What Makes Amazon’s Second Headquarters Decision So Important

Amazon second headquarters. Jeff Bezos, chief executive officer of Amazon, arrives for the third day of the annual Allen & Company Sun Valley Conference, July 13, 2017 in Sun Valley, Idaho.
Jeff Bezos, chief executive officer of Amazon, arrives for the third day of the annual Allen & Company Sun Valley Conference, July 13, 2017 in Sun Valley, Idaho. PHOTO: Drew Angerer/Getty Images

On September 7, 2017, Jeff Bezos made the announcement that Amazon will be setting up a second headquarters in addition to their primary headquarters in Seattle, Washington. The process has been dubbed “Amazon HQ2” on the internet and even has its own Wikipedia page. This is a rare and bold move for any company to make, and it could have some major impacts on the economy. However, Amazon is accustomed to making these kinds of executive decisions in an attempt to be one step ahead of their competition.

Why is Amazon building a second headquarters? A spokeswoman for Amazon has said the reason why Jeff Bezos wants a second headquarters for Amazon is rooted in a number of reasons. Some of them include tax benefits and a need for more efficiency, but the primary reason why is because Amazon is simply growing so fast. In the first quarter of 2018, Amazon’s profits grew by $7 billion, more than the next 5 largest retailers combined. Amazon is expanding far beyond online retail and is branching out to acquire companies that focus on artificial intelligence, groceries, and computer engineering. With a company expanding as rapidly as Amazon, building a 2nd headquarters only makes the most sense to maintain an efficient, uncluttered workplace.

Here are the details we know so far about the new headquarters and its potential impact that will follow it:

– The location of the second headquarters will be announced by the end of the year. While the announcement started off with a list of 230 metropolitan areas that Amazon was looking into, they have since narrowed their search down to 20 cities. Experts and insiders say the Washington, D.C.-Northern Virginia metropolitan area is the most appealing for Amazon as of right now, primarily due to its proximity to the federal government and White House officials. President Trump has repeatedly made his views clear about his distaste for Amazon and how they allegedly cost the USPS billions of dollars a year. It makes sense Jeff Bezos would want to be in close proximity to the White House, however, Amazon is still considering building the headquarters in Toronto, the only non-U.S. city on their final list. Toronto would be appealing to Amazon given Canada’s looser immigration laws, especially to well-educated immigrants, as well as the lack of political threat Canada poses to Amazon in comparison to the United States.

It will cost about $5 billion to construct the building over a 15-year period. Experts say the building will likely cover about 8 million square feet, of which 500,000 will be built in 2019 alone. That’s roughly the same size as their current headquarters in Seattle, which consists of 38 buildings and employs about 45,000 people.

It is expected to add about 50,000 jobs to the metropolitan area. In addition to being the workplace of 50,000 new workers, economists at the University of California at Berkeley suggest those 50,000 workers’ production will also indirectly create another 250,000 jobs in industries such as shipping, warehouse jobs, and retail. In addition, many of these jobs in the second headquarters are predicted to pay six-figure salaries. The jobs in the second headquarters will focus primarily on engineering, economics, and research analysts.

Housing prices & living expenses will certainly increase dramatically. Wherever Amazon chooses to set up its new location, expect a significant increase in population, living expenses, and travel expenses, even if for only a few years. A report from BuilderOnline.com suggests housing prices for new houses could double wherever the new headquarters is established, while existing houses may see a 50% jump in price. This is one reason I personally believe areas like New York City and Washington, D.C. will not likely house Amazon’s second headquarters. Living expenses and traffic conditions in those areas are extremely bloated as it stands, and being the home to Amazon’s second headquarters would only make it even more expensive and crowded. Ironically enough, it could very well cause some economic damage to the city.

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The building of a second headquarters in North America could further progress Amazon’s status as a leader in the corporate world. It could also falter the enormous progress Jeff Bezos and Amazon has made in its 24 years of existence. In the end, it all stands on the shoulders of Jeff Bezos and the executive decisions he and his crew make from this point moving forward. If they are able to make decisions that positively impact the company and the world around them, Amazon will be known as being at the forefront of the new technological era.

About Alex Glasier 10 Articles
I'm a graduate student of economics at Buffalo State College.

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