ANALYSIS: All the signs point to the US capital being the home of Amazon’s second headquarters
The much anticipated short list of places that Amazon plans to evaluate as the location for its second headquarters is out and there are only a couple of surprises.
Perhaps the biggest surprise is that there are a few areas on that list that don’t really meet the web retailing giant’s stated requirements. The presumption here is that Amazon has yet to make another round of cuts that will further cull the list of sites that don’t meet the original RFP requirements.
Several things jump out when you look where the cities are located on the U.S. Most are on or near the east coast. Nearly half are on the so-called Acela rail Corridor between Washington and Boston. Three of the 20 are in the Washington, DC metro area.
Amazon HQ 2
It’s also worth noting that a few of the cities on the list are missing some of Amazon’s “must-have” items. Access to mass transit seems to be the biggest miss in the top 20 list.
While the cities probably have promised that they’ll have mass transit by the time Amazon builds its new headquarters, that’s a promise that’s difficult to fill and in some cities, may be impossible.
A good example is Los Angeles, which has tried and for the most part failed to build a regional mass transit rail network. The city has a huge bus system, but those have to contend with the legendary LA traffic congestion.
Atlanta has a similar problem and while it does have limited rail transit, poor planning has resulted in horrific traffic. Other cities including Nashville, Columbus, Dallas and Austin likewise will find real mass transit hard to accomplish.
Amazon also wants access to a major international airport and many of the cities on the list have international air service in theory only. For example, while there are a few flights to Canada or the Caribbean from cities such as Nashville, Raleigh, Pittsburgh or Columbus, they aren’t any airline hubs of long range flying.
We could go on analyzing the top 20 cities all day, but there are clearly some that meet all of Amazon’s requirements and some that don’t. Of those that do, it seems that the Acela Corridor cities, along with Chicago have the edge. All of those cities meet the requirements as well as the things that Amazon has said it really wants, but that aren’t mandatory.
Boston has two things the rest of candidate cities don’t—MIT and Harvard—along with a number of other major schools. It’s always been a technology center and while Boston area traffic is fairly awful, the transit system is quite good, if somewhat old.
New York and Newark, taken as a pair, offer a lot to Amazon. While NYC is full of really large corporate headquarters, it has a lot to offer and Newark is just across the Hudson River from Manhattan. They both have superb transit options and cultural opportunities are vast.
Moving down the corridor, Philadelphia shares many of New York’s virtues, but it’s also much less expensive. Pittsburgh is farther inland, but it’s got Carnegie-Mellon University, which a major technology research center, but it’s too far from Philadelphia to really be considered a nearby location and it misses a lot of the other RFP requirements.
Chicago meets all of the requirements, as does Toronto. But Chicago’s crime rate may give Amazon pause. Toronto looks like a great fit, but it’s outside the U.S., which might be a problem, or it might be an advantage, depending on your point of view. But a site north of the border would inject complications ranging from customs to currency.
Then there’s the Washington, DC Metro area. The fact that there are three candidates clustered together in the area shows that Amazon is looking closely at the nation’s capital its suburbs. This fact has been noted in the news and financial media ranging from the Wall Street Journal to Slate. What may be most compelling to Amazon is that the company could choose any of them and get the benefits of all three.
In addition, Washington has some benefits that aren’t stated in the RFP, but that are certainly going to be important to Amazon over time. The proximity to the center of political power is probably the most important and having a headquarters in the area rather than just a lobbying office says a lot.
Plus, Jeff Bezos already splits his time between Seattle and Washington. He owns The Washington Post and he owns the largest private residence in DC, which he’s now renovating. A profile in the New York Times quotes Bezos as saying that once his house is ready, he wants to start hosting salons, much like those former Post publisher Katherine Graham once held in her home in Georgetown. This would indicate an interest in spending more time in DC than he spends already.
When I wrote about Amazon’s search for a new headquarters site, I predicted that the company would pick the DC area. Of the three areas mentioned, one has the edge in factors important to Amazon that aren’t usually mentioned. One of those is a business friendly environment with low taxes.
The other is access to the fiber infrastructure that Amazon needs. Northern Virginia has the environment and taxes policies. Furthermore nearly all of the world’s internet traffic passes through Loudon and Fairfax Counties there, with 70 percent passing through Loudon.
Only Northern Virginia will give Amazon access to the data pipeline it really needs. I think that when Amazon announces its choice later this year, that’s where it will choose.
Originally published on eWeek