Which cities are well positioned to land Amazon’s HQ2?

By on September 11, 2017

From The Brookings Institution: Amazon—the world’s largest online retailer and fourth largest company as measured by market capitalization—is soliciting North American regions in a competitive selection process for a second corporate headquarters, or HQ2.

In the world of economic development—of which business attraction is a core function—bringing an Amazon headquarters to town is a huge deal, likely the most significant corporate decision in recent memory.

Simply, very few companies have the potential to reshape American cities. But Amazon is probably one of them. It employs tens of thousands of workers in Seattle and claims an economic impact of $38 billion between 2010 and 2016. CEO Jeff Bezos has intimated that HQ2 will “be a full equal to our Seattle headquarters.” Specifically, the Amazon announcement projects as many as 50,000 new jobs with average compensation exceeding $100,000 per year in the new site.

And not surprisingly, the speculation of where Amazon will go began immediately after the announcement. We examined data to see which metro areas in North America will be top contenders for HQ2.

Before diving in, it is important to note that the specific function of this second headquarters is still a bit unclear. Preliminary signs from the “request for proposals” (RFP) suggest that HQ2 aims to be just that, a second command and control post that could share in the global management and product development done in Seattle. But much remains unknown, which makes this an admittedly speculative exercise.

What we do know is that Amazon is only seeking bids from metro areas with more than one million people. This immediately narrows the list to a little more than 50 U.S. metropolitan areas. We include Montreal, Toronto, and Vancouver in Canada as well.

Talent is a second major consideration. Innovation is a key distinguisher of Amazon from competitors, and that depends on top technical and managerial talent. The RFP notes that a “highly educated labor pool is critical” and that the site must be able to attract and retain “technical talent.” In this regard, a region must be able to offer a highly educated labor force, and that labor force must be large and deep enough to not be overwhelmed by the volume of Amazon’s worker needs. Therefore, we ranked metros on a “talent pool” index based on four simple metrics: the total metro population with a bachelor’s degree, the share of metro population with a bachelor’s degree, the metro area’s total number of STEM jobs, and the share of STEM jobs in the local labor market.

Seattle ranks 9th of the 55 metro areas on this composite “talent pool” index. Near the top of the list are the nation’s largest and most educated cities: New York, Washington, San Jose, Boston, San Francisco, Los Angeles, and Chicago. But the top half also includes medium-sized cities like Austin, Detroit, Hartford, Minneapolis-Saint Paul, and Raleigh. Smaller metros with more limited technical worker pools like Las Vegas, Orlando, Riverside fall near the bottom of the list, as do many Southern metro areas including Miami, Memphis, and New Orleans. Given how important human capital is to Amazon, it is likely that they favor the 22 metro areas that rank as above average metros on this combined index.

A second set of factors involve land and transportation access, specifically whether a city actually has a physical site that can accommodate up to 8 million square feet of development and provides public transportation. These public transit requirements likely eliminate Hartford, and probably Raleigh, which do not have rail systems (whether bus rapid transit is sufficient for Amazon is an additional question mark). Therefore, we end up with 20 North American metro areas that all have rail transit systems, albeit of varying coverage and quality, and international airports with the baseline connectivity necessary to meet Amazon’s demands of daily direct flights to the Bay Area, New York, Seattle, and Washington, DC. We list those below.

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Other opinions on which regions have what it takes: 

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