Just when you thought Amazon (NASDAQ: AMZN) couldn’t get any bigger, it does. On Thursday, Amazon announced that it plans to build a second company headquarters, Amazon HQ2, in North America, and it will spend more than $5 billion in construction and operation costs. This will serve as a complementary, but fully operational headquarters, to Amazon’s downtown Seattle headquarters. Amazon said it expects to create as many as 50,000 high-paying jobs as well as invest tens of billions of dollars in the community surrounding Amazon HQ2. Amazon currently employs more than 380,000 people worldwide.
‘We expect HQ2 to be a full equal to our Seattle headquarters,’ said Jeff Bezos, Amazon founder and CEO in the announcement. ‘Amazon HQ2 will bring billions of dollars in up-front and ongoing investments, and tens of thousands of high-paying jobs. We’re excited to find a second home.’
The company has issued an official Request for Proposal (RFP) for local and state governments to use when making their pitch. According to the Amazon HQ2 FAQs, Amazon is looking for a location that has strong local and regional talent. They are particularly interested in areas with strong software development and related fields, along with a stable, business-friendly environment.
‘We want to find a city that is excited to work with us and where our customers, employees, and the community can all benefit,’ Amazon said.
Other criteria for Amazon HQ2 include:
- Metropolitan areas with a population of 1 million or more
- Urban or suburban locations that will attract and retain strong technical talent
- Communities that think big and creatively when considering locations and real estate opportunities
- An urban or downtown campus
- A similar layout to the Seattle headquarters
- A development-prepped site
To give municipalities a benchmark, Amazon provided some key statistics for its Seattle headquarters:
- 33 buildings
- 8.1 million square feed
- Local retail on site (24 restaurants and cafes + 8 other services)
- 40,000+ employees
- $3.7 billion in capital investment (buildings and infrastructure)
- $1.4 billion in operational expenditures (utilities and maintenance)
- $25.7 billion in compensation to employees
The figures above represent Amazon’s investment from 2010, when Amazon moved its HQ to downtown Seattle, to June 2017.
As an incentive to cities considering the RFP, Amazon offered the following community investment data from 2010 to 2016.
- Additional jobs created in the city as a result of direct investment: 53,000
- Additional investments in local economy as a result of direct investments: $38 billion
- Increase in personal income by non-Amazon employees as a result of direct investments: $17 billion
- Increase in Fortune 500 companies with engineering/R&D centers in Seattle; was 7 in 2010, is 31 in 2017.
Seattle-based Geekwire called the announcement a surprise, and Geekwire’s John Cook suggested six cities that might be a good match for Amazon HQ2: Toronto, for its top technology base; Boston, also for being a technology hub; Austin, as a tech center and strong family roots for Bezos in Texas; Pittsburgh, which is trying to become a tech hub; Chicago, with more than 143,000 in its tech sector and home to Boeing since 2001; and Atlanta, technology talent and Georgia Tech.
This news comes just one day after Amazon announced that it was adding its first fulfillment center in New York – Staten Island, New York – creating 2,250 full-time jobs, including jobs that will allow workers to use advanced robotics.
‘We are excited to bring our first fulfillment center to New York and work alongside the state’s incredible workforce,’ said Sanjay Shah, Amazon’s Vice President of Customer Fulfillment. ‘The support of local leaders has been instrumental in our ability to come to New York, and we are grateful for the welcome we’ve received to bring thousands of new jobs with benefits starting on day one.’
Two weeks ago, Amazon announced that it would also open a fulfillment center in North Randall, Ohio, bringing more than 2,000 full-time jobs to the company.
Amazon investors don’t seem impressed thus far. On Thursday, September 7, the day the Amazon HQ2 announcement was made, stocked closed at $979.47 per share. At 7:50 PM Eastern on Friday, September 8, Amazon stock was valued at $965.90. That is not a significant dip though, and a year ago, on September 12, 2016, Amazon stock was $771.49, so the company’s value has measurably appreciated in the last 12 months.
From a membership perspective, Amazon continues to add value for its members, offering more products and services to its Prime membership. By incrementally increasing the value of a Prime membership, at no additional cost, members like me find that a similar membership is impossible to find. Where else can you get Prime Video, free two-day shipping, free Prime music, free photo storage, a subscription marketplace, Prime Early Access, Kindle Owners’ Lending Library access, and more. No one else provides all that Amazon does for a flat annual cost. Building another HQ will help Amazon in supporting its operations, all of which benefit Prime members in some way.
From a business perspective, Amazon has brought a lot of investment to local communities where it has fulfillment centers. Look at the two newest locations, for example. They will bring 4,250+ jobs to cities in New York and Ohio, and a new HQ will bring billions of dollars to whatever city Amazon eventually selects. This is a great opportunity for Amazon, its employees, Prime members and the communities in which Amazon is located.