Long-simmering speculation that Amazon was leaning toward the Washington DC suburbs, either Montgomery County Maryland or somewhere in Northern Virginia, for its long-anticipated HG2 has just been dashed by a Wall Street Journal report claiming that Amazon executives have recently undertaken another round of location tours among its 20 ‘finalist’ cities, a sign that CEO Jeff Bezos could be having second thoughts about building the second headquarters near one of his homes, and the Washington Post, a newspaper that he owns.
Though cities comprise most of the finalists, the notion that Amazon might pick a more suburban location has started to fade, as the executive search team has focused mostly on cities like New York City and Chicago with easily walkable neighborhoods.
The visits over the past couple of months include New York City, Newark, N.J., and Chicago, according to people familiar with the matter. In addition, Amazon has been following up with other locations, including Miami and the Washington, D.C.-area, according to some of the people. Some cities, like Raleigh, N.C., haven’t heard from the retail giant in months, according to people familiar with the matter.
The discussions, which follow an initial round of visits early this year, have added to the already intense speculation regarding which way the technology giant is leaning. While Amazon appears to be narrowing its list of 20 finalists, it is still unclear which cities may be in the lead, and what exactly the additional visits indicate about specific cities’ chances.
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Still, the visits have shed some additional light on the process. Amazon, for instance, appears to be favoring an urban site, say people familiar with the matter, which could be a problem for some sites in Northern Virginia and Montgomery County, Md. Those two suburbs of Washington, D.C., along with the district itself, have long been speculated to be front-runners, in part because Chief Executive Jeff Bezos has a home there and owns the Washington Post.
Even if Amazon has already made its final decision, investors, the public and even the cities themselves likely won’t know it right away, as the company is expected to negotiate several decoy “final” deals to avoid details of their true decision from leaking to the press.
They said the company may negotiate near-final deals with several of them before announcing its ultimate selection, something that could help avoid signaling its choice prematurely.
The flurry of recent discussions are part of the home stretch in a contest kicked off in September of last year, when Seattle-based Amazon announced a public search for what it dubbed HQ2. The company said it could hire as many as 50,000 employees and invest more than $5 billion in the new location over nearly two decades.
News of the company’s apparent keen interest in Chicago, New York City and Newark, NJ probably won’t sit well with city officials in Pittsburgh and Indianapolis, smaller cities where Amazon could have a significant impact on the city’s culture and economic development.
The HQ2 search has broken the mold for economic development in a way that experts say could have lasting impact on how companies invest in new sites—much like Amazon in its business has disrupted everything from the way consumers shop to the way companies compute and store their data.
The shortlist of 20 locations includes large, established cities like New York and Los Angeles, as well as smaller cities like Pittsburgh, Columbus, Ohio, and Indianapolis that have recently experienced an economic revival. The stakes for these smaller cities in winning HQ2 are especially high, promising drastic change by drawing in more highly-skilled workers, attracting other businesses and boosting real-estate prices, according to economic development experts.
Officials in these smaller cities are growing increasingly anxious, with some figuratively “sitting by the phone” waiting for a call from Bezos.
After more than a year, officials “are all sitting by their phone waiting,” said Jeff Finkle, president of the International Economic Development Council, an organization that represents economic development officials across the country.
Amazon is considering dozens of metrics and factors in its decision, including available tech talent and educational resources, cost of living, and public transportation.
And while the company could risk a speculative run-up in real estate prices if word of its preferred location leaks, WSJ reported that Long Island City, Queens has apparently attracted the interest of several Amazon executives.
In the recent visits, Amazon executives spent much of their time exploring neighborhoods around, or nearby, sites that have been proposed for HQ2, said the people. Executives appear to be more interested in an urban site that is already woven into the fabric of the city and less interested in having its own campus outside a city center, said the people. One reason would be shorter commutes. It could also help with recruiting employees, something that has proven true with its urban, downtown Seattle campus which is peppered with walkable apartment buildings and trendy restaurants.
In New York City, one of the neighborhoods Amazon is exploring is Long Island City, Queens, according to one of the people. The residential neighborhood is perched on the East River overlooking Manhattan, and is being gentrified by high-rise buildings and young professionals.
The potential prize for whatever city emerges as the company’s pick is huge. Amazon has pledged $5 billion in investment and 50,000 jobs. And while the company may be taking a second look at other cities, the New York Times pointed out earlier this week that Northern Virginia still checks the most boxes. The company’s largest office for its cloud-computing division outside of Seattle is already located there, and it would put Bezos close to Washington, which could help when negotiating lucrative government contracts like the $10 billion contract to migrate the Pentagon’s systems to the cloud. Some observers have even identified an office park that could be a prime location for Amazon’s new offices: Crystal City, an office park named after a neighborhood of Arlington, Va., which benefits from being just across the Potomac River from Washington. Online betting odds and analysts at Citigroup still see Northern Virginia as the most likely choice. Virginia is also seen as a more business-friendly state than Maryland. Of course, Bezos refused to offer clues about the company’s thinking during a speech at the Air, Space and Cyber Conference last month – though he did offer one new piece of information.
Amazon is planning to unveil its decision by the end of the year. So any real estate speculators hoping to front-run the company better get moving.
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