Twitter employee, just decided not to move here permanently because of the traffic.) Having effectively “mined” the place of its space and ability to draw people here, Amazon needs another “magnet” to draw talent. Is Austin good enough? Probably not from an existing employee’s perspective, but possibly for someone from Oklahoma State. Boston? Depends on their attitudes towards newcomers, but in general, from a West Coast perspective, it’s a snobby place. New York? Not family friendly. The big question is whether Denver has enough alternative tech jobs in Boulder for Amazon to be able to draw tech people there in the first place
The way that Bezos presented his HQ2 demand to urban areas shows that the Trump problem is not limited to the GOP. Bezis showed extreme ignorance of government, and like Trump-a-Doddle, be believes that he is the center of the universe. If the grand Jeff Bezos mandates that local governments violate their laws, then So Let It Be, as the Pharaohs exclaimed.
He demanded that governments ignore jurisdictions and violate open meeting laws and that instead political hacks make hasty, ill-conceived, behind the scenes decisions with ZERO public input. In a nation which has adopted the economic system of Corruptionism, Bezos sees nothing wrong with his autocratic high handed demands. It is this attitude which has turned Los Angeles into a city which is governed by corruptionism and by the Litigation which rises in opposition.
As its stands now, any offer from the LA metropolitan area will result in litigation. If you want to know how long that will take, look at the Target Litigation in Hollywood — constant violations of the laws result in never-ending litigation.