Amazon announced plans early Thursday morning to open a second headquarters “fully equal” to its Seattle home, calling on local governments across North America to submit proposals.
The news immediately ignited speculation that the e-commerce giant is outgrowing its hometown and introduced questions about whether Amazon’s complex relationship with Seattle is to blame.
GeekWire has been talking with city officials and business leaders to find out what they make of the announcement, which took everyone by surprise this morning — including, it seems, many of Washington’s top lawmakers.
Representatives from the offices of Seattle Mayor Ed Murray and Gov. Jay Inslee were scrambling to prepare statements on the news this morning, suggesting they didn’t see it coming.
“Our office is working to learn as much as we can about Amazon’s plans and what is driving the decision,” said Tara Lee, Inslee’s deputy communications director, in an email. “We don’t know if there is any option of additional Seattle, or elsewhere in Washington, development by the company.”
Murray seemed just as blindsided, issuing a statement hours later that pledged to “immediately begin conversations with Amazon around their needs with today’s announcement and the company’s long-term plans for Seattle.”
But not everyone was quite so shocked to learn that Amazon wants to set up shop somewhere outside of its hometown. Take Heather Redman, co-founder of venture capital firm Flying Fish and the incoming Chair of the Seattle Metropolitan Chamber of Commerce.
In an email to GeekWire, Redman said she was not surprised by the decision given what she views as hostile attitude toward Amazon in its hometown. Redman said her comments reflect her personal views, not those of the Chamber.
The negative attitude of many citizens and of our government to business in general and to Amazon in particular has created an environment for Amazon and, even more importantly its employees, that is unpredictable and outright hostile. This is our chance, as citizens and elected officials, to wake up and realize that Amazon is the best thing that has happened to the city in the modern era. It has brought us density with many civic and environmental benefits, jobs across the spectrum (everything from food service to construction to design to programming), an international population rich in culture, a boom in high-talent young residents who value the environment, social justice and the arts even more than our native population — just to name a few of its benefits.
Redman thinks Seattle should respond to Amazon’s request for proposals and try to convince the tech titan to invest more in its hometown. “It’s never too late to say we’re sorry,” she said.
Amazon is inviting states and local governments to pitch the company on bringing the new headquarters, dubbed “HQ2” to their community. The facility “will be a complete headquarters for Amazon – not a satellite office,” the company says in a news release.
Although many are lamenting what the second headquarters will mean for Seattle, not everyone is concerned that Amazon’s wanderlust is inherently negative.
“Many major tech companies have major presences outside of their original home — think about Google in Seattle,” said Ed Lazowska, a fixture in the University of Washington’s Computer Science and Engineering school and champion of the department’s new multi-million dollar facility. “If Amazon can do for another city what it has done for Seattle, the country will be a better place.”
Amazon is planning to spend $5 billion on the new campus. The company will hire new teams and executives and let existing senior leaders choose between the original headquarters and the new location. Amazon currently occupies 8 million square feet of office space across 33 buildings in Seattle, mainly in the Denny Triangle and South Lake Union neighborhoods. The company employs about 380,000 worldwide.
“Though they won’t find one quite like it, it is telling that Amazon is looking for a city in the model of Seattle for its second home, similar to what major tech companies like Google and Facebook have done in building campuses here,” Murray said in his statement.
Longtime Seattleites may be experiencing unpleasant flashbacks to Boeing’s 2001 decision to move its headquarters to Chicago, but Amazon isn’t planning to abandon its original headquarters. Still, the news is raising questions about whether the company will continue to grow in the Seattle region.
“Amazon’s quest for a second massive corporate base is reminiscent of Boeing’s ongoing efforts to ship jobs out of the Seattle area and hold us hostage,” said Seattle Councilmember Kshama Sawant. “For decades, Boeing executives and billionaire shareholders have carried out systematic economic extortion by pitting cities and states against one another, forcing a race to the bottom for the living standards of workers, and crushing labor unions. Amazon has similarly been using its monopoly power to gobble up swathes of prime real estate, and extract plum deals from the city’s Democratic establishment.”
(Sawant’s quote has been clarified and updated)
Amazon’s decision to spread its headquarters across two cities may have something to do with growing tension between the company and some of Seattle’s lawmakers and longtime residents.
Amazon, along with other big players in the tech industry, is drawing record numbers of newcomers to Seattle with high-paid jobs. That has been an economic boon to the region, but it has also driven up the cost of living and reduced housing supply, putting pressure on lower-income residents.
The conflict came to a head in July, when the Seattle City Council passed an ordinance taxing annual income that is greater than $250,000.
Sawant and Councilmember Lisa Herbold championed the bill. Washington law prohibits local jurisdictions from taxing income and the ordinance is facing several legal challenges, including one from an organization founded by Madrona Venture Group Director Matt McIlwain.
“We are disappointed to see that Amazon feels the need to build a second headquarters outside of Seattle,” McIlwain said in an email to GeekWire. “But, it is not surprising given the strategy of our City Council to focus on taxing more those that are investing in growing and strengthening our region rather than partnering with them to expand opportunity for all citizens in Seattle.”
Councilmember Herbold bucked that claim, arguing that Amazon or any individual leaving Seattle because of the income tax would likely face similar taxes elsewhere.
“Every state but seven (Alaska, Florida, Nevada, South Dakota, Texas, Wyoming, Washington) have state income taxes and more than 4,000 jurisdictions have taxes on local income,” she said in an email. She later added, “With Amazon developing a second headquarters, it gives us a little breathing room to build good mass transit, ensure affordable housing, and open up pathways into higher education for the future workforce. The local income tax will help provide the revenue to enable this physical and human infrastructure development.”
Amazon may also be tempted to establish a second headquarters outside of the U.S., in another tech hub like Toronto. The company has been critical of President Donald Trump’s immigration policy, claiming that restrictions harm its employees and ability to do business.
“Headwinds are coming,” Murray said in his statement today. “Unprecedented growth will not happen forever and my upcoming budget will reflect that. And current federal immigration policy makes it difficult for companies like Amazon to do business in the U.S., where they have employees who may not know from day to day whether they will be allowed to stay here.”
Amazon didn’t provide any clues as to why it is creating a second headquarters, but the company did disclose what it’s looking for in a press release announcing the news. The company’s wishlist includes “a stable and business-friendly environment” and access to great tech talent, among other things.
“We recognize there are many factors that went into Amazon’s decision, but the Seattle City Council’s focus on dividing the pie of economic opportunity rather than growing the pie for the city and the region is undoubtedly among them,” said McIlwain. “One only needs to look at the Amazon HQ2 RFP … to understand the alignment Amazon is looking for with the state and local government for their new headquarters.”
The federal and municipal political climate may have influenced Amazon’s decision, but Lazowska thinks the company’s insatiable appetite for growth is a more likely driving factor.
“Amazon will continue to grow and prosper,” he said. “There’s no way the company can add another 50,000 engineers and execs in downtown Seattle. So, plant a second flag elsewhere.”
We will continue to update this story with comments from city officials.
Update 11:15 a.m. Inslee issued a statement touting “Amazon’s incredible continuing growth” and CEO Jeff Bezos’ positive impact on Washington’s economy. “As the company continues to grow – including potential expansion of another 2 million square feet of office space in Seattle – we will have further discussions with them about possibilities in Washington state,” Inslee said.