Torn Decision May Lead to Amazon HQ2 and HQ3

November 9, 2018 • Shannon Flynn


With all the great deals on Amazon, it’s easy to get overwhelmed and have trouble choosing from your neverending options. Amazon itself seems to be facing a similar conundrum.

After a long and very public search for a location for a second headquarters, Amazon may decide to split HQ2 between two cities, the Wall Street Journal reported Monday.

Amazon originally announced its plan to build a second headquarters in September of last year. The company said the facility would cost at least $5 billion to build and operate, employ around 50,000 people and be a “full equal” to the company’s Seattle headquarters. That announcement kicked off a search that has been likened to a beauty pageant in which 238 cities, counties and states submitted proposals in an effort to attract Amazon and the economic benefits Amazon HQ2 would bring.

Now, it seems that economic impact would be split between two cities. The new plan would involve hiring around 25,000 workers at each location, according to the Wall Street Journal report.

The primary reason for the surprise decision, according to the report, is the fact that having two new locations would give the company access to two pools of tech talent, enabling it to recruit more of the top workers. Splitting the workforce would also help with logistical challenges such as ensuring adequate transit capacity and housing for the new workers.

Amazon hasn’t announced a final location decision yet but is reportedly in late-stage talks with various cities including Dallas, New York City and Crystal City in Northern Virginia. In January, the company named 20 finalists for its HQ2 location. Amazon has said it will make a decision by the end of the year, but an announcement could come as early as this week.

Being chosen as a location for Amazon’s new split headquarters would still create significant economic benefits, but some view the decision as a letdown.

Journalist Nick Wingfield tweeted “This should serve as a moment of reflection for everyone involved in the HQ2 hype (me included). If Amazon ends up splitting its expansion into mini HQs, that is called…opening satellite offices, which scarcely deserves the buckets of ink spilled so far”

Amazon still plans to view all three offices as headquarters, but splitting the workforce would make the two new offices significantly smaller than the company’s Seattle location, which hosts about 45,000 workers.

Over the course of the bidding process, cities and states have gone to great lengths to attract Amazon, an increasingly influential leader of the on-demand economy. Montgomery County, Maryland, offered the company $8.5 billion in tax incentives, and Newark, New Jersey offered $7 billion. Cities also spent substantial amounts on site-selection consultants, advertising and publicity stunts. One town in Georgia even offered to rename itself Amazon. Now, the selected cities will be getting half the amount of economic benefits as they initially expected.

Speculation about what Amazon’s final choices will be is still a hot topic though. Crystal City, which is in Arlington County across the river from Washington, D.C. appears to be a frontrunner. The company is reportedly negotiating with government officials about incentives and meeting with real estate investment trust JBG Smith Properties about the real estate it owns in the area. The Crystal City area also has a good transportation and access to tech talent.

Amazon executives have met with New York officials four times, the most recent meeting being several weeks ago, about potentially locating Amazon HQ2 in Long Island City in Queens. New York recently announced $180 million in investments to improve infrastructure in Long Island City.

Dallas, Texas is another frontrunner because of its low cost of living and incentives such as tax cuts, grants, infrastructure cost sharing and other benefits.

Amazon’s search for a location for HQ2 has been non-traditional due to its public nature. It’s also been unpredictable with the recent decision to split HQ2 between two cities the most surprising plot twist yet.