Richard Florida is a co-founder and editor at large of CityLab and a senior editor at The Atlantic. He is a university professor in the University of Toronto’s School of Cities and Rotman School of Management, and a distinguished fellow at New York University’s Schack Institute of Real Estate and visiting fellow at Florida International University.
In splitting HQ2, Amazon gains a presence in New York, which has the largest number of corporate headquarters, and greater Washington, D.C., which is fast gaining as a popular site for a corporate base.
It is rumored that Amazon will split its new HQ2 between Crystal City in the greater Washington, D.C., metro and Long Island City in New York. While the specific locations may come as a surprise, many urbanists, including myself, have been saying all along that this was never about a single HQ2, but instead about Amazon crowdsourcing information for a host of different things in different cities, like a new research hub in Pittsburgh, a major logistics facility in Indianapolis, or a Latin America headquarters in Miami.
I predicted Amazon would select D.C. back in September 2017 when the original request for proposals was issued, citing the region’s exceptional talent base and quality of life, its location in the East-Coast power corridor, and the fact that large-scale investment and tens of thousands of jobs in the nation’s capital might help mitigate any push for antitrust regulation, not to mention Jeff Bezos’ ownership of the Washington Post and a $20 million mansion.
When I interviewed Scott Galloway, the business analyst and expert on Amazon for CityLab back in November, he predicted New York. “Three possibilities: New York, New York, and New York. This entire bidding thing is a ruse. The most important thing for them is the ability to attract and retain the best talent in the world. And the best young tech talent in the world wants to live in either New York or San Francisco. Every other city is a distant third.”
Splitting it between the two cities is especially clever. For one, it gives Amazon a location in the nation’s and the world’s most important global city, New York—the foremost place for high-level business, management, financial, and marketing talent; and a second location in the deep-talent pool that is the nation’s capital. Both cities are part of a large mega-region and connected by frequent train and air service. Not to mention having two finalists gives Amazon the opportunity to continue to negotiate a better deal and more incentives, but also to mitigate any backlash by threatening to move all or part of its headquarters to the other city.
New York and Washington, D.C, play an important role in the analysis of the changing geography of corporate headquarters that my colleague, Patrick Adler at the University of Toronto’s School of Cities and the Rotman School of Management, and I have been conducting with our research team. Our project has put together detailed data on the location of Fortune 500 companies from 1975 to the present.
Check out the table below, which shows the leading cities for corporate headquarter locations today. New York tops the list with 70 corporate headquarters, more than double the amount of the next leading city. Chicago, Dallas, and Houston are next. The Bay Area, including San Francisco and San Jose, are also high up the list. Despite its reputation as a government town, Washington, D.C., ranks sixth.
Top Ten US Cities for Fortune 500 Headquarters
|Rank||Metro||2017 Count||2017 Share||Change Since 1975|
|6 (tie)||Washington, D.C.||17||3.4%||325%|
|6 (tie)||San Jose||17||3.4%||240%|
|9 (tie)||Los Angeles||15||3.0%||-17%|
D.C. has seen explosive gains as a headquarters town over the past several decades, adding 13 corporate headquarters since 1975, a whopping growth rate of more than 300 percent. Only the Bay Area (both San Francisco and San Jose) gained more over that period, adding 23 headquarters but only at a 200 percent growth rate. In picking New York and greater D.C., Amazon picked the single largest headquarters city and one of the fastest growing locations for headquarters.
Amazon’s split decision makes even more sense when you realize New York and D.C. are part of the same mega-region, the greater Boston-New York-Washington, or Bos-Wash. This is the largest mega-region in North America, with more than 50 million people and $2 trillion in economic output. It is also far and away home to the most Fortune 500 headquarters, with 137, more than a quarter of the total, as the table below shows. Chi-Pitts is a distant second, followed by the Texas Triangle of Dallas, Houston, and Austin; Northern California; and Char-lanta. The Pacific Northwest region of Cascadia and southern Florida (Miami, Orlando, and Tampa) both pull in last, with 11 and six headquarters respectively.
Top Mega-Regions for Fortune 500 Headquarters in 2017
When all is said and done, splitting Amazon HQ2 between New York and D.C. is a telling case of the big getting bigger and the rich getting richer. In fact, headquarters location is itself a reflection of our lopsided winner-take-all urbanism, with the top five cities accounting for a third of all Fortune 500 headquarters and half of their profits, and the top ten leading cities accounting for half of all headquarters and two-thirds of their profits.
Portion of Revenues and Profits By Top Headquarters in 2017
Amazon’s HQ2 search has been filled with twists and turns. Through it all, Amazon has played cities like a fiddle, crowdsourcing reams of information and compiling what is likely North America’s best site-selection database. It has compelled a competition on its own terms.
But America’s mayors and governors—including leading progressive politicians in blue states and cities—are the bigger culprits: Instead of standing firm or banding together, they’ve offered up hundreds of millions and in some cases billions, of taxpayer dollars. This money could be used to fight poverty, improve schools, or build affordable housing instead of being placed in the hands of a trillion-dollar corporation.
About the only hope left is that Amazon wakes up and does the right thing. Realizing that accepting such excessive public funds may create a backlash that could cost its brand dearly, Amazon could reject incentives and pledge with its new and old headquarter cities to address pressing issues and challenges like transit, homelessness, and housing affordability. The gains to its brand would far outstretch the actual monetary value of any incentives offered by the cities which, relatively, scarcely add to Amazon’s massive value and profits, anyway.
The alternative is hard to ponder. Not only will Amazon’s acceptance of such a huge incentive package mortgage away the “winner’s” future, it will unleash a devastating cycle of more competitions and even bigger incentives packages in the future.
CityLab editorial fellow Claire Tran contributed research and editorial assistance to this article.