Cities scramble to land new Amazon headquarters

Cities scramble to land new Amazon headquarters
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Local officials around the country are scrambling to put together enticing proposals to attract a new corporate headquarters for Amazon, a once-in-a-lifetime development project that would amount to billions of dollars in direct and indirect investment.

The world’s largest online retailer posted a surprising request for proposals last week, seeking a city to host what it calls its second North American headquarters, where it will employ up to 50,000 well-paid workers. The company said it would invest more than $5 billion in construction.

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Cities and states routinely compete to host major corporations and new factories, offering tax incentives and promises to build infrastructure or educational capacity. Wisconsin legislators are finalizing a deal to bring the tech manufacturer Foxconn to Racine. Nevada officials recently gave a massive tax break to attract a new Tesla battery factory near Reno. Washington state officials offered Boeing more than $9 billion in incentives to keep thousands of jobs in the Puget Sound area.

But experts said the size of Amazon’s new proposal makes the project perhaps the largest potential investment in recent memory.

“This is definitely a different scale. We don’t generally see companies the size of Amazon siting a second headquarters and bringing in 50,000 workers,” said Brooks Rainwater, the director of the Center for City Solutions at the National League of Cities. “The impact of Amazon building a new headquarters in a new city will be significant.”

In the days after Amazon issued its request for proposals, local elected officials across the country pledged aggressive efforts to woo the company.

Kansas City Mayor Sly James (D) said on Twitter that his city would compete for the project. Minnesota Gov. Mark Dayton (D) directed the state economic development agency to work with the Minneapolis and Saint Paul on their bid. A spokesman for the Rhode Island Commerce Corporation promised his state would be “in the game.” A spokeswoman for Indianapolis Mayor Joe Hogsett (D) said the city would “engage” with Amazon.

An Amazon spokesman declined to say how many cities have contacted the company about submitting proposals. Cities interested in hosting the new headquarters have until Oct. 14 to make their pitch.

But few major — or even mid-sized — cities will pass up the opportunity to bid on such a mammoth project. The benefits of landing a new Amazon outpost, local officials said, go far beyond the 50,000 employees who would work directly for the company.

“Amazon will create a rich ecosystem of other companies that support it,” said Mark Cohon, chairman of Toronto Global, which pitches international companies on Canada’s largest city. “It really is the knock-on effect. Billions of dollars of investment means more and more investment.”

Winning the competition would also put a new city on the tech map, attracting follow-on companies hoping to benefit from a huge, highly educated workforce.

“A defining industry can serve as a signature or calling card. A major concentration of high-value work will draw in skilled, often digital talent,” said Mark Muro, director of policy at the Brookings Institution’s Metropolitan Policy Program.

Cities like Toronto will pitch themselves as ideal fits for Amazon’s needs. Cohon pointed to the 400,000 tech workers already employed in the Toronto area, the city’s thriving art and music scene and the 90 Japanese companies and 80 German companies that already have regional headquarters there.

And Toronto is one of dozens of cities across the continent where Amazon already has a footprint. The company maintains a million-square-foot warehouse, employing almost 1,000 people, just outside the city limits.

Though Amazon has not said whether it will seek tax incentives or other deals from local governments — an Amazon spokesman declined to comment on the record for this story — public watchdogs warned some cities that giving away too much to a company carries risks.

“Taxpayers should watch their wallets as the trophy deal of the decade attracts politicians to a hyper-sophisticated tax-break auction,” said Greg LeRoy, who runs the watchdog group Good Jobs First. “We fear that many states and localities will offer to grossly overspend to attract Amazon, even though the business basics — especially a metro area’s executive talent pool — will surely control the company’s decision.”

The question of an adequate talent pool of thousands of highly trained technology workers highlights the fact that not every city will meet Amazon’s requirements.

Richard Florida, an urbanist at the Martin Prosperity Institute at the University of Toronto, said cities competing for the new headquarters will need a large airport to handle business travel, which might hurt competitors like Austin or Kansas City.

Others said the winning city would need space to house tens of thousands of new workers and space to host the headquarters itself. That would seem to limit dense urban cores like Boston or Washington, D.C., where office space is scarce. Still, Washington’s Virginia suburbs, where office space is more plentiful, are likely to make a strong push for the new headquarters.

Amazon’s new headquarters will be a full equal with its flagship office space in Seattle, the company said. 

The company has changed the face of a metropolitan area once known as Jet City, where tens of thousands of Boeing employees churned out generations of commercial and military aircraft.

As Amazon has grown, it has spurred a building boom that has transformed the South Lake Union neighborhood in Seattle, once dotted with semi-used warehouses and fading industries, into a bustling second downtown full of restaurants, coffee shops, hotels and high-end apartment buildings.

Now, Amazon occupies more than 8 million square feet of office space in Seattle, an area larger than the square footage of the Pentagon.

“There’s no substitute for having globally significant standing in an industry,” Muro said.