HQ2: Amazon Picks Two Cities

The pick is the story, and the story is the split: two cities instead of one, Long Island City in Queens and Crystal City in Arlington, the announcement that came on November 13, the end of a search that began with 238 bids, the decision that surprised even the finalists. Amazon said it would bring 50,000 jobs, 25,000 to each city, with $5 billion in investment, the hiring that will stretch over a decade and more, the headquarters that will sit on the East River and the Potomac. The HQ2 pick is the November 2018 story, and the story is the lesson: the site selection that became a spectacle, the incentives that followed the winner, the power that the biggest employer holds.

The pick is the subject of this article: how the search ran, why these two cities won, and what the process teaches about site selection and incentives.

1. The Announcement

The announcement is the event, and the event is the split: the news that came on November 13, the two winners instead of the one, the surprise that broke the pattern of the year, the end of the guessing game that had gripped the country. The announcement is the scale: 50,000 jobs in total, 25,000 for each city, $5 billion in investment, the hiring that will run for more than ten years, the buildings that will rise on both coasts. The announcement is the tone: the blog post that thanked the hundreds of cities, the framing that made the split sound generous, the message that the search was about the talent.

The announcement is also the reaction: the celebrations in Queens and Arlington, the questions everywhere else, the losers who wonder what went wrong, the winners who must now deliver. The announcement is the November 2018 fact: the biggest site selection in modern history is over, the two cities won, the work of building begins. The announcement was the end, and the end was the beginning.

2. The Numbers

The numbers are the scale, and the scale is the jobs: 50,000 positions paying well above the local averages, the 25,000 that New York expects and the 25,000 that Virginia expects, the hires that will come over the decade and more. The numbers are the investment: $5 billion in construction and equipment, the offices that will be built, the neighborhoods that will change, the tax base that will grow. The numbers are the comparison: the biggest corporate expansions of the decade, the deals that the cities have seen, the scale that no other search has matched.

The numbers are also the promise: the payroll that will ripple through the local economies, the suppliers and the restaurants and the housing market that will follow, the growth that the cities have been promised. The numbers are the November 2018 lesson: the jobs that are the currency of the site selection, the billions that move the needle, the scale that changes a region, the arithmetic that the winners will now defend. The numbers were the prize, and the prize was enormous.

3. The Search

The search is the process, and the process is the year: the request for proposals that Amazon issued in September 2017, the 238 bids that came back, the spectacle that followed, the cities that campaigned in public like candidates. The search is the theater: the stunts and the billboards, the governors who begged, the mayors who promised, the tax breaks that piled up, the secrecy that Amazon demanded. The search is the shortlist: the 20 finalists announced in January 2018, the site visits and the questionnaires, the second round of questions about the incentives, the months of speculation about the front-runners.

The search is also the lesson: the process that favored the company at every step, the competition that drove the offers up, the information that flowed one way, the leverage that the buyer held. The search is the November 2018 reading: the year of theater that ended in the split, the process that worked exactly as designed, the spectacle that will be studied by every economic developer. The search was the method, and the method was the power.

4. The Cities

The cities are the winners, and the winners are the fit: Long Island City, the Queens waterfront across the river from Manhattan, the transit hub with the trains and the ferries, the neighborhood that was already booming with the towers. The cities are the contrast: Crystal City, the Arlington office district by the Pentagon, the corridors of the defense contractors, the vacancy that became an opportunity, the land that was ready to build. The cities are the talent: the engineers of New York, the graduates of the Virginia universities, the pools that Amazon said it needed, the people who will staff the headquarters.

The cities are also the convenience: the airports and the trains, the government clients next door, the labor markets that are deep and expensive, the real estate that is available now. The cities are the November 2018 lesson: the site selection that is about the people before the perks, the talent pools that win the day, the locations that fit the plan, the fit that the subsidies cannot buy. The cities were the choice, and the choice was the strategy.

5. The Incentives

The incentives are the money, and the money is the controversy: the nearly $3 billion in subsidies that New York assembled, the $573 million that Virginia promised, the packages that dwarfed the offers of most rivals. The incentives are the math: the billions per job that the critics calculated, the richest company in the world taking the tax breaks, the schools and the transit that will not see the money, the deals that were negotiated in secret. The incentives are the justification: the jobs that will pay taxes for decades, the construction that will start now, the returns that the states project, the bet that the growth pays for the giveaway.

The incentives are also the debate: the economists who say the subsidies rarely pay, the activists who call it corporate welfare, the officials who say the competition left no choice, the question that will follow the announcement for years. The incentives are the November 2018 lesson: the price of the jobs, the leverage of the employer, the public money that flows to the private winners, the bargain that the cities will have to defend. The incentives were the cost, and the cost was the question.

6. The Critics

The critics are the backlash, and the backlash is the noise: the politicians and the activists who questioned the deal in New York, the unions who wanted the guarantees, the housing advocates who feared the rents, the voices that said the price was too high. The critics are the details: the $3 billion against the transit crisis, the tax breaks for the company that needs no help, the workers who will be priced out of the neighborhoods, the promises that were made without the votes. The critics are the counterweight: the public scrutiny that followed the announcement, the hearings that will come, the oversight that the process skipped, the questions that will not go away.

The critics are also the lesson: the site selection that once ran in the back rooms now runs in the open, the incentives that must survive the light, the winners that must answer for the cost, the scrutiny that is part of the price. The critics are the November 2018 warning: the deal is done but the fight is not, the politics will continue, the subsidy will be defended and attacked, the scrutiny that the company did not bargain for. The critics were the check, and the check was the balance.

7. The Process

The process is the playbook, and the playbook is the leverage: the request for proposals that set the rules, the confidentiality that kept the bids secret, the competition that made the cities bid against each other, the information that flowed only one way. The process is the technique: the questionnaires that probed the incentives, the site visits that tested the logistics, the finalists who were told to sharpen the offers, the auction that Amazon ran without naming it. The process is the result: the two cities that won on the talent and the transit, the packages that grew under the pressure, the deal that the company shaped from start to finish.

The process is also the caution: the cities that spent the months and the money, the 236 that lost, the winners who paid the most, the lesson that the process favors the buyer. The process is the November 2018 lesson: the site selection that is a negotiation, the leverage that scale creates, the discipline that the winners must keep, the playbook that every big employer will copy. The process was the game, and the game was the company's.

8. The Lesson

The lesson is the selection, and the selection is the strategy: the site decisions that shape the companies for decades, the talent that is the first factor, the transit and the airports and the universities, the incentives that come after the fit. The lesson is the November 2018 meaning: the search that became the most watched in history, the spectacle that changed the practice, the companies that will now expect the competition, the cities that will keep bidding. The lesson is the practice: the economic developers who must know their assets, the offers that must be honest, the returns that must be tracked, the deals that must survive the light.

The lesson is also the question: the subsidies that pay or do not pay, the jobs that arrive or do not, the neighborhoods that benefit or suffer, the promises that the cities will have to keep. The HQ2 pick is the November 2018 story, and the story is the lesson: the employer that held the power, the cities that paid the price, the talent that won the day, the scrutiny that will follow. The search is over, and the test has begun.

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