Amazon Headquarters Search Is `Trophy Deal of the Decade'
Breaking away from its ‘secretive’ headquarter expansion, Amazon has started a public hunt.
(Bloomberg) -- Amazon is breaking from its history of secret expansions with a public hunt for a second headquarters, spurring quick interest from cities eager to land a workforce of as many as 50,000 people.
Amazon.com Inc. has usually kept under the radar when approaching communities where it wants to build new warehouses, encouraging officials to keep the discussions quiet and even using code names on public documents to avoid detection. That approach has helped Amazon secure more than $700 million in tax breaks from states and cities since 2000, mostly to expand its warehouse and delivery operations, according to Good Jobs First, a nonprofit group that tracks business tax breaks.
But a corporate command post costing more than $5 billion with jobs offering $100,000 in annual compensation is a lot different than a sprawling warehouse plopped next to a freeway that has hundreds of people earning about $15 an hour. The one project could fetch Amazon more than $1 billion in breaks, said Greg LeRoy, executive director of Good Jobs First.
"This is the trophy deal of the decade," said LeRoy, who has been critical of government investments in Amazon warehouses. "There’s no comparison in terms of the number of jobs they are touting."
Significant Impact
The economic impact for the winning city would be significant. Amazon said its investments in hometown Seattle from 2010 through 2016 resulted in an additional $38 billion to the city’s economy.
That explains why mayors and public officials from Memphis, Tennessee; Tulsa, Oklahoma; Philadelphia; Chicago; Rhode Island; Hartford, Connecticut and St. Louis are eagerly lining up to court Chief Executive Officer Jeff Bezos.
The company had less negotiating leverage when it came to its warehouses. They had to be in strategic locations near highways that filled gaps in Amazon’s delivery network. They offered low-paying jobs and created a lot of truck traffic, things likely to stoke opposition, which is why Amazon wanted to limit visibility.
The new headquarters plan, which will woo software development engineers, accountants and administrative personnel, can be situated anywhere close to major airports with a good university talent pipeline, putting Amazon in the driver’s seat. That’s the kind of investment communities will rally behind.
Amazon’s Preferences
Amazon said its preferences include a metropolitan area with a population of more than 1 million, “a stable and business-friendly environment,” access to mass transit and proximity to major highways. It says it will prioritize “shovel-ready greenfield sites,” recognizing that many existing buildings may not be available to meet its requirements.
Shortly after Amazon’s proclamation, Pittsburgh mayor Bill Peduto announced that he’s “on it.” Jim Strickland, the mayor of Memphis, said his city will “absolutely make a bid.” Philadelphia mayor Jim Kenney said his East Coast metropolis would be a “prime” location for Amazon. In Chicago, Mayor Rahm Emanuel has already spoken with Bezos to pitch him on the city, according to a report from Crain’s Chicago Business.
Local leaders in Missouri, including St. Louis Mayor Lyda Krewson, are putting together a regional team to try to bring Amazon to the area. Nashville Mayor Megan Barry is sending out teams to find potential spots for Amazon to put its new campus. Hartford Mayor Luke Bronin hinted that it’s time to redefine his city as officials in Rhode Island said they will be applying to bring Amazon to Providence. Tulsa Mayor G.T. Bynum will also be submitting a proposal, assuring his city that he’ll do “whatever it takes.”
Outside the U.S., Toronto became the first city to publicly throw its name into the mix. Mayor John Tory told Canada’s public broadcaster that city staffers are working on a bid.
The only place playing hard to get so far is Detroit.
"Our only comment at this time is that we will be evaluating it carefully," John Roach, spokesman for Mayor Mike Duggan, told the Detroit Free Press.
To contact the reporters on this story: Spencer Soper in Seattle at ssoper@bloomberg.net, Kim Bhasin in New York City at kbhasin4@bloomberg.net.
To contact the editors responsible for this story: Jillian Ward at jward56@bloomberg.net, Molly Schuetz, Andrew Pollack
