In many ways, reports that Amazon will split its ballyhooed second headquarters between two cities came as a shock this week. But the change of plans actually fits one narrative that urbanists have claimed was always the real story behind Amazon HQ2.
“It never was about a second headquarters,” said Richard Florida, one of the most visible urbanist thought leaders. Florida is a University of Toronto professor and its director of cities, as well as co-founder and editor-at-large for The Atlantic’s CityLab.
Florida claimed early on that Amazon’s very public search for a second headquarters was really about creating a “large-scale, crowdsourced corporate locational strategy.”
In other words, Amazon leveraged the $5 billion corporate headquarters and 50,000 high-paying jobs to get cities to hand over comprehensive data about potential locations for future, smaller Amazon sites.
“It wouldn’t surprise me to hear, in coming months, ‘We’re going to put a Latin American headquarters in Miami. We’re going to put a major artificial intelligence and self-driving vehicle facility in Pittsburgh. We’re going to create major distribution and logistics hubs in Nashville or Columbus or Indianapolis. We’re going to put a major North American facility in Canada, Toronto,'” Florida said in an interview with GeekWire Tuesday. “I think this was always about sourcing, siting much more than just a single headquarters.”
On Monday, The New York Times reported that Amazon is closing in on deals to split its second headquarters across the New York City and Washington D.C. areas. It followed an earlier report from The Wall Street Journal that Amazon was in final discussions with Northern Virginia, Dallas, and New York City.
GeekWire caught up with Florida — who has been active on Twitter discussing the HQ2 effort — to discuss the pivot from one 50,000-person HQ2 to two 25,000-strong satellite offices. Continue reading for the edited Q&A, covering what the news means for cities and why Amazon is reportedly taking this tact.
GeekWire: What does splitting HQ2 between two cities mean?
Richard Florida: The first thing I’d say is that this is both surprising and not. And I think that the really interesting thing is a bunch of urbanists, or urban thinkers, already thought through this thing and saw that it wasn’t about selecting a single site, but it was about building a corporate locational strategy to site many things … What’s surprising is that they split HQ2. I think we all thought that they were going to site a bunch of different things, but I think it’s really interesting that they even went beyond our thinking and they’re going to split HQ2.
In my mind, this makes perfect and complete and obvious sense. I remember when I talked to (NYU professor) Scott Galloway about this way back when and Scott said, “The first three locations for HQ2 will be New York, New York, New York because it’s the world’s greatest global city. It’s where all big companies have their headquarters and if Amazon’s going to be a trillion dollar company, it needs to have one there. I said, of course, that I think it’s going to be D.C. because D.C. has the talent base, it’s close to The Washington Post. It’s close to all customers in the cloud.
And so I think that what’s so interesting about this is it now gives Amazon a big toehold in New York City, which is where you would put the global headquarters of one of the world’s largest corporations and it gives them a foothold in D.C., a great place to attract talent, and it’s next to The Washington Post, in the seat of the American government, which is where you’re going to mitigate against antitrust. If you have tens of thousands of jobs there to help, it doesn’t hurt.
The other thing I would say is that we know from the literature that corporations often site — and I wrote this in a tweet — often site their corporate headquarters where the CEO has a house. Jeff Bezos has an apartment in New York City and a mansion in D.C. So we should have all seen this coming. What it also means to me is that Amazon — which is in a very lovely significant outpost, Seattle, a tech hub, knowledge hub in the Pacific Northwest — so much for the rise of the rest. So much for the comeback of the heartland. It is now putting his new HQ2 and three in, not only the largest city in the United States but if you take the mega-region of Boston, New York, Washington corridor, by far the largest mega-region in the world. Fifty million people, $2 trillion in economic assets, economic output.
Talk about winner take all urbanism. That’s what this shows. So much for the rise of the rest in the heartland. This is a bi-coastal economy where the big go to the biggest and the rich go to the richest.
GW: What message does that send to the other finalists, particularly those midsize cities in less urbanized regions?
RF: Well, I think there’s two messages. The first message is that Amazon played this perfectly. The people who played this poorly were the mayors and governors and economic developers across America who got down on their hands and knees and gave Amazon reams of data, reams of information, crowdsourced them the richest site selection database and economic development database in history and offered them incentives. Amazon played this right. I’ve been saying this for a long time. These mayors know one another. They should’ve stood together. They should have said, we’re not having this, but they caved, and so they were played like a fiddle. These communities all across America were played like a fiddle.
That said, I don’t think this is over. I’ve said from day one, this isn’t just about HQ2 and it’s not just about HQ2 and three. This is a large scale crowdsourced corporate locational strategy and it wouldn’t surprise me to hear in coming months, ‘We’re going to put a Latin American headquarters in Miami. We’re going to put a major artificial intelligence and self-driving vehicle facility in Pittsburgh. We’re going to create major distribution and logistics hubs in Nashville or Columbus or Indianapolis. We’re going to put a major North American facility in Canada, Toronto.’
I think this was always about sourcing, siting much more than just a single headquarters. My hope is that Amazon takes the high road here and whenever it makes this announcement it says, ‘Look, we had 236 communities compete. We had 20 finalists. We don’t want the incentives. We never wanted the incentives. What we wanted to do was create a way of working with communities to site all these wonderful facilities we have to do. We’re not going to take incentives, we’re gonna actually be a partner in building these communities together and working with them.’ I’m hoping against hope that Amazon takes the high road here and says it wants to work with these communities and partners rather than bankrupt its new homes.
GW: Does splitting HQ2 in two give the project less significance or influence than if this was a true second headquarters equal to Seattle?
RF: It never was about a second headquarters. Corporations site things in labor markets or talent markets that are specialized in what they need. This was never about HQ2. It was always about finding interesting places to put important pieces of business.
HQ2 was a ruse to do that and I’m sure Amazon knew this from day one, knew that high up on its list were New York and Washington D.C. but Amazon is siting a lot of things, not just HQ2 and three and this was about developing a platform to site a whole bunch of facilities. I think the only place that could really, really contain HQ2 is New York. Twenty-two million people, largest city in the United States. Extensive transit train network, the ability to deploy a lot of housing. I think any other community in the United States, it would have completely overwhelmed.
So no, I think it’s better for the communities to get smaller than bigger. Certainly for Washington D.C. The Washington D.C., Northern Virginia area couldn’t handle the whole thing so I think, in a way, it’s better for those communities. I just hope they’re not stuck on the line for massive incentives that were promised for the whole thing. But if a community’s smart, at least they’ll say the incentives should be tied to jobs.
GW: Will this search set a precedent for other tech companies?
RF: It’s going to go one of two ways. Either Amazon is going to do the right thing and say, ‘Look, we did this to find places that are great for our business, that we want to grow our business in New York or Washington, our hometown of Seattle with HQ1. We don’t want incentives. We want to do this the right way. We want to invest in transit, transport, and mitigate homelessness or by affordable housing and better jobs.’ Or they’re going to say, ‘Look, we picked these two places that are going to give us hundreds of millions and billions of incentives.’
If they do the latter, it’s going to unleash a location bomb in which company after company are going to follow this problematic behavior and it’s time for the mayors and governors and economic developers to stand up and say, enough’s enough. I mean, they were played like a fiddle. They were the ones that refused to stand up and say, ‘We’re going to band together and do this the right way.’ They allowed themselves to be taken advantage of and they need to grow up.
Amazon did exactly the right thing. If I was an advisor to Amazon, I would advise them to do exactly what they did. But the mayors and governors and economic developers, many of whom I talked to, were unable to find a way to do the right thing. So I’ll tell you, the victims and the problem in this were the public officials who allowed this to happen.
I bet you if Washington D.C. or Northern Virginia, New York said no to incentives, Amazon would have still picked them. Where else are they going to go? It just showed us it was going to go to the biggest and most centralized, most global cities from day one.
That’s what this was about. Seattle wasn’t a big enough place to host this headquarters. It has to be out on the East Coast in the power corridor, the Boston, New York, Washington area and that’s where it went. And here we have the mayor of New York City, an alleged progressive, a tale of two cities, fighting against inequality and Governor Andrew Cuomo, a beacon of progressivism and you the D.C. region, which is a very liberal area … these so-called progressive politicians should be the ones to stand up and say, well, we have big problems with inequality, affordability, division to solve. We’re not in the business of giving corporate welfare to rich people and giant corporations. They’re the ones that are to blame here.
GW: As an expert in cities, somebody who’s spent a lot of time in cities, what can you tell me about the sites that Amazon is reportedly looking at?
RF: That was my biggest surprise. I would have expected Amazon to pick more urbanized sites but people who know the places better than me, the place in D.C., what is it called again?
GW: Crystal City.
RF: Crystal City. I’ve been there. They say it does have great transit connections. It is kind of suburban, but it can be densified. I just don’t know the site and Queens that well but that was the surprise to me, the specific sites, but it makes sense. Maybe Amazon has figured it’d build this kind of great urban hub in South Lake Union and New York. Now it can take these areas, which are kind of urban, or adjacent to urban, with a lot of vacant land or a lot of buildable land and make them work. I would’ve thought it would’ve picked a more prestige site but it makes sense what they did.