retail news in context, analysis with attitude

The Washington Post reports that Amazon is close to announcing that it plans to put its second North American headquarters city - dubbed HQ2 when it announced its intentions and set off a competition among hundreds of communities - in Northern Virginia, across the Potomac River from Washington, DC.

According to the Post the company “has held advanced discussions about the possibility of opening its highly sought-after second headquarters in Crystal City, including how quickly it would move employees there, which buildings it would occupy and how an announcement about the move would be made to the public, according to people close to the process.

“The discussions were more detailed than those the company has had regarding other locations in Northern Virginia and some other cities nationally, adding to speculation that the site in Arlington County is a front-runner to land the online retail giant’s second North American headquarters and its 50,000 jobs,” not to mention the $5 billion investment that Amazon has pledged to make in whatever community it chooses.

However, the Wall Street Journal reporting on the story is different, saying that Amazon “has progressed to late-stage talks on its planned second headquarters with a small handful of communities including northern Virginia’s Crystal City, Dallas and New York City … The ongoing talks with some local officials come as discussions appear to have cooled in some of the other 20 cities on Amazon’s shortlist, including Denver, Toronto, Atlanta, Nashville, Tenn., and Raleigh, N.C., according to people familiar with those situations.”

The Post notes that adding to the speculation about Northern Virginia is the fact that several buildings that had space for rent have pulled that space off the market.

To be clear, the developer of those buildings has not commented about the speculation on the record, and Mike Grella, director of economic development for Amazon, posted the following message on Twitter:

“Memo to the genius leaking info about Crystal City, VA as #HQ2 selection. You’re not doing Crystal City, VA any favors. And stop treating the NDA you signed like a used napkin.” (Amazon required nondisclosure agreements of all the finalist communities.)

Amazon founder/CEO Jeff Bezos is quoted in the story as having told a conference last week that “ultimately the decision will be made with intuition after gathering and studying a lot of data — for a decision like that, as far as I know, the best way to make it is you collect as much data as you can, you immerse yourself in that data but then you make the decision with your heart.”

The Post - which, of course, is owned by Bezos in a private investment - has another story in which the reports examined where Bezos’ private has traveled recently as a way of figuring out the likely winner:

“The jet has touched down in the Los Angeles area more than a dozen times and made multiple trips to Boston, Dallas, Miami, the D.C. area and the New York City area. Amazon named three D.C. area locations (the District, Northern Virginia and Montgomery County, Md.) finalists and two in the New York area (New York City and Newark).

“The plane has not been to 11 other finalist cities. Some of those were considered long shots from the outset, among them Columbus, Ohio; and Indianapolis.

“But experts say it could signal disappointment for other cities that were considered strong possibilities, such as Chicago, Atlanta and Austin, if Bezos did not travel to those places some other way. They say it is very rare to see a chief executive choose a new headquarters site without looking at it personally, even if he or she is not involved in the early or middle stages of the project.”
KC's View:
First of all, let’s be clear - this could all be a head fake. I’ll believe it when I see it officially announced.

I do wish that all of the cities involved in the hunt had been more open about the kinds of financial/tax/infrastructure incentives that they were offering Amazon. In fact, I wish Amazon had required the communities to be transparent about their pitches … it would’ve been nice if political leaders had enough confidence in their constituents that they wanted to explain their offers, put them in context, and define the long-term benefits, all as a way of getting taxpayer buy-in and enthusiasm.

Whoever gets the deal is suddenly going to see a lot of pressure put on its infrastructure, but there also are going to be enormous benefits, and a balance will have to be sought - and explained - in a nuanced sort of way.

At the same time, I’d expect that a number of the cities that don’t win the contest will still see plenty of investment from Amazon in coming years. Boston, for example, already is. Amazon has a very clear sense of place and time and potential in all of these markets, and I’d expect it to use that information.

I do think that whatever community gets HQ2, they should look to Toronto for inspiration about how public-private partnerships can reframe the discussion and move a community forward in a bold and progressive way. I’ve thought for a while that Toronto would’ve been the perfect place for Amazon’s North American HQ2, save for the political distress it probably would’ve created in some circles by going outside the US.

One thing is for sure. Amazon’s HQ2 will move whatever community lands it forward. There will be bumps and bruises and surprises both welcome and unwelcome. But this is all about embracing the future, and it is going to be exciting.