Bidding war for Amazon’s second headquarters is underway, here’s who’s on top

The bidding war for Amazon’s second headquarters began on Monday, and several cities have already submitted their proposals. New Jersey has submitted a bid for their city of Newark, offering up what could potentially be the greatest financial incentive for Amazon—$7 billion in tax breaks.

Just last month, Amazon announced a competition to source a location for their second headquarters. Dubbing it “HQ2,” Amazon is looking to spend up to $5 billion building the new hub, which will run in tandem with the Seattle-headquarters. The city lucky enough to land the gig would gain 50,000 jobs with an average salary of $100,000.

On the surface, Newark, NJ would appear to have everything Amazon is looking for. In the suburbs of New York City, Newark benefits from an extensive network of public transportation and even has its own airport. There are 60,000 students studying in six colleges and universities across Newark. This, combined with the proximity to other large metropolises like New York City and Philadelphia, means HQ2 would have an extensive talent network to pool from for future employees. Newark has some prime office space available for development, as well as more affordable housing than New York City or Jersey City.

Monday, New Jersey Governor Chris Christie announced their bid for HQ2. According to Fortune, the proposed $7 billion in tax breaks is broken down between state and city incentives.

The state has estimated that HQ2 could bring a potential $9 billion to the economy. As such, New Jersey is offering $5 billion in tax incentives over the next 10 years, but not before the 50,000 jobs are added. The city of Newark has also proposed a tax incentive, offering $1 billion in local property tax breaks and $1 billion worth of waived wage taxes for Amazon’s HQ2 employees over the next 20 years.

Amazon is allowing cities to submit their proposals through October 19.

Nearby Philadelphia is also reported to be ranked high on Amazon’s list of prospects. The city of brotherly love also proposed a tempting financial incentive, offering 10 years of property tax abatement. However, Fortune stipulates that it is “unclear” what, definitively, Amazon will gain from the plan.

Moody’s Analytics, a subsidiary of Moody’s Corp. providing economic and capital markets analysis, released a shortlist of cities they expect to be at the top of Amazon’s list. Coming in on top was Austin, TX. Austin was followed by Atlanta, Philadelphia, Rochester, Pittsburgh, New York City and the surrounding metro area, Miami, Portland, Boston and Salt Lake City.

The study first evaluated cities based on their adherence to Amazon’s laundry list of requirements for their new location. It also chose cities based on other economic factors. Other factors included: business environment, human capital, cost, quality of life and transportation.

One city that was absent from Moody Analytics’ list was Chicago, who submitted their proposal on Monday. Although Chicago’s announcement of their eligibility on Monday lacked details, Mayor Rahm Emanuel did release a statement.

“Chicago offers unparalleled potential for future growth for businesses of all sizes and is the ideal place for Amazon to build its HQ2,” the mayor’s statement read. “This bid will demonstrate to Amazon that Chicago has the talent, transportation and technology to help the company as it reaches new heights and continues to thrive for generations to come.”

Other cities have proposed to Amazon before submitting a formal bid. Kansas City’s mayor went on a reviewing spree on Amazon products. Georgia offered up a sizable amount of land totaling to a grand 345 acres; they even said they would name the site after the company, giving birth to the new city of Amazon, GA. A company in Tucson sent Amazon a 21-foot saguaro cactus to their Seattle headquarters.

Although amusing, the LA Times points out that such strategies to catch Amazon’s attention probably won’t amount to much. After all, the retail giant’s detailed seven-page request mostly highlighted financial incentives. Such incentives could materialize in the form of land, tax credits, relocation grants, workforce grants and fee reductions. These would be critical for Amazon, considering such incentives would allow the company to build a new “mega-campus” and offset “ongoing operational costs.”

Oh, and that 21-foot saguaro cactus? Amazon tweeted that they couldn’t accept the gift, “even really cool ones.” It was donated to Tucson’s Desert Museum. Better luck next time, Tuscon.

Featured image via Flickr/Robert Scoble

Amazon is taking applications to determine the location of its second headquarters

Amazon announced Thursday that it intends to build a second headquarters facility in North America, The Washington Post reports.

The new location will be “a full equal” to the company’s existing Seattle hub, CEO Jeff Bezos said in the announcement. Amazon will spend more than $5 billion on its new home, which will employ more than 50,000 people making an average salary of $100,000 per year. In addition to the 50,000 long-term jobs, Amazon’s new facility will create “tens of thousands” of ancillary, temporary gigs, the company says.

The company has yet to pick an exact location for the new campus and is allowing state and local governments to apply to host the new site. The application period will run through October 19, and Amazon will announce its decision next year.

The application process is open to any metropolis in North America. Chicago, Philadelphia, Toronto and other cities have already indicated intentions to apply, according to the Post. Amazon did not explicitly comment on how willing it would be to move to Canada or Mexico but did use the word “province” several times in the statement, Jed Kolko, the chief economist at indeed.com, notes per the Post.

In addition to offering jobs, the $474 billion tech giant intends to make investments in the surrounding community. The company says its investments in Seattle boosted the city’s economy by $38 billion from 2010 to 2016.

With the potential benefit to the local economy of housing an Amazon headquarters so high, the company will seek tax breaks and other incentives. The Post cites data collected by Good Jobs First showing that Amazon received $241 million in subsidies to support the building of new facilities in 29 U.S. cities in 2015 and 2016.

Many analysts believe that by initiating an application process, Bezos intends to spur a bidding war between governments throughout the continent.

“This was like an open letter to city leaders saying, ‘Who wants Amazon and all our jobs?’” Brad Badertscher, an accounting professor at the University of Notre Dame, told the Post. “This is Jeff Bezos doing what he does best: adding shareholder value and getting the most bang for the buck.”

Amazon said it is taking applications because it “wants to build the new headquarters in “a city that is excited to work with us and where our customers, employees, and the community can all benefit.”

Though plenty of cities appear to be “excited to work with” Amazon, the Post points out that Amazon’s presence in a given locale is not without drawbacks. Though the company has contributed tens of billions of dollars to Seattle’s economy, the giant’s rise has also precipitated gentrification in the area. The Post cites The Seattle Times as noting that the median home price in the Seattle area has jumped from $605,900 to $730,000 in the past 12 months—a 17 percent increase.

Moreover, traffic problems have surfaced and some say Amazon’s presence has compromised Seattle’s culture and “changed the city for the worse.”

Rita McGrath, a professor at the Columbia Business School in New York, points out, per the Post, that Amazon may choose to build its second home in an area where the cost of living is more moderate than it is in Seattle.

“It’s hard to attract people [i.e., potential employees] if they can’t afford the housing available locally,” she said.

Amazon has said it wants the new facility to be near a metropolitan area with a population of at least one million and a thriving tech industry from which the company can pull talent. The new digs will need to be within 45 minutes of an international airport, with direct access to mass transit.

Kolko notes that an east coast location would balance Amazon’s presence throughout the continent and put the company closer to its European operations.

Amazon also seeks at least eight million square feet (183.65 acres) worth of land—it plans to expand the new facility over the next decade. The Seattle campus spans 8.1 million square feet (185.95 acres).

The company needs the room, the Post notes. It plans to add 100,000 employees by the middle of next year and already employs 380,000 people worldwide. New Amazon packing and shipping facilities are coming to New York, Ohio and Oregon. And, the company just bought Whole Foods—and its 465 stores—for almost $14 billion (Whole Foods’ headquarters could not accommodate Amazon, the Post says.)

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