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Why Amazon may want a big city for HQ2

Posted at 7:02 PM, Oct 19, 2018

Amazon's search for the perfect home for its next headquarters could be leaning towards larger cities.

Executives have visited some of the bigger names on the list of 20 finalists in recent months, according to a report in the Wall Street Journal. They dropped in on New York City, Miami, Chicago and Newark, while possibly ghosting smaller or more suburban ares like Raleigh, North Carolina, and Montgomery County, Maryland.

Amazon may have decided that a city is necessary for luring the best employees.

"The key for Amazon is that they want to build a second HQ that is an attractive place to live and work for young professionals. This is why quality of life in the city will matter," said Nathan Jensen, a professor of government at the University of Texas at Austin.

Other than both being finalists for HQ2, places like Miami and Montgomery County don't have much in common. Miami is a cosmopolitan city that draws business and tourists from around the world. Montgomery County, located outside of Washington D.C. is less well known and lacks some of the splashier attractions of a warm city perched on the beach.

Not getting Amazon could be a mixed blessing for the less urban locations. Absorbing up to 50,000 new workers would be a major undertaking, notes Jensen. And many of those would be high-wage positions, which could recreate some of the issues with soaring housing costs, income inequality and gentrification seen in Amazon's home base, Seattle, as well as other regions with major tech companies.

The issues wouldn't be insurmountable.

"Unlike an unplanned expansion of the workforce, cities do have the ability to plan for this. This has been one of my disappointments in not seeing most cities HQ2 proposals. This is exactly the time when we, as a community, can thinking solutions to these challenges," said Jensen.

Amazon has searched for a home for its second headquarters — nicknamed HQ2 — for more than a year. The company has whipped up suspense around the decision. It has cities competing with glossy proposals and tax cuts and Amazon watchers are eagerly looking for clues, and odds-makers are aking bets.

The new facility would create 50,000 jobs and cost $5 billion to build. After the company received 238 proposals, it selected 20 finalists cities and metropolitan areas in January. Amazon has said it will announce the winning city by end of the year.