Pittsburgh, Philadelphia score high rankings in potential to deliver Amazon HQ2,
If one data-driven study is to be believed, Pittsburgh might have a good shot of landing Amazon’s HQ2.
Moody’s Analytics, a subsidiary of Moody’s Corp., listed Pittsburgh fifth among 10 cities it views as the top candidates for the Seattle online retail giant’s second headquarters, which could bring up to 50,000 jobs and $5 billion in investment.
The Steel City finished behind Austin, Texas, Atlanta, Philadelphia and Rochester, N.Y., in Moody’s calculations.
The firm based its analysis on five broad categories — business environment, human capital, cost, quality of life, and transportation. Those were selected based on Amazon’s stated preferences and Moody’s grasp of “the relevant economic factors that determine a city’s desirability from a business location standpoint.”
But when Moody’s added a sixth category — choosing to look at geography, a factor that it saw as more subjective than the others — Pittsburgh soared to second in its ratings, right behind Philadelphia. That gave Pennsylvania the two top contenders, by the firm’s calculations.
One variable considered in the geography category was distance from Amazon’s Seattle headquarters.
“Arguably, Amazon will want to diversify into a different labor market as much as possible; therefore we award points for metro areas farther away from Amazon’s Seattle headquarters. In addition, we award points to regions based on our subjective assessment of regional advantages,” the analysis stated.
In that regard, the Northeast scored the highest based on access “to the economically important Northeast corridor and the political power center of Washington, D. C.,” where Amazon founder and CEO Jeff Bezos, owner of the Washington Post, plunked down $23 million for a home.
Points also were awarded for the number of Amazon fulfillment centers in the state.
In assessing Pittsburgh, Moody’s Analytics noted that the city has become a burgeoning tech hub, with companies like San Francisco-based ride-hailing company Uber. The firm also pointed out that Amazon has a presence here with an office in South Side Works.
“Like Philadelphia, Pittsburgh combines high human capital with low costs and close proximity to the Northeast corridor. When the geographic scores are added, this brings Pittsburgh to second place, and not without some justification. Nor does Pittsburgh lack for desirable locations that could accommodate Amazon, including the Almono [now called Hazelwood Green] development, a 178-acre former industrial site,” the report stated.
The drawbacks, according to Moody’s, included state and local fiscal problems.
“In addition, compared with some other large metro areas, Pittsburgh may struggle to attract 50,000 new workers, as decades of declining population attest.”
Philadelphia scored high even though it did not finish inthe top five in any of the five main categories. (Neither did Pittsburgh.) Downsides included an inefficient tax structure and significant public sector pension problems.
Because of the state’s financial problems, Moody’s questioned whether Pennsylvania or Philadelphia would be able to offer enough incentives — they likely will top $1 billion — needed to attract the online retailer.
But for the City of Brotherly Love, the upside could outweigh the drawbacks, according to Moody’s.
“Amazon would be coming to the city at exactly the right moment: A boom is under way but is not so far along that the city is now expensive. Multiple prime locations could accommodate the Amazon headquarters, including Schuylkill Yards, a massive development already moving through the planning pipeline.”
Austin topped Moody’s list.
The firm stated the Texas city already is a top IT hub with companies like Dell, Samsung, Apple and IBM; has a well-educated labor force; a growing population; a lower cost of living than places like the Silicon Valley; and housing prices well below those in California or the Northeast.
“Amazon’s recent acquisition of Whole Foods, which is headquartered in Austin, is another factor in the metro area’s favor,” it explained.
Overall, Moody’s looked at 65 metro areas with populations of 1 million or more, based on Amazon requirements.
More than 100 cities, including Pittsburgh, have been scrambling to put together bids for HQ2, with proposals due Thursday. Amazon is expected to make its selection next year.