The Amazon HQ2 Shortlist, Why is it so long? What is HQ2?

Author: Donnie Laur.  Award-Winning Senior Creative Application Developer @ Visix Inc.  Atlanta, Georgia.

What is Amazon HQ2 and what is the shortlist and why is it so long?  Why is your region included on the list?

I will answer all of these questions, and even questions that you didn’t know existed… welcome to HQ2 Prime.

What is Amazon HQ2?

Earlier in the year Amazon reached out and said that it is looking for another headquarters, not a replacement for its big headquarters in Seattle but a second headquarters, equal to the first headquarters, hence HQ2.  Some media in Seattle questioned the idea that any company would need a second headquarters and maybe this is a means for Amazon to relocate.  However, Amazon has exceeded 500,000 employees worldwide (the HQ2 page on Amazon now says 540K employees), so it isn’t really shocking that it would need another headquarters that at some it would house roughly 50,000 employees.  Anyone who has ever done business in the East or West coast time zones know that you have to have employees to handle the other coast.  With the Pacific time zone for HQ1 it frankly makes sense to have developers up and working several hours earlier, which I think points to an Eastern time zone.

Amazon is looking for a location with strong local and regional talent — particularly in software development and related fields — as well as a stable and business-friendly environment to continue hiring and innovating on behalf of their customers.  Amazon expects to invest over $5 billion and grow its second headquarters to be a full equal of Seattle, creating as many as 50K high-paying jobs.  In addition to Amazon’s direct hiring and investment, construction and operation of HQ2 is expected to create tens of thousands of additional jobs and tens of billions of dollars in additional investment in the surrounding community.

Amazon estimates its investments to Seattle from 2010 to 2016 resulted in an additional $38 billion to the city’s economy – every dollar invested by Amazon in Seattle generated an additional $1.40 for the city’s economy overall.  — From the Amazon HQ2 bid page.

What type of 50K employees?

High-paying developer jobs, construction, executive jobs and more.  To be clear Amazon already has warehouses and distribution centers in many regions, several in some cities on this list.  While they were not fully clear they do have developer jobs, projects like Alexa Echo and Amazon Studios that are possible.  They did state that they will hire as many as 50,000 new full-time employees with an average annual total compensation exceeding $100K over the next 10 to 15 years.

What are they looking for in an Amazon HQ2?

What was in the RFP (Request for Proposals)?  It was due by October 19th, 2017 and 238 regions or cities submitted proposals.

  • Metro areas with more than one million people.
  • A stable and business-friendly environment.
  • Urban or suburban locations with the potential to attract and retain strong technical talent.
  • Communities that think big and creatively when considering locations and real estate options.
  • It could be an urban or downtown campus, but it does not have to be.
  • It could be a similar layout to the Seattle campus, but it does not have to be.
  • The space required could be greenfield sites, infill sites, existing buildings or a combination.
  • 30-mile proximity to a population center.
  • 45-minute proximity to an International airport.
  • Proximity to major highways and arterial roads.  1-2 miles.
  • Access to mass transit, at the site.  Rail, train, subway/metro, bus routes.
  • Initial square foot requirement of 500K+ for phase one of 2019.
  • Total square foot requirement of 8M square feet for beyond 2027.
  • Sustainable and energy-efficient buildings and space were mentioned.
  • Optimal fiber connectivity, it must be available for the site.
  • Multiple cellular phone coverage maps is also a requirement for the site.

Key preferences and decision drivers

  • Site/Building.  Space must be available and connected to fiber/cellular.  It doesn’t have to all be already pre-built.  They talk of a combination here of all sorts of buildings.
  • Capital and Operating Costs.  A stable and business-friendly environment and tax structure will be high-priority considerations for the Project.  Incentives offered by the state/province and local communities to offset initial capital outlay and ongoing operational costs will be significant factors in the decision-making process.
  • Incentives.  Lay out all the incentives that are available.
  • Labor Force.  Must be close to a population center, highly educated labor pool is critical and a strong university system is required.
  • Logistics.  The airport must have direct flights to Seattle, NY, SF, and DC.  Ability to quickly get to the airport.
  • Time to Operations.  Quick timetable so zoning and site prep is important.
  • Cultural Community Fit.  It requires a cultural and community environment for its long-term success.  A diverse population, excellent higher ed schools, local government structure and elected officials eager and willing to work with the company.  A stable and consistent business climate is important to Amazon.
  • Quality of Life.  A place where employees want to live.  High quality of life.

Who Made the Amazon HQ2 Shortlist?  In order of West Coast to East Coast

  1. Los Angeles, Ca
  2. Denver, Co
  3. Dallas, Tx
  4. Austin, Tx
  5. Chicago, Il
  6. Indianapolis, In
  7. Nashville, Ten
  8. Columbus, Oh
  9. Toronto, Canada
  10. Atlanta, Ga
  11. Pittsburg, Pa
  12. Philadelphia, Pa
  13. Montgomery County
  14. Washington D.C.
  15. Raleigh, NC
  16. Northern Virginia
  17. Newark, NJ
  18. New York City
  19. Boston, Ma
  20. Miami, Fl

Why is the shortlist so long?

I have seen many news articles be a bit snippy with the fact that the shortlist is 20 cities long.  Most of them calling it a “shortlist”.  The fact is that list could not have been any shorter, should not have been any shorter.  Why?  Well, I think that a few things here are happening.

  1. It was 238 bids.  20 is less than 10%, about 8.5%.  If this was a sports league, 10% is about right for an all-star team.  But, honestly, if you are a company that does due diligence, do you really think you can fully vet 238 bids in a few months?  No, you reduce it the best that you can and you dig deeper on the remaining bids.
  2. I think that Amazon doesn’t want to tip all of its hand.  Other companies are going to be using this research, this data, some of it public, when they look for their next business offices.  Not necessarily a HQ2 but a region office or a place to relocate to.  You don’t want to narrow this down to 3 or 4 places and make it too easy for everyone else.
  3. Can Amazon do some good?  I honestly believe that in announcing 20 places you will see 19 regions who do not win that will take huge steps that might not have been possible in improving their region and metro area.  Some places will finally put into motion plans to improve transit and local transportation, upgrade airports or improve their cities.  In a few months it might not be huge but for certain those 20 regions are going to do all that they can to prove that they are worthy of the winning bid.  This isn’t just tax breaks here but improving areas, as they know that Amazon will be coming to visit.  Get spaces that have been dormant all prepped and ready.  Even if Amazon does not move in to develop it, someone else will.
  4. Do no harm.  Would it be harmful to some regions to only have a shortlist of 3 or 5?  Yes, it would have.  Let’s say that the shortlist was 3 and we knew what sites were being proposed to Amazon for HQ2.  Take a guess what would happen to those 3 regions in and around the proposed site?  Real Estate sales.  This can not be overstated if they tip their hand no doubt someone would go in and buy up enough of the surrounding areas to drive up prices for them and for someone else if that region is not selected.  I do think that some regions will still see this happen, but it is unlikely compared to 3-5 cities.
  5. Even if the real shortlist over at Amazon is 5, there is no need to give up the real shortlist.  For some of the above reasons and really who wants to be snubbed?

What is the real shortlist?

Well, that is a matter of debate but I think my some means of deduction that some regional bids can be eliminated.  Granted, I do not know anymore than the next person but after doing all of the research here is my point of view and opinion.

  • Several Canadian regions submitted bids, they did say North American and they left one.  I do believe we can rule out Toronto.
  • There is only one West Coast bid, I think you can rule out a second Pacific coast location, so remove Los Angeles and go ahead and remove Denver too.
  • If we are talking about communities friendly to business with a stable state and local economy you can most likely remove Chicago.
  • Miami is too far south.  They don’t really need the furthest point away from Seattle.
  • I don’t see smaller metro areas without the big airports and Universities making the cut so go ahead and cut out the midwest with Indy and Columbus.
  • I do like the Nashville as being in a tax-free state but it doesn’t have the pull for technology employees to move there.  The average tech salary there is low, throwing in salary over 100K would be shocking to the system.  Cost of living is low too, but it will not be a pull for tech workers.  You have to have an existing strong tech force in place.

What is left?

  1. Dallas
  2. Austin
  3. Boston
  4. New York City
  5. Newark
  6. Pittsburg
  7. Montgomery County
  8. Washington D.C.
  9. Raleigh, NC
  10. Northern Virgina
  11. Atlanta

Can I shorten this more?

Cost of living was a factor as well as an airport with direct flights to Seattle, NY, SF, and DC.  While this could be taken sort of literal, I almost think that they want good flights to all of these areas, so maybe a location in D.C. to Seattle isn’t that great of a flight.  Yes, that could very well be over thinking it but let’s go that route and also consider that cost of living in New York and D.C. is too high anyway.  Yes, I do realize that Newark has offered a crazy amount of $5 billion offer to Amazon.  Really, some offers you can’t afford to take as they will not work out as expected for either side.

That leaves the following, now put in alphabetical order.  Removing the 2 New York and 3 in the D.C. area (They really should have combined these 3 bids into one bid).  Yes, some are out of the metro areas so the cost of living is less.  While they have 30 minutes to metro and 45 to an airport I really don’t think they want to stretch the limits.

  1. Atlanta, Ga
  2. Austin, Tx
  3. Boston, Ma
  4. Dallas, Tx
  5. Pittsburg, Pa
  6. Philadelphia, Pa
  7. Raleigh, NC

Do Pittsburgh and Philadephia have the high tech developer type talent base that can fill these jobs?  It doesn’t seem that Pittsburgh and Philly does.  Dallas is questionable but many people tell me that it does.  I don’t see two frontrunners from the same state so let’s go ahead and remove the Dallas Fort-Worth and leave Austin.

  1. Atlanta, Ga
  2. Austin, Tx
  3. Boston, Ma
  4. Raleigh, NC

I think that all of these regions have the tech force, the Universities to supply with a steady stream and enough local big companies to supply talent.  Raleigh more in the way of Universities like North Carolina, Duke, Wake Forest, and North Carolina State.  Atlanta with Georgia Tech, Georgia Southern both downtown with the University of Georgia, KSU and many other Universities in range.  Boston area has some great Universities but a bit higher cost of living.  I do not think that the Universities in Austin compare to Raleigh or Atlanta but the tech force there is growing and the culture fit is good, tech workers will move there.  I think if we are eliminating New York and D.C. for cost of living and if there is a thing, being too far east, then we can also remove Boston if not for its climate.

If you factor in diversity I think that Atlanta has an advantage over Austin or Raleigh.  The fact that the airport and transportation is a factor favors Atlanta.  The airport in Atlanta is the busiest in the nation and companies like UPS are already stationed there.  The MARTA rail transit system is the 8th largest in the country.  It has its downside but you can ride from the airport to the proposed locations and out to parts of the suburban area.  The only bigger transit rail systems in the US are New York, Chicago, DC, Boston, SF, Philly and Newark.  MARTA in Atlanta has 432,000 average weekday riders by rail or bus, Raleigh has the GoRaleigh system with 17,500 average weekday riders, and Austin Capital Metro had 15K total MetroRail daily boardings in October.  It is possible that Austin and Raleigh might not be able to support enough riders to fill Amazon needs, they didn’t state how big the transit system had to be or how far out the lines or buses had to run.  I think it is important to note that it seems that only Atlanta and Boston can fit all of their needs when it comes to Universities and transit and available space.

The shortlist that I think we are looking at is Atlanta, Austin, and Boston.

Who am I?

Donnie Laur.  Senior Creative Application Developer, Visix Inc.  Atlanta, Georgia.   – I never said I wasn’t biased but I laid out only the facts, with some guesses.  I first started the site as HQ2 Atlanta but I changed it to HQ2 Prime because honestly, a few places have a good shot.