- Moody’s Analytics ranked what it believes to be the top contenders for Amazon’s second headquarters.
- The analysts point to Austin, Texas as the most likely city, based on several of the company’s requirements.
- However, it is nearly impossible to guess exactly which city Amazon will pick.
More than 50 North American cities are hoping Amazon will pick them as the site for the company’s second headquarters, dubbed HQ2. In perhaps the largest corporate offer to municipalities in modern American history, the e-commerce giant is promising 50,000 jobs and an investment of $US5 billion in the campus’s construction.
But only one city can win. Bids are due this Thursday, and Amazon plans to announce its pick in 2018.
To find a list of possible winners for HQ2, the financial-services division of Moody’s Analytics examined Amazon’s stipulations against 65 cities with at least one million residents. Amazon is looking for at least one million people in its chosen city, along with 8 million square feet of space, access to an airport, a “stable and business-friendly regulations and tax structure,” incentives to offset HQ2’s construction and ongoing expenses, a labour force, mass transit, a “cultural fit,” and a “high quality of life.”
Moody’s looked at five of these factors: business environment (economic growth, the city’s history of corporate tax incentives, and the region’s credit ratings), a skilled workforce, costs (pertaining to real estate, taxes, energy prices, and labour), quality of life, and transportation. The analysts excluded Seattle, the home of Amazon’s first headquarters.
Using data from local governments and community surveys, the report points to Austin-Round Rock, Texas as the top contender.
“Austin has a much lower cost of living than places such as Silicon Valley. Even though house prices have been rising and are high for Texas or the South, they are well below those in California or the Northeast,” the analysts wrote. “Anecdotally, the quality of life is high, and many want to live in the ‘Silicon Hills.’ Further, being in Texas, Austin resides in a business-friendly state that seeks to attract and keep companies.”
Atlanta-Sandy Springs-Roswell, Georgia and Philadelphia, Pennsylvania ranked second and third, respectively.
Still, it’s nearly impossible right now to guess which city Amazon will choose. Moody’s doesn’t account for extra economic incentives that have now become valuable parts of some city bids. Newark, New Jersey, for example, is offering Amazon up to $US7 billion in tax breaks over the next two decades if the company decides to build there. The report also doesn’t consider the amount of available land for HQ2’s construction.
Amazon has also laid out several requirements for cities, and it’s hard to predict which ones the company will weigh more heavily than others. A large international airport — like in Atlanta, which makes the top 10 in Moody’s report — might be especially important for HQ2. Or job growth in engineering and computer science could become the most significant point.
Or it might be land. Amazon wants to build an 8 million-square-foot campus, but it’s possible the company might want some wiggle room to expand even larger in the future. A “cultural fit” is also subjective on Amazon’s part.
In The City Observatory, economist Joe Cortwright argues that Amazon could have already made its choice long before the bid deadline.
“Amazon — who after all, makes its business knowing the decision preferences of tens or hundreds of millions of customers — is hardly likely to rely on cities for the information to make its decision,” he wrote. “The whole point of this exercise is to improve the company’s bargaining position for the location it wants.”
NOW WATCH: Tech Insider videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.