Metropolis

What if There Is No HQ2?

A picture taken on October 26, 2018, central France in the Amazon's distribution center of Saran shows the logo of Amazon. (Photo by GUILLAUME SOUVANT / AFP)        (Photo credit should read GUILLAUME SOUVANT/AFP/Getty Images)
The arrow might point in two directions.
Guillaume Souvant/Getty Images

The real HQ2 was the dignity we lost along the way.

After more than a year of corporate pageantry and public prostration, culminating in the governor of New York offering on Monday to rename himself “Amazon Cuomo,” the Seattle-based everything store may have decided to split its mythic second headquarters into two regional branches, at least according to a report in the Wall Street Journal.

That comes after the Washington Post reported that the company was zeroing in on Crystal City, Virginia, a suburb of Washington, D.C.; a report from the Journal that the final finalists were Crystal City, Dallas, and New York City; and a suggestion from CNBC that the headquarters might be split between Crystal City and Austin, Texas.

Perhaps, like King Solomon, Jeff Bezos will know the true home of Amazon’s second headquarters by whichever mayor surrenders his share to protect the company’s integrity.

The rumors have been flying thick and fast, and no one really knows what’s going on. But Amazon might just be doing what all big, expanding companies do: Put a new office here, and a new office there, and maybe later, another office somewhere else.

The galaxy-brain take on the Journal scoop is that Amazon knew it didn’t want to build everything in one place anyway, and realized it could solicit more generous offers from cities and states if it promised the prestige of a single second headquarters. The prize may be smaller now, but what elected official—given the option to return triumphant to his chamber of commerce—would dare ask to renegotiate?

I think it’s more likely that Bezos and Co. really did believe they were doing something unprecedented when they announced the search for a second headquarters last fall. Maybe they even thought that Seattle’s Amazon campus and HQ2 could effectively function as two equivalent poles of power in the company. That arrangement has few analogues, but then neither does Amazon itself.

What happened next? Reality. Amazon’s request for proposals asked for a kind of American utopia, a big city with an international airport and good transit and a high quality of life and low taxes and and and… Most cities that threw their name in the hat boasted of their assets and promised to rectify their deficiencies, debasing themselves before a company that threatens most of their small retail businesses.

The scale of Amazon’s proposal was also overwhelming: An office with 50,000 workers would be twice the presence that Bank of America (the nation’s second-largest bank) retains at its primary headquarters in Charlotte, North Carolina. A requirement for offices up to 8 million square feet would put HQ2 on the same scale as the company’s Seattle campus, making it twice as large as the nation’s next-largest corporate office, Citi’s 3.7 million square feet in New York.

One way to think of that is as a one-of-a-kind demand for space, both for the office itself and for its workers. That expectation has sent the stock of Crystal City’s largest holder of office space up by more than 30 percent since this time last year. Other bettors have taken stakes in the local housing market.

But it’s also a once-in-a-lifetime demand for talent: 50,000 workers would mean Amazon hiring 1 in 20 workers in a midsize metro like Pittsburgh or Austin.

So you can see why Amazon executives might have decided that the initial idea was a bit of a moonshot. In the end, the company will end up doing what most companies do. It might assign second offices based on their specialties—government contracting inside the Beltway, robotics in Pittsburgh, finance in New York. Or it might split its expansion between a high-cost, high-talent metro like Washington, D.C., and a cheaper place to set up shop, like Dallas, where it can pay lower wages. That model—executive talent in a hot city; back-office in a Sun Belt exurb—is widespread in corporate America.

Whether Jeff Bezos still intends to build a Seattle-size second headquarters or ever did, Amazon did succeed in orchestrating a national groveling campaign that put virtually every public official on the record in praise of its business model. The reward is public subsidy in whatever location it chooses, but the contest must have been at least as sweet as its ending.