Dive Brief:
- After the announcement that it would be building a second North American headquarters, online retail giant Amazon snagged 238 bids for its HQ2 and tax incentives of up to $7 billion, according to Business Insider.
- At $7 billion, New Jersey officials have offered the highest-dollar incentive program, followed by Irvine, CA at $5 billion; Philadelphia at $2 billion to $3 billion; and Maryland with subsidies "in the billions of dollars."
- Amazon has reportedly received at least $613 million in local tax breaks to construct its warehouses, according to the Institute for Local Self-Reliance, and another $147 million for building data centers.
Dive Insight:
Local incentive offerings aren't uncommon among deals to bring big businesses to the cities and states that want them. And, for mega-retailers like Amazon, those economic deals can be a requirement in the bid selection process.
Earlier this month, Taiwan-based Foxconn Technology Group inked a deal with Wisconsin Gov. Scott Walker that will provide $3 billion in tax incentives for the company to invest $10 billion in a flat-panel display factory. The agreement will see Foxconn create 13,000 jobs throughout the 15-year span of the incentive agreement. It represents the largest economic incentive package offered to a foreign company in U.S. history.
For many state and local entities, the promise of job growth and economic expansion can lead to concerns over their infrastructure's ability to handle an increasing population. Two decades after Amazon planted roots in Seattle, the city's rapid and continuing population growth has driven it to the top rankings of cities with the longest commute times. Even with strong infrastructure in place, cities that strike deals with big corporations will likely need to expand their existing systems to account for such growth.
Outside the cities' own pitches, several analysts have thrown out guesses on where Amazon will land, based on Amazon’s stated preferences. Those include requirements like: metropolitan areas with more than one million people, a stable and business-friendly environment, urban or suburban locations with the potential to attract and retain strong technical talent and communities that "think big and creatively." Amazon also outlined optional amenities, like the possibility for an urban or downtown campus, a similar layout to Amazon’s Seattle campus and a development-prepped site.
Moody’s Analytics recently crunched the numbers and declared Austin the winner, followed by Atlanta; Philadelphia; Rochester, NY; Pittsburgh; the New York tri-state area; Miami; Portland, OR; Boston; and Salt Lake City. Retail analyst Nick Egelanian, president of retail development consultants SiteWorks International, however, told Retail Dive that the "Mid-Atlantic has clear advantages from available mass transit and international airports along with proximity to the largest pool of high level college graduates" and said he thinks that a pool of highly skilled workers is among Amazon’s biggest priorities, making cities with several colleges and universities the most likely candidates.
