Amazon Is Choosing a Second Home. What Are Its Options?

From Toronto to Austin, cities will be vying for Amazon's attention. Here's what they have to offer.
Amazon Announces Public Hunt for New Headquarters

Amazon.com Inc. is looking for a North American city to build a massive second headquarters. Dubbed “HQ2,”  the site will probably cost more than $5 billion, take up to two decades to develop and employ 50,000 people. Whatever city gets chosen will be transformed by Amazon, which has already changed the character of its native Seattle, setting in motion a building boom and rising rents.

“Seattle doesn't have enough capacity for their growth,” says Lisa Picard, chief executive officer of Equity Office, one of the biggest office landlords in the U.S. “That's the biggest issue.”

HQ2 will be a major economic boon for the city that successfully woos Amazon, and mayors, including Chicago’s Rahm Emanuel and Jim Strickland of Memphis, Tennessee, are already raising their hands. So are officials in Philadelphia, Hartford, Connecticut; Tulsa, Oklahoma; St. Louis and Rhode Island, demonstrating that Amazon will wield a lot of leverage in making its choice.

“I would suspect they go for places with capacity and reasonable costs of living and strong lifestyle,” says Picard, whose company is owned by Blackstone Group LP. “That's a game-changer for places that are needing a new industry.”

Here are some of the options:

Atlanta
Pros:

  • Major flight hub and home of UPS, giving Amazon’s ever-growing shipping division a solid pool of expertise and a centralized North American location.
  • Large, dynamic metropolitan area of nearly 6 million, which already hosts the headquarters of major corporations like Coca Cola, Delta and Home Depot.

Cons:

  • Amazon prides itself on its urban Seattle locations being walkable and bikeable. A more suburban city like Atlanta may contradict that spirit.

Chicago

Pros:

  • Mayor Emanuel has already had several conversations with Amazon about putting the new HQ in America’s Second City, according to the Chicago Sun-Times.
  • Heavy concentration of operations, marketing, finance and sales employees to poach from other industries.

Cons: 

  • One of the few major U.S. cities without a significant tech presence.

Toronto
Pros:

  • Already home to 800 Amazon employees and features a large pool of high-quality computer science and engineering graduates.
  • Potentially easier to hire people from abroad because of more open tone on immigration from the government. Also offers the benefit of government-funded health care.

Cons:

  • Hiring so many people outside the U.S. might make Amazon a bigger target than it already is for President Donald Trump.

Pittsburgh
Pros:

  • Home to top AI and robotics university Carnegie Mellon
  • Has industrial manufacturing background useful for Amazon’s warehousing operations
  • Close to major distribution hubs

Cons:

  • Located far from other major cities and tech hubs.

Brooklyn
Pros:

  • Locating in New York would give Amazon access to the world’s top pool of finance and media talent, proximity to fashion as well as a growing tech scene.
  • Creative center would draw young employees looking for a locale that’s even hipper than Seattle.

Cons:

  • Rent prices are already high, one of the reasons locals in Seattle are pushing back against the company’s expansion there.
  • Limited space for new construction.

Austin
Pros:

  • Close to the distribution and business hub of Dallas.
  • Home to a hip, young population that could be a draw for potential employees.
  • No state income tax for employees.
  • Home to Whole Foods, which Amazon recently acquired.

Cons:

  • Smaller than other U.S. options.
  • Corporate “margin tax” penalizes unprofitable companies. 

Memphis 
Pros:

  • Large pool of university talent.
  • Lower wages and rents than in more established tech hubs.
  • State has been focused on attracting new tech companies to the area.

Cons:

  • Lack of a nearby major international airport, smaller size.

Los Angeles

Pros:

  • Already home to Amazon's quickly-growing video business.
  • Westcoast time zone could increase synergies with the Seattle office.

Cons:

  • Urban sprawl, traffic and high home prices could make it difficult to hire the number of people Amazon requires.

Detroit (Wild card)
Pros:

  • Low rent, potential for bigger tax breaks for a city and state looking for diversification from manufacturing.
  • Trying to turn around a city is the kind of statement Jeff Bezos might want to make.

Cons:

  • May be a harder sell to move top engineers and other Amazon employees there.
  • Smaller size, limited tech scene.

Other potential locales include Salt Lake City, Dallas, Vancouver and even Mexico City, says Kenneth A. Lewis, a partner at architecture firm Skidmore, Owings & Merrill. ``It's a vibrant city with an educated work force, a very business-positive community and culture, culture, culture.''

— With assistance by Spencer Soper

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