Amazon HQ2: The Final 20 by the Numbers
CCIM Institute’s Chief Economist examines how Amazon narrowed the site-selection field.
At the time of writing, Amazon has not yet announced the North American city that will be selected for HQ2, but it has narrowed the list of contenders from 238 metros to just 20. How did Amazon narrow such a large field of contenders? Let's start with the geography and then look at some numbers.
As the following graphic from Amazon shows, only four of the metros are in the Western U.S. (Los Angeles, Denver, Austin, and Dallas). The other 16 are in the Central or Eastern U.S. - and three of those 16 markets are essentially the Washington, D.C., MSA. Therefore, Amazon's selection list is down to four markets in the West, four in the Central U.S./Canada (Toronto, Columbus, Indianapolis, and Chicago), and nine in the East (Atlanta; Washington, D.C./Northern Virginia/Montgomery County; Miami; Raleigh, N.C.; New York; Boston; New Jersey; Philadelphia; and Pittsburgh).
This focus on markets in the East and Central U.S. is consistent with a key finding in CCIM Institute's upcoming Commercial Real Estate Insights report: East is the new West for growth.
For Amazon, this trend can also be viewed as “the common-sense business reason” - a company follows its customer growth. In 2017, most of Amazon's business customers resided outside of the Western U.S. (860,000 business customers in the West led by California, Washington, and Texas; and 1.39 million in the Eastern and Central U.S. led by New York, Florida, Illinois, Pennsylvania, and Washington, D.C./Northern Virginia). In other words, it just makes sense that Amazon would explore locations that get them closer to this business customer growth.
An analysis of the most recent CY 2016 and Q3 2017 MSA and state-level GDP and job growth data by the Bureau of Labor Statistics and Bureau of Economic Analysis reveals that the top MSAs in GDP and job growth are all on Amazon's list of 20 finalist metros. Here is a quick breakdown of the rankings by city and MSA:
Top MSAs for GDP
Top MSAs for Job Growth
|1. New York City
|2. Los Angeles
||2. New York City
|5. District of Columbia/Northern Virginia
||5. Los Angeles
Looking deeper in the GDP and job rankings, the data shows that 10 of Amazon's 20 finalist metros rank in the top 20 for MSA-level GDP and job growth. On the GDP side, the other top 20 Amazon finalists that rank among the top 20 for GDP are Philadelphia (No. 8), Boston (No. 9), Atlanta (No. 10), Miami (No. 12), and Denver (No. 17). The top job growth metros include Philadelphia (No. 10); Washington, D.C./Northern Virginia/Montgomery County (No. 13); Nashville, Tenn. (No. 15); Raleigh, N.C. (No. 17); and Indianapolis (No. 20). If one recognizes that Toronto GDP and jobs data are not considered and that three of the 20 Amazon finalists are essentially the Washington D.C., Northern Virginia, and Montgomery County MSA, then 10 of the net 16 finalist metros rank in the top 20 for both GDP and jobs. In other words, Amazon's 20 city finalists are growth metros home to or developing the target business customers Amazon wants to grow with.
This is a modified excerpt from a longer report that examines the larger implications for corporate site selection in light of the Amazon HQ2 RFP process.
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