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Place your bets: Top 5 cities for Amazon HQ2

November 13, 2017

More than 200 cities across North America are crossing their fingers in hope that they’ll be home to Amazon’s second headquarters, dubbed “Amazon HQ2,” which the ecommerce giant says is expected to create some 50,000 high-paying jobs and generate billions of dollars for the local economy.

Some of the key requirements outlined in Amazon’s request for proposals include a metro area with at least 1 million residents, close proximity to an international airport, as well as a city with a business-friendly environment, high quality of life and top-notch universities "to attract and retain strong technical talent.”  

There has been a plethora of media outlets, research groups and even gambling websites betting on which city Amazon will choose. Using our State Data Lab and data from a number of sources, we’ve narrowed the list down to five cities that we think have the best shot at landing Amazon HQ2.

In no particular order, here are some of the top contenders:

Atlanta, Ga. 

  • Metro area population: 5.79 million
  • Cost of living rank: 29
  • Forbes best places for business rank: 9
  • Median rent (two bedroom): $1,170
  • Airport: Hartsfield-Jackson Atlanta International Airport
  • Mass transit rank: 26
  • Tech hub rank: 17
  • Top-tier universities: Emory University and Georgia Institute of Technology
  • State corporate tax rate: 6 percent   

Atlanta has appeared on many lists of top contenders for Amazon’s second headquarters because of its international airport, which is the world’s busiest in terms of passengers traffic, and its proximity to several major interstate highways. As a major air and ground transportation hub, Atlanta likely would satisfy Amazon’s logistical requirements. Atlanta also has a sizable and growing pool of tech talent, and was ranked by the global real estate firm Cushman & Wakefield as one of the Top 25 tech cities in the country.

Atlanta’s transit system, low cost of living and its proximity to top-tier universities, including the Georgia Institute of Technology, make it an ideal city for Amazon to attract the technical talent it needs. Additionally, many experts believe Amazon is eyeing a location on the opposite side of the country, making Atlanta an appealing option.

One of the biggest obstacles facing Atlanta, according to Seattle Times columnist Jon Talton, is that it’s a “sprawl mess,” and Amazon likely would have to build a “Seattle-like district in the city itself.” However, that would be the case for many other cities in contention, according to CityLab, a city news website.

Raleigh, N.C.

  • Metro area population: 1.30 million
  • Cost of living rank: 80
  • Forbes best places for business rank: 2
  • Median rent (two bedroom): $1,120
  • Airport: Raleigh-Durham International Airport
  • Mass transit rank: n/a
  • Tech hub rank: 5
  • Top-tier universities: Duke University and University of North Carolina at Chapel Hill
  • State corporate tax rate: 3 percent

Raleigh is another top prospect for an east coast location. The city’s top-notch and growing tech hub, low cost of living and plenty of access to real estate would cross off many of Amazon’s boxes, according to Inc. Magazine.

While Raleigh lacks a major transit system, it was ranked by Forbes as the second best city for business. At 3 percent, North Carolina’s corporate income tax is the lowest rate of any state that imposes such a tax.

John Boyd, a site selection consultant from New Jersey, told the News & Observer that he expects Amazon to look at Raleigh closely because of the “state’s positive business climate (i.e. low taxes and new incentives), its premier labor market and access to world-renown colleges and universities and growing IT sector, and because Amazon is already a sizable employer in the Tar Heel State and has a solid working relationship with the state's economic development leaders.”

Austin, TX

  • Metro area population: 2.06 million
  • Cost of living rank: 30
  • Forbes best places for business rank: 8
  • Median rent (two bedroom): $1,390
  • Airport: Austin-Bergstrom International Airport
  • Mass transit rank: n/a
  • Tech hub rank: 7
  • Top-tier universities: University of Texas-Austin
  • State corporate tax rate: 0 percent

Austin is another city frequently cited by experts as one of the top candidates because of its large tech workforce, high quality of life and a business-friendly environment. Texas does not levy a corporate income tax and the city’s housing market is significantly more affordable than many other cities vying for HQ2.

As Inc. Magazine notes, “Austin infrastructure is strong with an international airport and, unlike other large Texas cities, a strong public transit system. Austin also is urban enough to already have in place the amenities, shopping and restaurants Amazon would want its employees to have access to.” Additionally, Whole Foods, which was purchased by Amazon earlier this year, is headquartered in Austin.  

Some of the biggest drawbacks for Austin could be the potential political divide between Amazon’s left-leaning executives and Texas’ conservative policies, as well as its relatively small international airport.

Boston, Mass. 

  • Metro area population: 4.79 million
  • Cost of living rank: 9
  • Forbes best places for business rank: 30
  • Median rent (two bedroom): $2,080
  • Airport: Logan International Airport
  • Mass transit rank: 3
  • Tech hub rank: 4
  • Top-tier universities: Massachusetts Institute of Technology, Harvard University and Boston University
  • State corporate tax rate: 8 percent

Boston may not have the most business-friendly environment and it’s an expensive place to live, but it meets Amazon’s requirements in just about everything else.

Amazon would be hard-pressed to find a city with better universities. Boston is considered the fourth best tech hub in the country, and Harvard University and the Massachusetts Institute of Technology surely would provide a steady stream of the best tech talent possible.

Boston also boasts one of the best mass transit systems in the country, a big plus for Amazon employees.

Washington, D.C.

  • Metro area population: 6.13 million
  • Cost of living rank: 3
  • Best places for business rank: 57
  • Median rent (two bedroom): $1,540
  • Airport: Dulles International Airport, Ronald Reagan Washington National Airport 
  • Mass transit rank: 4
  • Tech hub rank: 3
  • Top-tier universities: Georgetown University, Gallaudet University, George Washington University
  • Corporate tax rate: 9 percent

Amazon CEO Jeff Bezos has a home in Washington, D.C., and having a headquarters in the nation’s capital would be a strategic political move, especially in light of President Donald Trump’s harsh rhetoric against the ecommerce behemoth. As CityLab points out, bringing tens of thousands of jobs and billions of dollars to D.C.’s economy might give Trump a reason to change his opinion about Amazon.

CityLab also mentions other possible factors:  “Richard Florida points to literature on HQ locations that suggests CEO preference dictates where companies settle. After buying the Washington Post, Jeff Bezos has both commercial and residential ties to the district—in January, he bought a $23 million dollar house there, in the Obamas’ current neighborhood. (He also has outposts in Beverly Hills and Manhattan). Why not shorten the commute?”

But the District of Columbia’s lack of space and high cost of living could prove to be a major deterrent.

Runner-ups 

While these cities might be some of most likely candidates for Amazon HQ2, there are a few more that deserve an honorable mention. The Top 5 runner-ups are Denver, Pittsburgh, Chicago, San Jose and New York.

Sources: State Data Lab, U.S. Census, Tax Foundation, Expatistan, Times Higher Education, U.S. News & World Report, Apartment List, Zillow, Walk Score, National Science Foundation, American Public Transit Association, Cushman & Wakefield, Forbes, Seattle Times, News & Observer

 
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