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The Only 3 Cities Amazon.Com, Inc. (AMZN) Should Consider

Denver might appear to be in the running but if logic prevails, it's not

By Will Ashworth, InvestorPlace Contributor

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The New York Times crunched the numbers and found that Denver was the best place for Amazon.com, Inc. (NASDAQ:AMZN) to open its second headquarters.

The Only 3 Cities Amazon.Com, Inc. (AMZN) Should Consider
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Also, in consideration, according to the Timesstudy of 50 cities, were both Boston and Washington D.C.

“The city’s lifestyle and affordability, coupled with the supply of tech talent from nearby universities, has already helped build a thriving start-up scene,” stated the Times. “The region has the benefits of places like San Francisco and Seattle — outdoor recreation, microbreweries, diversity and a culture of inclusion (specifically cited by Amazon) — but the cost of living is still low enough to make it affordable.”

While it’s hard to argue with the reasons the newspaper gave for picking Denver as the ultimate winner in the Amazon sweepstakes, there’s a big reason why that’s not going to happen.

Denver, while a three-hour flight from Seattle and a fine city to be sure, isn’t nearly as far east as Amazon probably desires.

It would be pointless to put what could end up being a second Amazon company — should the government break it up or if the company was to decide on its own to split Amazon Web Services from the rest of its businesses — so geographically close to each other.

Therefore, the winning location is likely to be in the easternmost third of the U.S., putting the cutoff line around the Mississippi River. Sorry, Warren Buffett, your hometown’s probably on the outside looking in.

However, as we know, money talks and you-know-what walks. Denver and the state of Colorado could step up with financial incentives to match the insane deal given Foxconn in Wisconsin, blowing east coast contenders out of the water.

If logic prevails, based on the criteria provided by Amazon, these three cities are the best choices for Amazon’s second headquarters.

Amazon New HQ Third Choice: Toronto

As far as I can tell from leafing through the eight-page request for proposal document Amazon has put together, the only problem Toronto might face is that it is located in Canada. However, Amazon states it requires a second corporate headquarters in “North America” and not the United States, so a strong presentation by Toronto mayor John Tory and his economic development team should make it interesting.

Here in Toronto, one of the biggest developments in the city’s history is currently undergoing planning approval with the local municipal government.

Spanning 60 acres and involving some of Canada’s premier property developers, Wynford Green will be located along the new Eglinton Crosstown light rail transit that joins up with the city’s subway system. Ready in late 2021, the LRT makes this acreage ideal for Amazon’s second headquarters.

Technically, Amazon is looking for 100 acres, which could be parceled together with land north of Wynford Green, but that’s merely speculation on my part. I’m sure Mayor Tory has other potential locations in mind to woo Amazon.

Toronto was named the most diverse city in the world and will welcome every new Amazon employee with a smile and universal healthcare, a cost the Ontario government will gladly exchange for 50,000 high-paying jobs.

I’m biased, but I think Toronto should be the front runner, even if it likely won’t be.

Amazon New HQ Second Choice: Boston

Boston’s definite edge is that it’s already a city driven by technology, with an educated work force and some of the country’s best universities. You can’t hire 50,000 people and pay them an average of more than $100,000 if you don’t have educated workers.

Boston has that in spades.

General Electric Company (NYSE:GE) is moving its headquarters from Fairfield, Connecticut to Boston to attract the kind of talent a data-driven business needs to thrive.

There definitely is an innate culture and tactical depth and talent here. It lends itself to these kind of entrepreneurial endeavors,” said GE CFO Jeffrey Bornstein talking to the Wall Street Journal about GE’s move. “The universities here, whether it’s MIT, Northeastern, Harvard, you name it … the proximity allows us to build even deeper relationships with these institutions.”

Boston didn’t make the best financial offer to GE, but it chose the city anyway because it understood the importance of getting top talent excited about where they’d be working. It’s very likely that Amazon also won’t be concerned about dollars and cents as much the cultural fit.

While the New York Times article found that Boston would have a tough time locating enough land to accommodate an eight million square foot campus, I’m sure the Massachusetts state government can get a way to make it work.

Landing Amazon would cement its reputation as the “Seattle” of the east coast. 

Amazon New HQ First Choice: Atlanta

Interestingly, Atlanta ranks higher than Boston for tech talent, according to Recode.

However, I think it’s the cost of housing that could put Atlanta at the top of the list. The median home price in the Georgia capital is $229,400and less than half the price of a house in Boston, 31% of the $746,000 average price in Toronto, which is also about where the average home price is at its current headquarters in Seattle.

Amazon’s looking for a city with an international airport. Atlanta’s Hartsfield-Jackson fits the bill. It’s also the world’s busiest airport with more than 100 million passengers passing through on an annual basis. It will be able to meet the traveling needs of Amazon employees.

Atlanta also happens to be a big logistics hub, something the Brookings Institute noted in its report on which cities could land Amazon.

Atlanta’s legacy of large companies with major logistics operations such as Coca-Cola, Home Depot, and UPS has created a unique specialization in supply chain technology that may be attractive to Amazon if they are creating a new hub for managing their logistics system,” stated Brookings. “Atlanta is intriguing: its sprawling physical development may be disqualifying, but the city provides a combination of a deep white-collar labor pool, supply chain technology capabilities, Georgia Tech, and a relatively low cost of living.”

From where I sit, Atlanta provides the most attractive city for a younger, educated workforce at the least cost. The details can get figured out later. 

As of this writing, Will Ashworth did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, https://investorplace.com/2017/09/amazon-com-inc-amzn-stock-amazon-hq/.

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