Where Should Amazon Locate Its New Headquarters? Three Experts Weigh In – Forbes
When Amazon announced plans last month to establish a second headquarters in North America, it set off a feeding frenzy among cities hoping to lure the $150 billion-in-revenue retailer.
New Jersey offered $7 billion in potential tax credits for Amazon to plants its “HQ2” in Newark. Kansas City Mayor Sly James bought and reviewed 1,000 products on Amazon to make the case for his city. Tiny Stonecrest, Ga., located outside of Atlanta, voted to rename the city Amazon if the retailer located there.
Amazon’s requirements include a metro area with more than a million people, a business-friendly environment and a place attractive enough to retain strong technical talent (the company is planning on having as many as 50,000 workers at HQ2). Amazon asks communities to “think big and creatively when considering locations and real estate options.”
Credit ratings firm Moody’s ranked Austin as the best candidate based on its labor pool, cost of doing business and quality of life.
Forbes asked three site selection experts with a combined 100 years of expertise in economic development what they think Amazon should do.
Jerry Szatan, founder Szatan & Associates:
We know Amazon’s criteria, but we don’t know their relative importance: are they all equal or are some more important? Beyond numbers, where would Amazon feel it fits culturally? I don’t know, but I’ll plunge ahead with a prediction: Chicago. (Yes, my hometown.)
Chicago typically greatly exceeds Amazon’s objective criteria: a large, diverse population, talented workforce, a global city, worldwide air access, a vibrant downtown that recently has attracted a string of prominent headquarters, extensive public transport, internationally-ranked universities locally and more nearby including the University of Illinois’ top-ranked IT program. The current Nobel Memorial Prize in Economics recipient teaches at the University of Chicago and you can get there on a lakefront bike path.
Amazon wants culture, quality of life and cities to “think big and creatively.” Few places equal Chicago’s art, culture, sports, food and music scenes; some not widely appreciated: you can attend the Pro Beach Volleyball Tour here. When it comes to urban vision, the unofficial motto is “Make no little plans.” Among many innovations from Chicago are the modern skyscraper, controlled nuclear fission, the Special Olympics and urban blues music.
Amazon is a retail company. It also is an IT and logistics company; a 21st-century successor to 20th-century mail order firms, many founded in Chicago. Chicago knows IT and logistics and direct-to-consumer sales are in its DNA. Amazon would fit right in.
Bert Sperling, founder Sperling’s Best Places:
With the creation of its second headquarters, Amazon has the opportunity to be bold and truly innovative yet still be completely sensible.
Amazon expects to staff its new offices with 50,000 employees, which will increase the local population by about 125,000 residents. If the new headquarters was its own city, it would rank near the 200th-largest in the United States.
The sheer number of new residents is a problem because it will severely strain the resources of any metropolitan area, no matter how large. The criteria identified by Amazon for their new site point to places already successful and growing, and which are least able to absorb that many new residents seeking 40,000 housing units.
Here’s the answer – Amazon should create their own city.
A new city would sidestep the high housing prices already found in existing highly-desirable places, allow their planners to implement new concepts of urban/suburban design and incorporate alternative transportation options. A new city would provide room for expansion, and allow it to be a testbed for new concepts such as drone delivery, autonomous delivery vehicles and employee-less shops. Starting with a clean slate could actually be cheaper and faster than dealing with crumbling infrastructure and the constraints of existing buildings and roads.
I haven’t seen much discussion of political considerations, but this has to be a factor. Jeff Bezos has spoken in opposition to LGBT discrimination and immigration restrictions so it is difficult to imagine him supporting conservative states which favor these views. It would also be against Amazon’s best interests to locate in a state which would choose political ideology over sound fiscal theory (lookin’ at you, Kansas).
The new headquarters would want to be located within reasonable proximity to a mega-metro area for access to internet connectivity, shipping, airports, major universities, health care and other vital resources.
The Chicago and Denver regions are appealing but this is an opportunity for Amazon to establish a presence on the opposite side of the country, near the centers of government and finance. Taking all these factors into account, my short list of places for the new Amazon city are within a 30-mile radius of Washington, D.C., and in New England along the 100 miles between Boston and New Haven.
Angel0s Angelou, Founder of Angelou Economics:
Amazon wants a city that has access to a sizeable and well-educated talent pool (especially STEM-focused education), has a suitable transportation network for commuting and international market access, housing availability and affordability, and that is home to a university system that the company can forge a lasting partnership with, much like the Seattle headquarters has with the University of Washington.
Amazon did a smart thing by making this a public process. It is a win-win situation. Amazon benefits from many innovative ideas from around the U.S. on building a second world-class headquarters. The communities benefit from the unprecedented opportunity to strengthen collaboration among their private/public partnerships, to rethink their economic development positioning and strategies that may have emerged from their desire to compete for this project.
We believe that Atlanta, Chicago, Cincinnati, and Dallas could be prime candidates for HQ2. Each is home to headquarters of major companies, offer a high quality of life, and have the talent that Amazon needs.
|Access to Talent|
|2016 labor force||5-year emp. growth||2016 emp. in related industry||2016 pay in related industry||Grads (4yr)||Univs. w/ comp. science||Fortune 500 HQs|
Atlanta stands out for the presence of strong educational and research institutions, a great overall business climate for the city and the state, and a large presence of Fortune 500 companies in the city.
|STEM bachelor’s degrees per 1,000||3-year growth in logistics||Percentforeign born||Unlinked passenger trips for public transit||Commute times||Cost of living index||For-Sale inventory||Median Monthly Home Owner Costs|
Cincinnati offers the lowest cost of living among these candidates and is home to two of the largest retail and consumer goods companies in the U.S. Chicago provides the best transportation network of these candidates, has sites that likely mirror the company’s current downtown Seattle headquarters the closest, and provides the largest available labor force.
Dallas is a fast-growing economy and community, has the highest percentage of foreign-born residents, and has the greatest employment within the industries that Amazon is most closely associated with.
Moreover, all these cities will not be significantly stretched in accommodating 50,000 new employees along with their housing and transportation requirements.
Sources: US Census; BLS; National Center for Education Statistics; Fortune; National Science Foundation; American Public Transit Association; Council for Community and Economic Research; Zillow.
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