Since Amazon announced that it would establish a second headquarters, cities have come out of the woodwork to pitch themselves as the best location for “HQ2.” And who can blame them? HQ2 could be the future site for up to 50,000 workers with salaries averaging over $100,000 per year. It’s rare that a single company’s impact on a city could transform the local economy and improve growth prospects in the way that HQ2 could.
There have been many efforts to handicap the race for HQ2, but few have taken seriously what Amazon and other corporate headquarters really value in a potential site. Extensive empirical research and expert observation of corporate headquarters site selection suggest that, in rough order of importance, the most important factors include the following:
• Talent pool (abundance and skills of local workers)
• Infrastructure (access to transportation options and global connectivity)
• Location (proximity to customers, suppliers, and production facilities)
• Cost of doing business (rents, wages, taxes, and utilities)
• Incentives
Using measurable and relavant factors from the list above and from Amazon's request for proposals (RFP), we have compiled the AEG HQ2 index, which captures a city’s measurable advantage in attracting Amazon’s HQ2. For the 35 cities in the United States that meet specific requirements from the RFP, we estimate their performance using 11 total metrics across three broad categories:
• Access to Labor and Services
• Ease of Transportation
• Cost of Doing Business
The AEG HQ2 index is the unweighted average of the values for each category.
Check out the interactive map and table below to see how your city performs on the AEG HQ2 index.
The 35 metro areas that we include in our analysis all have a population over one million people and an international airport with at least some nonstop flights to Seattle, New York, San Francisco, and Washington, DC. These are requirements from Amazon’s RFP.
By taking an unweighted average across the three categories, we assume that Amazon doesn’t value a particular category over the other. Also, there are many factors not included in this index that can come into play in Amazon’s decision. Many of these are difficult to quantify and predict. For example, we do not speculate about the nature and size of potential incentive packages. Also, we do not directly capture the “quality of life” in these cities, though it does have an indirect impact on some of the metrics we include. That said, it is clear that cities that fall further down on this list are going to need to provide more incentives and more intangible benefits in order to compete with those at the top.
For a detailed methodology, click here