Five Regions That Could Draw Amazon’s Next Headquarters

Xconomy Seattle — 

[Updated 4:26 p.m. See below.] Amazon sent cities across North America into a frenzy Thursday after announcing plans to build a second headquarters outside of Seattle, bringing with it tens of thousands of jobs and billions of dollars in economic development benefits.

The tech and commerce giant says it wants cities and states to apply to be a candidate for its so-called HQ2 by Oct. 19. Amazon will pick the city in 2018. Notably, the (currently) Seattle-based company says its second headquarters would be built in North America broadly, exciting economic development officials in Canada. Mexico is also part of North America.

What is Amazon looking for in its second headquarters city? People, talent, and creativity, the company says in a news release and request for proposals. Incentives will play a role, too. Amazon has narrowed it down to cities with at least 1 million people; a stable and friendly business environment; an urban or suburban area that could attract tech talent; and creative thinkers, in regard to real estate.

The company is basically looking for another Seattle, and it says HQ2 will be equal to its 40,000-person, city-redefining headquarters in its home region—not just a satellite office.

Any large city in the country would love to see a technology giant move in, but some make more sense than others. Given Amazon’s requirements, Xconomy examines five regions with cities that could be the most likely candidates for the new Amazon location.

1. South: The Case for Texas

Texas’s big cities match up with Amazon’s requirements point for point. There’s plenty of land—Texas is big, if you haven’t heard—taxes are low for both businesses and workers, and there is lots of talent to recruit, particularly in tech-heavy cities like Austin and San Antonio. With four of the largest 15 cities in the nation, Texas has the people Amazon would be looking for.

Austin jumps to the top of the list because of its history as a technology and startup hub. The city has both traditional tech companies in town such as Facebook, Google, and Indeed, as well as younger startups like Homeaway, Aceable, Everfest, and countless more. There’s plenty of software talent to choose from. And Amazon already has thousands of employees in Austin, both its own and through its recent Whole Foods acquisition.

To that point, Amazon also has a fulfillment center just to the south in San Marcos, TX, which is about halfway between Austin and the outer edges of San Antonio. That proximity to both cities could be an argument for locating a new headquarters in San Marcos, which is one of the fastest growing cities in the country. The area could grow into the next great American metro area, tying together San Antonio and Austin like the Dallas-Fort Worth metroplex.

2. Northeast: The Case for Boston

If you build it, why not build more? Amazon announced in July it plans to hire some 900 people for new offices it is opening in Boston’s Fort Point neighborhood, bringing its total in Boston to about 2,000. Surely, Amazon would need more of a rationale to place a second headquarters in Boston than just the fact that it’s already creating new office space there—and it has it, in Boston’s thriving startup scene and universities. [Paragraph updated to clarify that Amazon isn’t building its new office space.]

The proximity of MIT and Harvard would give Amazon access to young tech talent it would be looking to hire anyway, without requiring them to relocate after college. Boston is perennially among the top three cities in terms of startups that receive venture capital funding, meaning that Amazon can also continue poaching talent from young companies (and can buy those companies too).

While the city may not be as cheap to operate in as some other areas of the country, it’s easily worth the premium to have a headquarters in one of the nation’s top cities for innovation.

3. Southeast: The Case for Atlanta

Atlanta and its surrounding areas have long been known for industry, home to corporate giants from Coca-Cola and Delta Air Lines to Cox Enterprises and Turner Broadcasting. The vibrant city has more recently become a darling of the film industry and has also developed its own startup scene, with companies that are creating technologies ranging from virtual reality to applications of blockchain.

Cost of living is one factor that could draw a company like Amazon to Atlanta. While Atlanta remains comparable in cost to cities such as Austin, Dallas, and Detroit, it is notably cheaper than Seattle, Boston, New York, or San Francisco.

Among the largest 15 metro areas in the U.S., Indeed rated Atlanta and Detroit as the top cities for making your paycheck go the furthest. That affordability, as well as Atlanta’s diverse culture, could be incentive enough.

The city also has the country’s most active airport, which bodes well for tech executives who need to fly in and out at a moment’s notice.

4. Midwest: The Case for Chicago or Detroit

Speaking of affordability, there’s something to be said about Detroit as an attractive landscape for Amazon’s second home. Detroit has a growing startup scene, with about 35 VC-backed companies in the city, which represents about 25 percent of the state’s total startups, as Xconomy has previously reported. Cost of living and doing business is lower in the city than most other large metro areas, in part due to its collapse during the Great Recession.

Amazon could also draw on the tech talent being developed at nearby academic centers in Ann Arbor and East Lansing.

The same could be said for Chicago. The Windy City draws in young workers finishing their degrees at places like University of Wisconsin-Madison, University of Illinois, Purdue, and of course the University of Chicago and Northwestern University. Chicago is inarguably the business center of the middle of America, and a presence there would buck the tech industry’s coastal tendencies. Breaking norms is what made Amazon successful.

5. The Great White North: The Case for Canada

Canada, marking its 150th anniversary and under the leadership of Prime Minister Justin Trudeau, is thriving. In the wake of the U.S. presidential election, Canada has seen a wave of immigration from America and elsewhere, bolstering its already ample technology talent pool in cities such as Vancouver, Toronto, Waterloo, and Montreal—the latter two being among the world’s foremost centers for artificial intelligence research. It’s also noteworthy that Waterloo is the headquarters for BlackBerry.

Trudeau has pitched U.S. companies on Canadian tech firms, while numerous leaders in Canadian business and government have advocated opening the country’s arms to any skilled workers affected by President Trump’s proposed immigration bans.

For Amazon, a decision to build its second headquarters in a large Canadian city like Toronto or Montreal would blunt the impact of more restrictive U.S. immigration policies, which are anathema to the tech industry.