The race to host Amazon’s new $5 billion facility has entered its final stretch. Proposals from 238 cities have been narrowed down to a shortlist of 20 finalists. With up to 50,000 jobs and billions of tax dollars on the line, the stakes are high. Which city will come out victorious and host Amazon’s HQ2? Read on to find out.
What is HQ2?
HQ2 is the shortened name of headquarters 2, a proposed second headquarters for giant conglomerate Amazon. The company is attempting to become the world’s largest and requires a great physical location.
The proposition attracted attention from more than 200 cities across North America with bids from areas as diverse as Anchorage, Alaska and El Paso, Texas. There was even an ambitious bid by tiny Stonecrest, Georgia (population 20,000) which involved the creation of a brand new City of Amazon named after and run by the company.
The bids have now been narrowed down to 20 and a fierce round of behind closed doors negotiations is now underway. With billions of dollars on the line the stakes are high. Every city is in with a chance during this final stage.
What are Amazon’s HQ2 Requirements?
Amazon required proposals to have several essential requirements:
- Population of over 1 million people
- A stable and business-friendly environment
- Within 30 miles of a major population centre
- Within 45 minutes of an international airport
- Access to highways and arterial roads
- Good public transportation access
- Up to 8 million square feet of office space for potential future expansion
In addition, Amazon have some optional criteria:
- Direct flights to New York, San Francisco, Seattle and Washington D.C.
- An urban location
- Access to major universities
When will HQ2 be announced?
The final shortlist of 20 cities was announced in October 2017. There is no definitive date on when the name of the winning city will be revealed but it will be some time in 2018. Amazon are keen to start work on HQ2 but will not rush the final decision.
Amazon HQ2 betting: Who are the HQ2 top contenders?
Strengths: New HQ2 favourite Northern Virginia has overtaken the competition thanks to a leak from Amazon. A local Arlington news site experienced a spike in traffic originating from an internal Amazon domain, suggesting employees were investigating the area.
Northern Virginia makes a lot of sense as a location for HQ2. It offers proximity to Washington D.C., good transport links and an educated workforce. Improvements are also being made to the proposed HQ2 area with the development of a a new Silver Line train station.
Weaknesses: Much of the shortening in Northern Virginia’s odds is due to the traffic from Amazon employees to the local news site. Whilst this is promising for the area it does not mean Amazon are not investigating other candidates more discretely.
Northern Virginia’s cost of living is also relatively expensive compared to some of the other contenders, with the average house costing twice as much as it would in Atlanta.
Strengths: Austin is America’s fastest growing city and offers Amazon a young and highly skilled workforce, good transport links and relatively low housing costs for workers. Texas considers itself to be “business friendly” with schemes in place to both attract and retain businesses.
Referred to as the “Silicon Hills” Austin has become an IT hub with Dell, Apple, Samsung and IBM setting up facilities in the city. Amazon acquired Whole Foods in August 2017 so the fact that the grocery chain’s headquarters are located in Austin is advantageous for the city’s overall bid.
Another of Austin’s strengths is its central location within the country. This would make it simple to assemble important executives from both coasts in one place.
Weaknesses: One issue with Austin’s bid is Texas’ perceived dependence on oil revenue. Fluctuations in energy prices affect the prosperity of the state to an extent that may be off-putting to Amazon.
Austin also faces regional competition from fellow Texas finalist Dallas, as well as strong bids from other Southern cities. As the competition heats up the two sides may split any potential Texas vote or be forced to compete on the size of incentives offered.
Strengths: Former HQ2 favourite Boston has been overtaken by Montgomery County and Austin in the HQ2 race but is still a very strong candidate. The city shares a labour market with nearby Cambridge that incorporates some of the world’s leading universities. Amazon already takes advantage of such a well-skilled workforce and is in the process of opening an office for 900 staff in the Boston metro area.
Amazon has also worked with Boston based tech start-ups and a presence close to these innovative companies would be a bonus, especially as the company looks to develop its speech recognition and robotics divisions.
In terms of infrastructure, Bean Town has good transport links and meets all of Amazon’s key requirements. There are also a range of sites available across the city that would be a suitable fit for HQ2.
Weaknesses: Perhaps the biggest question mark over Boston’s bid comes down to cost. Boston is an expensive city to do business in. Amazon will be incentivised to build HQ2 in the area but any savings might be outweighed by the increased wage costs needed to attract staff to one of America’s most expensive cities.
The other issue concerning Boston’s bid is related to the strengths that would attract Amazon in the first place. Does Boston need Amazon as much as the other cities on the shortlist? With a thriving start-up culture, world-class universities and a housing market that is already one of America’s most expensive, the answer is probably no.
If the winning bid is decided by which city is prepared to offer Amazon the largest financial incentive then Boston is unlikely to compete with some of the metro areas more in need of investment.
Strengths: America’s seat of power has a number of unique advantages for Amazon. Bringing jobs and wealth to the city housing congress will do the company no harm politically. CEO Jeff Bezos also owns a house in D.C, a factor which has a larger effect than you might expect on a company’s choice of headquarter location. This is especially true considering Bezos already owns the Washington Post.
Washington meets all of Amazon’s requirements and is certainly keen to seal the deal for HQ2. Incentives offered by Washington D.C. district add up to a record-breaking package. Amazon would receive relocation reimbursements of up to $7500 per worker and for every military veteran hired the company would receive $30,000. Those perks are in addition to a $15 million tax exemption and a freeze on property taxes and sales tax.
This would all make financial sense for Amazon. Relocation reimbursements alone could be worth $375 million to the company.
Weaknesses: Like Boston, Washington’s housing market is amongst the most expensive in the country. As a result high-skilled workers will demand a wage premium when moving to the city.
The city’s public transport system has also come under scrutiny with failures on existing lines and decreasing usage. Traffic congestion is an issue within the city and some tech workers have left the D.C. area for less crowded cities.
Amazon recently stressed the importance of confidentiality during its negotiations with cities. Any further release of financial details or a public backlash related to the high cost associated with attracting HQ2 will count against D.C.’s bid.
Strengths: Completing the four favourites is America’s ninth most populated metro area, Atlanta. The southern city boasts a growing tech scene, low cost of living and great universities. Atlanta is already home to companies including Coca-Cola and UPS demonstrating it possesses both the human and physical capital to supply multinational corporations.
One of the key factors in Atlanta’s bid is the proximity of Hartfield-Jackson airport. Situated just seven miles from central Atlanta, Hartfield-Jackson is the world’s busiest airport in terms of both passenger numbers and number of flights. This ensures Atlanta can offer better air travel options than any other city on the shortlist.
Weaknesses: As sizeable as Atlanta’s population is, the metro area is vast and comparatively sparsely populated, covering a full 13 counties. Atlanta’s roads are also notoriously congested so Amazon would require a headquarters that can be easily accessed by employees who may be spread around the city. Narrowing down an accessible location that fits all of Amazon’s criteria could be a challenge.
The other question mark over Atlanta’s bid is what it has to offer to separate itself from the other cities. Washington and Boston in particular can offer unique and immediate advantages over other cities. Atlanta’s offering may become too reliant on the strength of its airport to truly stand out from the other shortlisted bids. Unless the city can identify and present its unique advantages its bid may get overlooked for more compelling proposals.
Montgomery County, Maryland
Strengths: A former HQ2 favourite, Mountgomery County was briefly ahead of the likes of Austin, Boston and Atlanta in the HQ2 race.
The area's previous favourite status was due to a huge three billion dollar tax break pushed through by Governor Larry Hogan. The total incentives package offered to Amazon could amount to five billion dollars.
The county has also proposed legislation entitled the PRIME act, after Amazon’s membership service, which will provide further incentives to Amazon and other large businesses who move to the area.
Weaknesses: There may be some backlash to such a high benefits package. Analysts have calculated that the proposals could cost the area 6.5 billion dollars over the next 35 years when taking into account lost tax revenue.
Transport could also present a potential problem as the most easily accessible airports are on the smaller side compared to those available to other bids. Improved transport links between Montgomery County and Baltimore may also be required by Amazon.
Much of the strength of Montgomery County’s bid is based on the huge incentive package on offer. Should another city choose to outbid them then the area may not have another unique selling point to strengthen their bid, short of increasing their own incentives package.
Potential Amazon HQ2 cities: The other contenders
This is a private bidding process so none of the twenty finalist cities can be ruled out prematurely. Especially since the extent of the financial incentives offered by each bid is unclear.
We do know that Toronto (27.380*) have refused to offer Amazon generous subsidies but, as the only non-US finalist, the city can offer the chance to diversify corporate operations across the border. Equally, traditional powerhouses like New York (21.840*) and Los Angeles (46.070*) will always be attractive to a company the size of Amazon beyond short-term financial gain.
If Amazon would prefer to operate in a similar way to its current headquarters in Seattle then a smaller city would be a better choice. Bids by Pittsburgh (26.360*) and Nashville (27.380*) offer Amazon a more influential position within the area without sacrificing many of the advantages offered by the larger metro areas.
Where can I bet on Amazon HQ2?
Pinnacle are offering odds on all 20 Amazon HQ2 finalists. View the latest Amazon HQ2 odds for the full list of cities and their current chances. Pinnacle offer the best odds online and are independently rated as the number one bookmaker for payouts.
To learn more about betting strategy read more of Pinnacle’s expert betting advice.