Amazon’s HQ2 Deadline: Now the Real Competition Begins
The deadline to submit proposals for Amazon.com Inc.’s second headquarters, dubbed HQ2, has arrived, and about 100 cities are expected to compete for the project. Amazon’s preferences for HQ2, which will cost more than $5 billion and create 50,000 jobs over the next two decades, include a metropolitan area with a population of more than 1 million, access to mass transit and the potential to attract and retain technical talent. The company has said it won’t make a decision until next year, but speculation is sure to reach new heights now that the bids are in. Here are 10 cities that may have the best shot at the prize.
The southern U.S. city, home of Amazon delivery partner United Parcel Service Inc., is a major flight hub, and the greater metro area houses a dynamic population of almost 6 million, as well as the headquarters of major corporations like Coca-Cola Co. and Home Depot Inc. Still, Atlanta is a relatively suburban city, compared with the urban HQ1 of Seattle.
A Moody’s report chose Austin as the top contender for HQ2, pointing to its low cost of living, high quality of life and the “business-friendly” state of Texas. The city is also home to a hip, young population of potential workers – and there’s no state income tax for employees. While Austin is a smaller city than some of Amazon’s other options, and its corporate "margin tax" penalizes unprofitable companies, it’s also the home of natural grocery company Whole Foods, which Amazon recently acquired.
Several Amazon executives have already advocated putting HQ2 in Boston, due to its proximity to Harvard University and Massachusetts Institute of Technology; an airport with nonstop flights to Seattle and Washington D.C.; and a lower cost of living than some other large urban areas. Amazon has ties with Boston already, having purchased local robot maker Kiva Systems Inc. for $775 million in 2012. The city also won General Electric Co.’s 2015 new headquarters bid, and has provided more than $100 million in grants, property tax relief and programs for GE – though the city has said it won’t negotiate any incentives with Amazon until Boston makes it past the first round of the selection process.
The Windy City ranks second in Anderson Economic Group’s analysis of 35 cities competing for the precious HQ2, focusing on its talent, diverse ecosystem and access to transportation in its bid. Just last month, Illinois Governor Bruce Rauner reauthorized the Economic Development for a Growing Economy (EDGE) tax-credit program, which provides special tax incentives to companies relocating to Illinois or expanding operations in the state when another state is actively competing, according to BNA. One issue? The city isn’t known as a center of technology.
Denver has a busy international airport and is surrounded by a highly educated workforce. It’s also home to a surge of millennials looking for high-tech and energy jobs in Colorado, and boasts an outdoorsy lifestyle that’s an easy fit for Amazon’s quality-of-life considerations. Colorado has also chosen eight sites that meet Amazon’s requirements for HQ2. Still, other cities are offering larger tax breaks than Denver.
Detroit offers low rent and the potential for larger tax breaks, because the city and the state of Michigan are still trying to turn themselves around and diversify from manufacturing. Michigan is also home to three big universities that produce a broad pool of talent. According to Michigan State University, 70 percent of its engineering graduates remained in the state. Even so, Governor Rick Snyder has said he will not ask the state legislature to approve additional incentives just for Amazon, according to Crain's Detroit Business. The city’s mass transit system also isn’t on par with some other cities in the running, and Detroit has a smaller tech scene.
In its bid for HQ2, the Big Apple is pitching its diverse workforce, robust university ecosystem and access to advertising, fashion and other industries. Brooklyn is emerging as an attractive component of the bid, with its building boom and throngs of young residents. New York is so serious about HQ2 that Mayor Bill de Blasio had landmarks around the city, including the Empire State Building and One World Trade, lit up in "Amazon orange" on Wednesday night. (Neighboring Newark, New Jersey, is also jumping in to bid, offering practically the same workforce with $7 billion in potential tax credits.) The bid by the biggest U.S. city may be at a disadvantage because of limited space for construction and already-high housing costs.
The city is home to a large labor force and well-respected research institutes like top AI and robotics university Carnegie Mellon. It’s also close to major distribution hubs and has an industrial manufacturing background that could be useful for Amazon’s warehousing projects. Yet it’s far from other major metro areas and tech hubs.
Canada’s biggest city is already home to 800 Amazon employees and boasts a large population of computer science, engineering and artificial intelligence graduates and programs. Municipalities in the Toronto region have teamed up to increase their chances at scoring Amazon’s HQ2, and Ontario just announced a plan to boost STEM graduates, saying that it can offer talent at 30 percent less than other big tech jurisdictions. Yet going to Canada holds political risks: Moving integral operations and workforce from the U.S. may step up tension with President Donald Trump.
The U.S. capital city’s urban location, highly educated workforce and public transportation are top selling points for its HQ2 bid. Not to mention Jeff Bezos already has a strong presence there: the Amazon founder owns the Washington Post, and last year purchased the largest home in the city. Washington didn’t disclose what it may offer Amazon in financial incentives, but the district has been active in providing taxpayer dollars to corporations in the past, according to the Post. Cons include the city’s expensive housing market and limited space for building.