Amazon’s ‘HQ2’ Sweepstakes: How To Properly Speculate On A Winner – Forbes

People walk past the signature glass spheres under construction at the Amazon corporate headquarters on June 16, 2017 in Seattle, Washington. (Photo by David Ryder/Getty Images)

The chase for perhaps the largest economic development attraction job in decades has begun.

By now, virtually everyone has heard of Amazon’s intent to build a second corporate headquarters in North America, to be the equal of its present headquarters in Seattle. The request for proposals released by Amazon holds some truly amazing figures to make cities salivate — Amazon would hire as many as 50,000 new employees at HQ2 over the next 10 to 15 years, with an average salary exceeding $100,000 a year, and would build as much as eight million square feet of building space by 2027. To put that into some perspective, HQ2 would make Amazon one of the top five to 10 employers in any of the cities in the running and would build commercial space equivalent to 5-10% of most cities’ current downtown scale. And that’s not even taking into account spinoff growth related to Amazon’s presence.

So yes, it’s big.

Since the release of the RFP this past Thursday, tech and business experts, urbanists, economic development specialists and others have been speculating on the eventual winner of the HQ2 Derby, focusing on Amazon’s stated preferences:

  • A metro area with one million or more residents
  • A stable and business-friendly environment
  • An urban or suburban location with the potential to attract and retain strong technical talent
  • Communities that “think big” when considering locations and real estate options
  • Close proximity to a major international airport
  • Access to mass transit

A couple of other Amazon preferences are implied but aren’t stated directly in the RFP. It’s assumed by many that Amazon will likely seek a location that is affordable, or at least comes with the requisite incentives that make such a development feasible. It’s also assumed that Amazon will put a premium on a metro area’s culture, looking for places that value openness, inclusion and diversity. How those are defined and evaluated will be completely an Amazon matter.

Speculations and projections are coming in from all over. The Brookings Institution developed a useful methodology that narrows the field to 20 metro areas, including Seattle. Some view the HQ2 Derby as the Heartland’s golden opportunity to join the economic ranks of America’s coastal elite cities. The New York Times believes it has the ultimate winner figured out, while metros from Chicago to Detroit to San Diego to Pennsylvania’s Lehigh Valley are working on proposals and assessing their chances. Some places (possibly Chicago, Atlanta, Dallas and Denver) believe that HQ2 is theirs to lose; others (possibly Detroit, St. Louis, Cincinnati) believe their chances are slim but are willing to roll the dice. You can’t win if you don’t play.

But if we’re going to try to speculate on the ultimate winner, we need to better understand Amazon’s motivations for HQ2. Three questions that Amazon must be answering internally come to mind:

  • Why build somewhere else, rather than expanding in Seattle?
  • How linked, or independent, would HQ2 be from HQ1 in Seattle?
  • Is Amazon electing to place a bet on a city outside the hegemonic coastal cities, and if so, why?

Amazon’s answers to these questions would reveal much about the final selection.

So let’s try to develop an Amazon perspective on the above questions. My guess is that Amazon is electing to build a second headquarters because it realizes it may be fast approaching its ceiling in the Seattle area — in terms of attracting and retaining talent, and of offering an excellent quality of life at a reasonable price. Amazon may very well believe that continued growth in the Seattle area could mean that it becomes much more like the Bay Area already is today.

Amazon has said little about HQ2’s role and function, other than to say that it will be “equal” to the current headquarters in Seattle. How the company views that role will have much to do with its decision as well. Will Amazon require its HQ2 execs to have frequent contact with Seattle? Will HQ2 have a domestic focus while HQ1 has an international one, or vice versa? The city that comes closest to guessing right on Amazon’s internal answer will have a leg up.

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