Prime real estate: Amazon looks for 2nd headquarters outside Seattle
NEW YORK (AP) — Amazon, bursting out of its Seattle headquarters, is hunting for a second home. Must haves: A prime location, close to transit, with plenty of space to grow.
The company said Thursday it will spend more than $5 billion to build another headquarters in North America to house as many as 50,000 employees. It plans to also stay in its sprawling Seattle headquarters, with the new space "a full equal" to that, said founder and CEO Jeff Bezos.
Amazon's announcement highlights how fast the e-commerce giant is expanding, and its need to find fresh talent to fuel that growth. With the lure of so many new jobs, city and state leaders were already lining up Thursday to say they planned to apply. Among them: Chicago, Philadelphia and Toronto. They have a little more than a month to do so through a special website , and Amazon said it will make a decision next year.
Its requirements could rule out some places: Amazon wants to be near a metropolitan area with more than a million people; be able to attract top technical talent; be within 45 minutes of an international airport; have direct access to mass transit; and be able to expand that headquarters to as much as 8 million square feet in the next decade. That's about the same size as its current home in Seattle, which has 33 buildings, 23 restaurants and houses 40,000 employees.
"They're so big in Seattle, they're running out of room," said Kevin Sharer, a corporate strategy professor at Harvard Business School.
Amazon said it will hire up to 50,000 new full-time employees at the second headquarters over the next 15 years, and they would make an average pay of more than $100,000 a year.
The company is hoping for something else from its second hometown: tax breaks, grants and other incentives. A section of the proposal that outlines those says "the initial cost and the ongoing cost of doing business are critical decision drivers."
Brad Badertscher, an accounting professor at the University of Notre Dame, said the public search appeared to be a way to start a bidding war among cities.
"This was like an open letter to city leaders saying, 'Who wants Amazon and all our jobs?'" Badertscher said. "This is Jeff Bezos doing what he does best: adding shareholder value and getting the most bang for the buck."
Amazon gets tax breaks when cities compete for its massive warehouses, where it packs and ships orders. The company received at least $241 million in subsidies from local and state government after opening facilities in 29 different U.S. cities in 2015 and 2016, according to an analysis by Good Jobs First, a group that tracks economic development deals.
In explaining why it was holding a public process, Amazon said on its site that it wanted "to find a city that is excited to work with us and where our customers, employees, and the community can all benefit."
Bezos has crowd-sourced major decisions before - in June, just before Amazon announced its plan to buy organic grocer Whole Foods, the billionaire took to Twitter seeking ideas for a philanthropic strategy to give away some of his fortune. And tech companies have been known to set places in competition with each other: In vying to land Google's ultra-fast broadband network, many cities used stunts and gimmickry to get the company's attention. Topeka even informally renamed itself "Google, Kansas."
Amazon.com Inc. said its search is open to any metropolitan area in North America, but declined to say how open it was to going outside the United States. Jed Kolko, the chief economist at job site Indeed, noted that the company's request for proposals mentions "provinces" several times — a clear sign it would consider a Canadian metro area.
Kolko also said an East Coast locale could bring it closer to the company's offices in Europe.
Amazon's arrival might transform an area: Until 10 years ago, the neighborhood near Seattle's campus just north of downtown was dotted with auto parts stores and low-rent apartments. Now it's a booming pocket of high-rise office complexes, sleek apartment buildings and tony restaurants.
And the company keeps growing. Amazon has said it will hire 100,000 people by the middle of next year, adding to its current worldwide staff of more than 380,000. It announced plans to build three new warehouses that pack and ship packages in New York, Ohio and Oregon. And it recently paid close to $14 billion for Whole Foods and its more than 465 stores.
The Whole Foods headquarters in Austin is far smaller than what Amazon said it's looking for — the flagship hub is also a full-service grocery store with shoppers who compete for parking spaces. Even its larger corporate campus that stretches down the surrounding blocks may be too small for the space Amazon would want for a second headquarters.
In Seattle, its rise has not been without critics, who say the influx of mostly well-heeled tech workers has caused housing prices to skyrocket, clogged the streets with traffic and changed the city for the worse. The Seattle Times reported Thursday that the median price for a house in August in Seattle was $730,000, up almost 17 percent in a year.
That itself may be a factor. Amazon may be looking for a spot where it's not as expensive for its employees to live, said Rita McGrath, a professor at the Columbia Business School in New York.
"It's hard to attract people if they can't afford the housing available locally," she said.
On Thursday, local and state leaders sounded off on the Amazon developments. Washington State Republican Party Chairman Susan Hutchison called it a “bombshell announcement” by Amazon and a wake-up call.
“This is purely a Boeing deja vu,” said Hutchsison. “(What) they are basically setting us up for is them having another place to go if the political and business climate in our city deteriorates.”
Meanwhile, Washington Governor Jay Inslee said Amazon has made Washington one of the most innovative and best in the nation for business. He tweeted Thursday, “We’ll have further discussions with them about possibilities here in Washington state.”
Mayor Ed Murray said Seattle and Amazon has had a good working relationship and the push for a second headquarters elsewhere doesn’t reflect unmet demands.
“The nature of their business has grown so globally. They’re looking at other spots. We’ll sit down with them community leaders, business leaders and talk with Amazon and see if the piece of hat will be here in Seattle,” said Murray.