Could Amazon’s “HQ2” Land in the Carolinas?
Amazon recently announced plans to build a second headquarters building. With the announcement, cities and regions are scrambling to pursue the project. Do North Carolina and South Carolina have a chance to land the project?
According to key economic development and government officials, cities in both states plan to pursue the one of the largest economic development projects in the history of the country. Amazon, which is headquartered in Seattle, WA, plans to build “Amazon HQ2” that will be Amazon’s second headquarters in North America. The company expects to invest over $5 billion in construction and grow the second headquarters to include as many as 50,000 high-paying jobs.
“We expect HQ2 to be a full equal to our Seattle headquarters,” said Jeff Bezos, Amazon’s CEO and founder. “Amazon HQ2 will bring billions of dollars in up-front and ongoing investments, and tens of thousands of high-paying jobs.”
Mark Sweeney, a partner at the McCallum Sweeney, a site selection firm that advised Boeing Co. on its record-setting $8.7 billion tax-incentive package with the state of Washington in 2013 told the Wall Street Journal that states will offer a package in “that neighborhood.”
“I would expect the interest to be unmatched and unrestrained by every location, even ones that really don’t have a much of a shot,” he told the WSJ. In addition to tax breaks on property, state and city income tax, Sweeney expects that states will offer to pay Amazon cash through tax rebates. In addition, other incentives including grants for training employees, adding public transportation or other infrastructure could also be part of a deal to lure Amazon.
According to an analysis by Good Jobs First, a group that tracks economic development deals, Amazon regularly gets tax breaks when cities compete for its distribution centers and warehouses. Good Jobs First reported that Amazon received at least $241 million in subsidies from local and state government after opening facilities in 29 different U.S. cities in 2015 and 2016.
“Taxpayers should watch their wallets as the trophy deal of the decade attracts politicians to a hyper-sophisticated tax-break auction. We fear that many states and localities will offer to grossly overspend to attract Amazon, even though the business basics–especially a metro area’s executive talent pool–will surely control the company’s decision,” said Grey LeRoy, Good Jobs First’s Executive Director.
Many site selection experts believe that Atlanta, Boston, Chicago, Dallas, New York, and Toronto will be strong contenders. However, cities in the Carolinas could be contenders. Calandra Cruickshank, CEO of StateBook International, a company that provides online data for site selection decisions, believes that Amazon’s identity as a disruptive giant makes it “possible that they might be disruptive in this choice, as well.”
“Rather than choosing one of the usual suspects, they might actually choose to start their own beachhead somewhere else,” she told USA Today.
According to The Brookings Institute’s “Which cities are well positioned to win Amazon’s HQ2?” medium-sized cities like Raleigh could be contenders due to the “talent pool” of educated workers. The Charlotte Observer reported that Charlotte Regional Partnership CEO Ronnie Bryant and Charlotte Chamber CEO Bob Morgan said in a joint statement that Charlotte “will aggressively pursue this opportunity.” The Charlotte Chamber will identify potential sites for the facility throughout Charlotte and Mecklenburg County.
In Greenville, SC Mark Farris, president of the Greenville Area Development Corporation told the Upstate Business Journal(UBJ) that his organization was “working with several partners” to respond to the RFP.
Didi Caldwell, a site location consultant with Global Location Strategies, told the Upstate Business Journal that South Carolina’s best opportunity for recruiting the Amazon headquarters would be in the two counties that are part of the Charlotte metropolitan area, York and Lancaster.
“This is going to be entirely dependent upon talent,” Thomas Stringer, a site-selection manager at professional services firm BDO who does not represent Amazon told USA Today. “Talent attraction, talent development.” Both North Carolina and South Carolina have strong reputations for developing training and jobs programs, however they may lack the workforce to fill the eCommerce giant’s needs.
Amazon’s key requirements could present challenges to cities in North Carolina and South Carolina. Amazon wants to be near a metropolitan area that has more than a million people; be able to recruit and attract top technical talent; be within 45 minutes of an international airport; have a university system; have direct access to highways and mass transportation; and have the ability to expand that headquarters to as much as 8 million square feet in the next decade. Amazon’s current headquarters in Seattle has 33 buildings and 40,000 employees. The project could demand record numbers in terms of incentives, grants and tax breaks.
In addition to Amazon’s direct hiring and investment, construction and ongoing operation of Amazon HQ2 is expected to create tens of thousands of additional jobs and tens of billions of dollars in additional investment in the surrounding community. The company is expected to make a decision in early 2018.
