It’s official. Long Island City, NY, and Arlington, VA, will split the honors of hosting Amazon’s new headquarters. HQ1 will stay in Seattle.
Why did it take Amazon so long with so much drama to decide where to put its new headquarters when every state and city in the Union would welcome it?
That might be the reason.
Amazon doesn’t always make a profit, but it’s been genius at handling costs and cash flow. Every locale vying to be chosen has thrown a package of incentives Amazon’s way. By choosing two locations for its secondary headquarters, Amazon just reaped a double dose of sweeteners.
There’s cheering in New York and Virginia today, but Amazon has left a trail of disappointment. The process was long for everyone. For the cities that bid, it was arduous and expensive. Although some places can now relax about the money they won’t spend.
Maryland, for instance, had offered a package worth $8.5 billion in tax and infrastructure help. It’s a bill that will never come due now. Newark, NJ had dangled $7 billion.
Most cities kept their actual offers mum. Negotiations on the financial packages were as secretive as Amazon’s decision on the ultimate location.
Montgomery County, Maryland, was a poster child for discretion. It released a copy of its 10-page offer with every line of text blacked out. Governments might have trouble doing that as they are subject to Freedom of Information demands, but Montgomery County’s bid, like many others, was handled by the Chamber of Commerce.
By going that route, even those in decision-making circles never knew much. A member of the Austin City Council complained the council didn’t have a clue. Its offer was also put together by the Chamber of Commerce. Only if Austin had won would the government find out what the CC had promised on its behalf.
During the run-up to the final announcement, Amazon watchers took to spying on Jeff Bezos’ travel itinerary to guess where HQ2 will be. Some guessed that Denver and Dallas would make the cut because his private jet touched down there. It also went to New Jersey and Washington, DC.
The last one might have been a clue, except that Bezos owns the Washington Post and has a house in the DC area.
Amazon asked for a lot. It wanted an airport nearby, a large pool of educated tech workers. It needed major transportation, a million people in the metro area, and plentiful land for expansion… near urban centers where land is scarce, yet. Also, it would be nice if the airport had direct flights to Seattle, New York, and Washington, DC, the company suggested.
Choosing New York and DC suburbs covered the airport problem.
Still, some cities and their governments feel they were getting played, and those grumbles began to surface even before the final choice.
Most large companies negotiate deals like this in secret as much as possible. No one objected to Amazon doing the same. The issue was the scope and brazen grasp for special treatment Amazon sought.
The usual process for building a large factory, sports center, or headquarters is that the company studies options. Then it zeroes in on one or two places, maybe even four to pursue more seriously.
Instead, Amazon made a national request for proposals that turned the process into a brawl. Initially, more than 200 cities showed interest.
Now we know who won. Whether they will be happy about it five years down the road is an open question.
Big Warehouse, Big HQ, Big Pressure
Amazon is not the only corporation with a large footprint in Seattle, but Seattle Mayor Jenny Durkan had her doubts that winning the HQ2 bid would be an unmixed blessing. Durkan noted that Seattle housing prices average $824,000, and rents have soared 57% since 2013. Seattle has 4,000 homeless people on the streets.
In Austin, councilwoman Leslie Pool was a big doubter. Amazon’s HQ2 (if not split) promised to bring 50,000 high paying jobs, and that would change Austin, not in a good way, she believed.
“This is a city where you want to put down roots. The people here are the friendliest. The parks are beautiful. But if someone like Amazon comes in, a big con is the massive amount of dislocation it causes. You put out the small businesses and longtime property owners, the very businesses and people that give the city its flavor and, I would argue, its brand.”