Amazon eyes D.C. area for HQ, report says
Toronto was contender for e-commerce titan’s second headquarters
Toronto could be out of the running to become the site of Amazon’s second headquarters.
The Washington Post reported Saturday that the online retail giant is in “advanced talks” to open its second headquarters in the Washington, D.C., metropolitan area.
Amazon, based in Seattle, is said to be seriously considering an area known as Crystal City, the Post said, citing unidentified sources. It’s a large residential and office complex in Arlington, Va., just south of Washington.
Toronto, the only Canadian city included on Amazon’s short list of locations in January, had been considered a top contender. Mayor John Tory has been a vocal supporter of the bid, which could bring as many as 50,000 new jobs.
“We have put forward a strong bid that highlights the fact that the Toronto region has emerged as a global centre of innovation and technology because of our talented, diverse and inclusive workforce,” wrote Tory, in an email statement to the Star. “There is no other region in North America that can boast the same talent, the same quality of life, the same vibrancy and economic strength.”
Declining to comment on the Post report and “ongoing speculation,” Tory added: “The bid book we put together to tell that story has been downloaded more than 15,000 times — a clear sign that people from around the world are interested in our region and its opportunities.”
But the Post reported that discussions with Crystal City were more detailed than those Amazon has had with other potential sites.
Gabor Forgacs, a professor at Ryerson University who specializes in tourism and business, said although Toronto is a strong candidate, other cities had advantages as well. Taking the company outside the U.S. would have been a large step for Amazon, one that required careful planning.
There would also be advantages to Amazon in going Canadian: for instance, the exchange rate, at 76 cents to the dollar, would be beneficial for the company. “Everything is a lot cheaper if you have an American company spending in Canadian dollars,” said Forgacs.
Toronto’s accessibility as an easy destination by air, along with its developed highways and influx of regional distribution companies, would all work in Canada’s favour.
Toronto’s increase in immigration has also created a “major labour pool” for Amazon to hire from, Forgacs said.
“If they look at the quality of our educated workforce, whatever they need specialists for, they’ve got a pretty high chance of being able to hire locally,” he said. “From IT jobs to warehouse jobs, they could probably find most of their needs here.
“The kind of headquarters Amazon had in mind would have benefited from all of this.”
However, there are other downsides to locating in Toronto. It is the farthest north among the potential sites, and the cost of land is a factor. Amazon could benefit from cost advantages in other cities, Forgacs said.
Population density, which determines how many possible customers Amazon would be able to serve in a specific radius, could also be higher in other areas.
To go across the border and set up a major head office in another country would be a “very risky choice that they would need to validate,” said Forgacs.
“I like our chances, but I wouldn’t put money on it,” he said.
According to the Post, which cited public and private officials speaking on condition of anonymity, the company is so close to making its choice that Crystal City’s top real estate developer, JBG Smith, has pulled some of its buildings off the leasing market and officials in the area have discussed how to make an announcement to the public this month, following the U.S. midterm elections. The company may be having similar discussions with other finalists.
Amazon announced last year it was looking to open a second headquarters somewhere in North America. Several state and local governments threw their hats in the ring, offering Amazon millions in tax incentives if it opened its new headquarters in their city.
The Washington metropolitan area was long considered a top contender. Company founder and CEO Jeff Bezos already had several connections to the Washington area. He’s the owner of the Washington Post and has a home in the area. When the company announced a list of 20 top contenders in January, it included both Washington and Montgomery County, Md., just north of D.C.
At a conference in New York on Thursday, Bezos said: “Ultimately the decision will be made with intuition after gathering and studying a lot of data — for a decision like that, as far as I know, the best way to make it is you collect as much data as you can, you immerse yourself in that data, but then you make the decision with your heart.”
The fact Amazon is reportedly in “advanced talks” with Crystal City does not mean the deal is certain.
Shortly after the Post published its story, Mike Grella, Amazon’s economic development director, posted on Twitter, “Memo to the genius leaking info about Crystal City, VA as #HQ2 selection. You’re not doing Crystal City, VA any favours.”