Where were people expecting HQ2 to go?
Also, Amazon is now the third most-valuable company in the US after Apple and Microsoft, and is expanding in Europe, the Middle East, India and China. New headquarters on the other side of the country could help it oversee to its global workforce and its increasingly international customer base and partners. According to several reports last week, Amazon was closing in on a handful of locations, including New York City, Dallas and northern Virginia. JBG Smith, a real-estate company that owns much of the office space in Crystal City,already saw its stock jump in anticipation of the announcement.
Even before last week’s reports, the DC area had long been seen as the front-runner for HQ2, since Amazon picked three separate locations in the vicinity among its 20 finalists. There are a bunch of other pluses for the region: Bezos owns The Washington Post, Amazon’s interest in federal government cloud-computing contracts is growing, and Bezos purchased the largest home in DC. More broadly, Amazon had been seen as strongly favoring the Northeast, with eight of the finalists there.
Moody’s Analytics did its own review of the finalists and placed Boston in the top slot, followed by New York and Philadelphia — all three among those eight Northeast picks.
Amazon picked most of the eight Northeast spots in different states (or, in DC’s case, a district), making it easier for the company to pit those states against each other and get the best possible incentives package.
Are two HQ2 locations better than one?
That depends whom you ask. A new 50,000-person campus, even in a major city, would be a daunting project and a strain on local infrastructure. Two 25,000-person offices are likely to be more manageable, easier to site and still huge — providing a big economic benefit for both locations. The move will also mitigate some concerns about traffic, rents and Amazon’s reported worries it won’t be able to hire enough tech talent in any one city.
However, some people are complaining that picking two spots undercuts the entire point of announcing HQ2, since the locations likely won’t be equals to Seattle and therefore not actually HQs. All the excitement and attention and news stories hyping the project wouldn’t have reached such a fevered pitch had Amazon instead announced plans to build two new satellite offices.
Two of Amazon’s biggest satellite locations are already in New York, with about 1,800 workers around the city, and northern Virginia and Washington, with about 2,500 workers. Amazon last year announced plans to double its staff in New York City.
So it’s not surprising that at least a few industry watchers saw the HQ2 search as a farce and a PR stunt that’s allowed Amazon to gain months of positive news coverage and extract more incentives from local governments.
The benefits for Amazon don’t stop there. The company gained mountains of valuable data from dozens of states and cities that it’s now expected to use for its future development plans and to outfox its rivals. Having two winners could also allow Amazon to pit both cities — as well as Seattle — against each other for future expansion plans, helping it maintain a strong negotiating position.
How did cities try to sell themselves?
The initial HQ2 announcement essentially kicked off a “beauty contest” among municipalities. Because the company said it was looking for “communities that think big and creatively,” many cities made sweeping and goofy gestures to get Amazon’s attention.
Tucson, Arizona, for instance, sent a 21-foot saguaro cactus to the tech giant. New York City lit several landmark buildings in “Amazon orange.” And the city of Stonecrest, Georgia, offered to rename a part of itself Amazon, Georgia.
After Amazon chose its finalists, the selection process mostly went quiet, with Amazon and those 20 cities declining to say much about the goings-on. Critics derided the lack of transparency, saying taxpayers have a right to know what incentives they’ll be expected to pay for.
But some information did come out, and money certainly was a big factor for the finalists, much more than circus-like stunts to get noticed. Amazon wasn’t shy about asking for incentives.
Montgomery County, Maryland, offered the biggest publicly known incentives package, at $8.5 billion. Yes, that’s much more than the $5 billion Amazon plans to spend on HQ2, so Maryland seemed to be hoping Amazon’s halo effect would bring in indirect jobs and business.
Newark, New Jersey, offered the second biggest known package, at $7 billion.
On the other end of the spectrum was Toronto, the only city outside the US to make the shortlist. It offered no direct incentives package for HQ2, but Amazon might have seen some appeal in Canada’s universal health care and a number of government tax credits and grants.