Amazon Chooses 20 Finalists for Second Headquarters
Posted January 18, 2018 8:29 p.m. EST
Updated January 18, 2018 8:35 p.m. EST
SEATTLE — Like a college applicant waiting for that special message in the mail, officials in Boston got what they wanted Thursday: a cryptic four-sentence note informing them that the city made the finals in its bid to host Amazon’s second headquarters.
“We would like to move Boston forward in the process so we can continue to learn more about your community, your talent, and potential real estate options,” Holly Sullivan, an Amazon executive, wrote in the note. “Please email me back with available times for a call so we can discuss next steps.”
Boston was one of 20 places in the United States and Canada that made Amazon’s list, joining cities that had been widely expected to make the cut, like Denver and Dallas, and surprises like Nashville, Tennessee, and Columbus, Ohio.
The winner could get as many as 50,000 high-paying jobs and $5 billion in investment, figures that Amazon has dangled in front of local officials, setting off an unprecedented competition to be the second home for one of the internet’s mightiest companies. In all, 238 cities and regions applied to bring the company to town, many using promises of tax breaks and public charm offensives to gain favor with the e-commerce giant.
The finalists include places like Newark, New Jersey, where the local economy has struggled for decades, and hip centers like Miami and Austin, Texas. For other cities, like Los Angeles and New York, luring Amazon would cement their place as centers of the tech industry.
The other finalists are Atlanta; Chicago; Indianapolis; Montgomery County, Maryland; Northern Virginia; Philadelphia; Pittsburgh; Raleigh, North Carolina; Washington and Toronto — the only one outside the United States.
Officials from the 20 locations celebrated their selections and, in most cases, reiterated their pitches for why Amazon should ultimately pick them. Ras Baraka, mayor of Newark, said Amazon would have “a tremendous social and economic impact on this city, state and region by coming to Newark.”
Kathleen Wynne, the premier of Ontario, the province where Toronto is located, reacted with what could be perceived as a dig at her U.S. competitors. Toronto was the “obvious choice” for Amazon, in part because of Canada’s universal health care system and its openness to immigrants, she said.
“We are already welcoming the best and brightest talent from around the world — no matter where you come from, you are welcome and you will feel at home in Ontario,” Wynne said.
Many of the cities selected had been considered shoo-ins from the moment Amazon announced the search in September, largely because they closely matched the attributes that the company said it wanted in a second home, which it is calling HQ2. Those criteria included a metropolitan area with a population greater than 1 million and the ability to attract and keep strong technical talent.
But there were several surprise snubs, too. Amazon rejected applications from Detroit, Phoenix and San Diego, plus all the bids from Mexico. The list leaned east, away from the tech-saturated hubs of the West Coast.
“Getting from 238 to 20 was very tough — all the proposals showed tremendous enthusiasm and creativity,” Sullivan, Amazon’s head of economic development, said in a statement. “Through this process we learned about many new communities across North America that we will consider as locations for future infrastructure investment and job creation.”
Amazon shrouded its selection process in secrecy. On Thursday, the company said little about how it had pared down the list, other than to say it based its choices on the criteria it laid out for the search earlier.
The process was conducted by a team of about a dozen people within Amazon, including economists, human resources managers and executives who oversee real estate, according to people briefed on the process who spoke on the condition of anonymity because the deliberations were private. Jeff Bezos, Amazon’s chief executive who was the mastermind behind turning the search into a public process and coined the term “HQ2,” was also involved, the people said.
The veil of secrecy kept even the finalist cities in the dark until Thursday’s announcement.
Muriel Bowser, the mayor of Washington, was on her way into the office when a deputy mayor called and said the city had made the Top 20. “I was, of course, pleased, but not that surprised because we know that Washington, D.C., matches what Amazon is looking for,” Bowser said.
Hans Riemer, president of the Montgomery County Council, found out from a friend via text message.
“My heart skipped a beat,” he said.
The process will now shift into a new phase, with Amazon representatives communicating more directly with the finalist cities as they prepare to select a winner later this year — and perhaps with cities being even more outspoken about why they should be chosen. Emissaries from Amazon are expected to visit the finalist locations in person. Some of the finalists are neighbors, setting up what are likely to be intense regional rivalries. Bowser said Amazon’s selection of Montgomery County and Northern Virginia — both near Washington — spoke to the appeal of the region’s work force.
“Of course,” she added, “we believe that Washington, D.C. — with our top talent and world-class amenities — is the right place for Amazon HQ2.”
Baraka said that Newark has a “friendly rivalry” with its bigger neighbor, New York, while adding that his city enjoys the advantages of cheaper real estate, space for development in its downtown and lots of fiber optic network capacity.
Amazon needs a second headquarters because it’s bursting at the seams in its hometown, Seattle. Bezos founded the company there in 1994, and it has since transformed the city, employing more than 40,000 there. That expansion has also contributed to Seattle’s soaring cost of living and its traffic woes.
To lure applicants, Amazon showered local politicians with its own data about the effect the company has had on the Seattle economy, and some of the immediate economic benefits its second home would experience — including $5 billion in construction spending.
It asked candidates to include in their bids a variety of detailed information, including potential building sites, crime and traffic stats and nearby recreational opportunities. Amazon also asked cities and states to describe the tax incentives available to offset its costs for building and operating its second headquarters. The most eye-popping of those offers was New Jersey’s promise of as much as $7 billion in tax incentives to bring Amazon to Newark.
Another tech giant, Apple, this week said it, too, was hunting for a location to build a major new campus. But the company’s chief executive, Tim Cook, said it would not conduct a public bidding process akin to Amazon’s. He said California and Texas were unlikely locations for the new campus because Apple already has significant operations there. Amazon’s search process has also attracted critics. Stacy Mitchell, co-director of the Institute for Local Self-Reliance, a nonprofit organization that serves as an advocate for local businesses, said that politicians were enhancing Amazon’s image just as the company’s market power was under growing scrutiny from groups like her own.
“As these cities woo and grovel, they are basically communicating this idea that we should want Amazon to be bigger and more powerful in our economy,” Mitchell said.
Ed Glaeser, a professor of economics at Harvard who studies cities, predicted that the winner of the contest would have in place the kind of positive economic attributes that mean it wouldn’t necessarily need Amazon to thrive.
“At its best, the competition for Amazon has spurred cities to think about how to improve their quality of life more generally,” he said. “At its worst, the competition has become a distraction and a contest for throwing cash at the giant.”