The location of Amazon’s second headquarters will benefit in enormous ways from the influx of jobs and development that will come with HQ2 but cities vying for the position will be keeping quiet about what they’re offering while the contest continues. According to CNBC reports last week, Amazon has requested that cities on the short list keep the process confidential. Dallas mayor Mike Rawlings explained, “It’s like a poker game. Bring the bidding war on!”
Silence is Golden
Rawlings was likely referring to the massive incentive packages cities and regions have put together to make their location more attractive to Amazon than any other. These incentives could include tax rebates, tax exemptions, grants and other development funding, and even initiatives designed to appeal to Amazon’s corporate culture. However, putting these incentives out in the open could lay both Amazon and the potential host city open to criticism as well as hurting the city’s chances at offering something unique.
“If I were to lay out now what we’ll offer, it would be criticized and looked at, and determined whether it’s good or bad,” observed Philadelphia major Jim Kenney in response to the gag order. He noted that he would prefer to manage problems as they arise and prepare for them effectively rather than have a public verdict on a particular aspect of the offer before it has even been accepted. “We [already] have people saying [they] don’t want Amazon because housing prices will go up or it will be too crowded. These are problems we’d love to manage,” he explained.
Real estate investors hoping to get a head start in HQ2’s future market may actually benefit from the gag order because it will compel them to seek primary sources of data about potential investment markets rather than falling prey to local hype. For example, while every metro on the short list insists it is the best fit for Amazon, many of those markets are already overheated. This could weight the odds in favor of markets with lower costs of living, for example, even though an argument in favor of New York, New York, or Los Angeles, California, (both very expensive housing markets) could be very strong. Instead of relying solely on whether HQ2 will eventually take up residence in your market of choice, examine the overall economy, including market drivers, types of employment, and population trends. Then, if HQ2 does move in, you will be ahead of the game and, if not, you will have invested in a sound market for your purposes anyway.
Investor Insight: Speculation about Amazon’s HQ2 will certainly ramp up now that the company has released its “short list” for HQ2 locations. However, you’ll have to go directly to primary sources of data because Amazon and its candidates won’t be talking.
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