Amazon's Second HQ

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Amazon's Second HQ

Amazon launched its search for its second North American headquarters in September 2017. Cities were asked to submit proposals for the chance to house the company's second headquarters. From the 238 proposals that were submitted a shortlist of 20 cities was created in January 2018. These cities are courting Amazon by offering funds, incentive packages, tax exemptions, employee housing, mass transit overhauls and more. Below is an overview of the announcement, the application process, the shortlisted cities, and a few examples of how certain cities are vying for the top spot.

HQ2 ANNOUNCEMENT

On September 7th, 2017, Amazon announced their HQ2 search. The company also reported that this venture would result in the addition of "50,000 high-paying jobs" in the community where the new office is built. Amazon stressed that this new office would operate as a full-fledged headquarters and not as a satellite location. At the time of this announcement, the Amazon HQ2 Request for Proposal (RFP) was opened and interested parties were directed to the digital hub for HQ2.

Amazon's new headquarters is expected to generate "tens of thousands of jobs in construction and related industries." It is also expected to generate "tens of billions of dollars in additional investment in the city" that Amazon chooses. The company has pledged to invest more than $5 billion in the operation and construction of the new facility. Amazon opted for a public process because the company wanted to find a city that was not only excited to work with them, but was also a place where their employees and customers could benefit alongside the community.

HQ2 PREFERENCES

In the initial announcement, Amazon outlined several preferences and ideas for their future space. These preferences are listed below.

— Metropolitan areas with over 1 million residents.
— A business-friendly environment with stability.
— Urban or suburban areas with the ability to draw and retain strong technical talent.
— Communities with a creative mindset when considering real estate options.
— An urban/downtown campus.
— A layout that resembles Amazon’s Seattle headquarters.
— A development-prepped site. Amazon seeks to encourage applicants to think creatively about viable location options, without negatively affecting their preferred timeline.

OVERVIEW OF THE application PROCESS

DEADLINE

All electronic proposal applications were due by October 19th, 2017 and hard copies were accepted between October 16th-19th. Each applicant was required to submit an electronic copy and five additional hard copies. The electronic copies were required to be sent using a "password-protected website URL or a USB." The application timeline is provided below.

September 7th, 2017 — RFP Phase I Available
October 19, 2017 — RFP Phase I Response Deadline
2018 — Final Site Selection and Announcement


REQUIREMENTS

Each "metropolitan statistical area (MSA), state/province, county, city and the relevant localities" were only allowed to submit one proposal. However, each proposal could include more than one real estate site "in more than one jurisdiction."

Amazon is open to possible building sites like "greenfield sites, infill sites, existing buildings," or some combination. Ideally, the company would prefer sites that are 30 miles from the population center, within 45 minutes from an airport, and no more than 1-2 miles from a major highway. They also require direct access to public transit. In terms of the building itself, Amazon requires that the initial square footage reach 500,000+ and the final square footage reach "up to 8,000,000."

The application stresses the importance of sustainability, fiber connectivity, and "multiple cellular phone coverage maps." Applicants are also required to submit a summary of incentives offered by the state or community, labor and wage details, information on the ability to attract regional talent, higher education programs, travel logistics, and community life. Those who apply are also encouraged to outline any extra details or intangible factors.

SHORTLISTED CITIES

The top cities on Amazon's North American shortlist are provided below. The majority of these cities are either on the east coast or in the eastern half of the United States. Only four out of 20 are located on the west coast or in the central US. Toronto, Canada is the only contender based outside of the US.

1. Atlanta
2. Austin
3. Boston
4. Chicago
5. Columbus
6. Dallas
7. Denver
8. Indianapolis
9. Los Angeles
10. Miami
11. Montgomery County, Maryland
12. Nashville
13. Newark
14. New York City
15. Northern Virginia
16. Philadelphia
17. Pittsburgh
18. Raleigh
19. Toronto
20. Washington, D.C.


NEXT STEPS FOR SHORTLISTED CITIES

For the 20 shortlisted cities, the next steps in the process will take place over the upcoming months. Candidates will continue to work with Amazon to "dive deeper into their proposals" and gather additional information. Amazon will discern the "feasibility of a future partnership that can accommodate" the company's future hiring plans while also benefiting their employees and community. The final decision is expected to be reached sometime in 2018. Details on exactly how Amazon will narrow the field or choose the winner were not provided.

HOW CITIES ARE COURTING AMAZON

Cities on the shortlist are vying for Amazon's second headquarters in a variety of ways. This includes incentive packages, funds, marketing efforts, employee perks, and more. Some shortlisted cities have been more public about their proposal than others.

Typically, cities that were more secretive chose not to disclose their exact real estate sites or the investment they offered in their proposal. Raleigh, NC; Los Angeles, CA; Montgomery County, Maryland; and Pittsburgh, PA have not disclosed precise details about their proposals. An overview of how some cities are courting Amazon is listed below.


1. WASHINGTON, DC

Washington, DC is considered to be a front-runner because Amazon's CEO, Jeff Bezos, purchased a $23 million home in DC. Bezos owns the Washington Post and Amazon Web Services also signed a 400,000 sq ft lease in early 2017.

The city's proposal included four real estate options, tax exemptions, reimbursements, and "its largest-ever incentive package." It's reported that DC also spent "tens of thousands of dollars marketing its bid." DC's proposal highlighted its diversity, stable economy, transportation infrastructure, highly educated labor force, and its network of colleges and universities both within and nearby the city.


2. PHILADELPHIA, PA

Analysts have indicated that Philadelphia's bid to win over Amazon went "above and beyond." The proposal included employee housing options, satellite office locations, and sites for "Amazon’s business partners and vendors." Philadelphia offers three different real estate options that fit the requested criteria: uCity Square, Schuylkill Yards, and the Navy Yard.

The city has decent public transit and access to a large talent pool due to the 100+ colleges in the area. Philadelphia offers tax incentives and one of its biggest selling points is its position "between New York and Washington, D.C." The city also offers affordable housing.


3. NEWARK, NJ

New Jersey's Governor Christie announced that the state would pay Amazon $7 billion to locate their second headquarters in Newark. That's $2 billion more than Amazon expects their property to be worth. In this aggressive move, Newark hopes to not only improve their competitive status but to also make up for its unsavory past. Although Newark has improved over recent years, the city has been largely associated with a "high violent crime rate."

Despite this association, Amazon currently employs 1,000 workers at their Audible office in Newark.

4. AUSTIN, TX

Austin has a history of using incentives to lure in tech companies like Samsung, Merck, and Apple. Texas as a whole is the leader in terms of business incentives. The state provides $19.1 billion in business incentives annually. Austin is already home to one of Amazon's corporate offices which could potentially work in their favor. Amazon received $277 million from 2005-12 "in Texas business incentives for fulfillment centers, making it the largest corporate recipient of state grants."

Although Austin is a smaller city, in recent years it has steadily grown with a 20% growth rate from 2010-16. This city meets Amazon's HQ2 criteria for its quality of life, stable business environment, and preexisting tech community. The city's low living costs are another benefit.


5. DENVER, CO

Denver has attracted other noteworthy companies like Twitter, Oracle, and Google. This city shares a startup community with Boulder and is more affordable than some other cities on the shortlist. Denver is also willing to offer hefty incentives and reinvent itself in order to win their bid. In their proposal, Denver highlighted the ability to grow and their proximity to the Denver International Airport. In terms of growth, it has been reported that a new tech startup is "launched every 72 hours in Colorado."


6. BOSTON, MA

Boston offers a large recruitment pool due to the many colleges in the area and "easy access to Logan Airport." Amazon already has connections in the area and the city provides a lower cost of living than some competitor cities. Logan Airport offers multiple flights to both Seattle and Washington, DC which will provide employees with an easy route to major economic hubs. The proposal offered Suffolk Downs as their official bid location. Suffolk Downs is "a rare single tract of land owned by a single developer close to the city center and the airport." Over the course of the last decade, the airport has experienced a surge in the number of flights. This increase is one of the major factors that led General Electric to move from Connecticut to Boston.

In order to overcome some of its drawbacks, Boston included investments in their transit system in their proposal. This included the "implementation of a $100M gondola system that could connect multiple sites to ensure Amazon would have access to its requested 8M SF."

CONCLUSION

In conclusion, the top 20 cities that have made it to Amazon's HQ2 shortlist are courting the corporate giant through a variety of tactics. While some shortlisted cities, like Los Angeles, CA, have remained secretive about their proposal strategies, others have shared details with the public. These strategies involve offering tax exemptions, funds, employee housing, incentive packages, mass transit investments and more. The shortlisted cities also highlighted their proximity to airports and their access to young talent.
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