By Laura Stevens | Wall Street Journal | January 18, 2018
Amazon . AMZN +0.24% com Inc. on Thursday announced a short list of 20 metropolitan areas for its planned second headquarters, kicking off an intense final selection in the contest for the tech giant’s investment and jobs.
The finalists, chosen from among 238 places that applied in October, included New York, Boston and Chicago, all big cities with convenient access to airports, robust tech talent and sufficient mass transportation.
Some surprise candidates included Columbus, Ohio, and Indianapolis.
Amazon says it expects to create as many as 50,000 jobs paying an average of $100,000 or more and generate more than $5 billion in investments over nearly two decades.
The company also expects to build or acquire 500,000-plus square feet of office space to open the first phase of its project as soon as next year, according to its request for proposals. Amazon said Thursday it expects to make a location decision in 2018.
The promise of those benefits has triggered a bidding war among applicants, in what economic-development experts have said is one of the most public and broadest contests to woo corporate investments in decades. Cities and regions across North America have offered big incentives and quirky proposals to try to attract the online retail giant.
The race puts Amazon in the position of kingmaker for cities across North America at a time when its business is booming. But the choice to split headquarters also comes as technology giants face more concerns about their increasing dominance in certain industries.
President Donald Trump has called out Amazon on Twitter over issues including state taxes and shipping with the U.S. Postal Service.
Meanwhile, Amazon founder and Chief Executive Jeff Bezos has recently stepped up his political game, last week donating $33 million to scholarships for undocumented immigrant high-school graduates.
Mr. Bezos also became one of the first tech chief executives to join legal action opposing Mr. Trump’s travel-ban order last year.
Those moves have prompted some site-selection experts to speculate Mr. Bezos may choose a location where an influx of workers could help promote political change. Indeed, a flood of high-paid tech workers and their families could bring significant changes to even major metro areas, potentially pushing up wages and housing prices, which has been the case in Amazon’s home market of Seattle in recent years.
Amazon said it will work with all of the candidates over the coming months to further evaluate the locations.
“Getting from 238 to 20 was very tough—all the proposals showed tremendous enthusiasm and creativity,” said Holly Sullivan, who has been running the process, in a statement. She added that the company has learned about new communities that it will also consider for future investments.
The company’s in-house economic development team has been examining the proposals to create its short list since they flooded into Amazon’s current headquarters late last year.
At the top of the company’s criteria is finding enough tech talent to fill all the jobs, according to people familiar with the matter.
Amazon’s team helped narrow the list using criteria including a metro area with more than one million people, a stable and business-friendly environment, a location where it can attract and keep tech talent and communities that think big when it comes to locations and real estate, according to the request for proposals. They also factored in sustainability, fiber and cell connectivity and cultural community fit.
A wild card in the selection process may be incentives, something that could help Amazon recoup its hefty spending on the new site. Newark and its home state New Jersey, for example, had announced a potential $7 billion in tax incentives to draw the new campus. Most other cities declined to publicly disclose their offers, citing the competitive nature of the process.
Amazon has grown rapidly since its founding in 1994 in Mr. Bezos’s garage as an online bookseller. The company is now not only the largest online retailer, but also makes its own tablet and speaker devices, sells cloud-computing services, is building a significant content delivery network and, most recently, has become a grocery giant. Last year it bought chain Whole Foods, adding more than 470 brick-and-mortar stores to its retail empire overnight, helping boost its workforce to more than 540,000.
The growth has fueled Amazon’s revenue to record heights, reaching $43.7 billion in the third quarter, more than double the total three years earlier. During that period, the company’s stock roughly tripled, and on Wednesday closed at $1,295, near its all-time high.
Amazon has started to outgrow its current home of Seattle, where it employs more than 40,000 and dominates a significant piece of the city’s downtown.
After the new location opens, Amazon has said executives will be allowed to decide whether their teams are is based in Seattle, the new city or both. Some management experts have questioned the company’s plan, saying it could be difficult to maintain a strong culture when spread across two headquarters.
Amazon still plans to grow in Seattle, too. In an interview with The Wall Street Journal late last year, retail chief Jeff Wilke said the company expected to add 2 million square feet and 6,000 people over 12 months. “But we think it’s important if we’re going to continue to grow, to make sure we have the space,” he added.
Small towns and counties from states including Texas and Maine and cities ranging from Anchorage, Alaska, to Sacramento, Calif., applied for the new headquarters. Multiple places in Canada and Mexico applied, too.
Site-selection experts say that the last such public bidding process was likely in the 1980s, when General Motors prompted governors to take to TV in an attempt to woo a car manufacturing plant.
Cities Amazon Is Considering for a Second Headquarters
- Austin, Texas
- Columbus, Ohio
- Los Angeles
- Montgomery County, Md.
- Newark, N.J.
- New York City
- Northern Virginia
- Raleigh, N.C.
- Washington D.C.