Want to be Amazon's new hq? Here are 9 things your city needs for a winning bid

Amazon HQ2
Amazon is looking for a city where it can hire 50,000 people.

Which cities will lead the economy of tomorrow? And who will decide? Often it’s an amorphous mass of companies and people over time, drifting to where land is cheap and weather is warm. Sometimes it’s one company, choosing in one moment. Like now, when Amazon decides where to put its second corporate headquarters.

The scale of Amazon.com Inc.’s undertaking — over time, needing up to 8 million square feet of office space and 50,000 well-paid employees — is unlike anything in recent memory. The only thing comparable would be cities bidding for the Summer Olympics. Amazon’s request for proposal narrows the list significantly in terms of the number of cities realistically able to bid for such a project.

First, Amazon’s required labor force dramatically shrink the number of metro areas able to bid. Amazon says it’s considering metro areas with a population of a million or more, but, realistically, to provide 50,000 employees, a metro area is going to need to be significantly larger than that.

Consider a place like Pittsburgh. Its metro area has 2.35 million people, and its labor force is 1.2 million. But the size of its labor force hasn’t grown in 25 years. Even with the talent its well-respected universities produce, is Amazon, a company that thinks of growth in terms of decades, going to build a headquarters in a place where it might have to hire more than 4 percent of the metro area’s labor force with uncertainty about whether that force will ever grow?

The next factor that will reduce the list of possibilities is the need for a suitable international airport. It’s hard to say what exactly constitutes an international airport — you can fly from Hartford, Conn., to Canada — but, as with everything Amazon does, higher volume or higher capacity will probably be seen as more favorable. The list of most-trafficked international airports is full of the usual suspects — large coastal cities and major airline hubs. One additional factor to consider is that the airlines with the largest market share in Amazon’s hometown of Seattle are Alaska Airlines, which serves primarily West Coast destinations, and Delta Air Lines, which is based in Atlanta.

Once you’ve winnowed the list to large metropolitan areas with robust international airports, other considerations come into play. Amazon says “a highly educated labor force is critical and a strong university system is required.” Would that take cities like Dallas and Charlotte out of consideration, or would being a couple of hours from highly respected universities be good enough?

Costs are stated as an important factor, as well. It’s “easy” to identify large metro areas with robust airports and deep, educated talent pools, but those tend to be tremendously expensive. Amazon surely sees how much being in Seattle, which is cheaper than the San Francisco Bay Area, helps with recruiting. It might make sense for an expansion of 5,000 employees, but will Amazon really try to hire 50,000 employees in a metro area like Vancouver, San Francisco, Toronto, Boston, New York, or Washington — areas that are already expensive?

Tax incentives play a role, too. To some extent, this is a question of “who wants it the most.” For all other considerations, Chicago would be an attractive destination. But the city and state are broke. Are Chicago and Illinois willing to offer billions of dollars in tax incentives, trying to compete with younger, “hungrier” Sun Belt metros? And Chicago’s another metro area with no clear prospects for labor force growth, even if its existing talent base is large and deep.

There are also some softer cultural factors that are difficult to quantify. Will flirtations with anti-gay laws under a guise of “religious liberty” (and anti-trans “bathroom bills”) hurt the causes of the large metro areas in North Carolina, Georgia, and Texas? Will Toronto’s case be helped or hurt by the political environment under President Trump? (After all, he has waged a personal war against Amazon.) Will Washington’s case be strengthened by Amazon CEO Jeff Bezos’s ownership of the Washington Post? Will geographic diversity — perhaps a place in a time zone other than Pacific — be seen as attractive?

This is the Olympics of corporate relocations. The winning city will be able to offer a large metro area, a deep and educated talent pool with a strong local university system, a robust international airport, sufficient highway and transit infrastructure, a reasonable cost of living, a welcoming culture, a business-friendly environment, likely eye-popping tax incentives, and a local business and political community able to work together to make a convincing pitch.

By my tally, the options are: Toronto, Boston, Washington, Atlanta, Dallas, and Denver.

Conor Sen, a Bloomberg View columnist, is a portfolio manager for New River Investments in Atlanta.

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