"If you’re chasing HQ2 ambitions in real estate, these two markets are probably good bets even if the prediction is wrong."
Last year, New York University (NYU) marketing professor Scott Galloway predicted that Amazon would purchase Whole Foods. In June 2017, the internet behemoth did so. Now, Galloway has another big, Amazon-related prediction: “It all comes down to two locations [for HQ2]: It’s either going to be the metro area of New York or the metro area of D.C.,” he said recently, going on to add that the entire selection process will, in the end, come down to just two things: where Amazon can attract talent, and where Amazon CEO Jeff Bezos wants to spend his time. He noted that Bezos owns homes in both of these metro areas.
Regarding talent, he said simply, “In the eyes of Amazon, the best talent is a 24-year-old [electrical engineering] grad from MIT. This individual isn’t concerned with cost of living – cost of living only matters when you’re in your 30s and you begin collecting dogs and kids.” Galloway has an interesting take on the HQ2 process in that he believes Amazon should pick the location sooner rather than extending the bidding process. Many other analysts believe that the longer cities can promote themselves to Amazon and, in the process, leverage heightened media attention and exposure for the things they offer, the better.
Galloway, however, not only thinks that Amazon should hurry up and make a decision; he also believes that mayors and civic leaders should refuse to offer financial incentives in return for HQ2. He has previously written that Amazon, Apple, Facebook, and Google (“The Four,” which is also the title of his book on the topic) should be broken up because, among other things, “Amazon can take any other consumer company’s stock down 10-30 percent just with a press release,” enabling, he argued, The Four to “dominate the press and markets.”
While not everyone agrees with Galloway when it comes to capitalism, monopolies, and Bezos’ underlying motives, most do agree that Amazon’s deck is likely secretly “stacked” in favor of a few metro areas, although few agree on which cities have “shoo-in” status. “My hunch is all 20 finalists are in the hunt for something, with fast-expanding Amazon wanting to do the vetting for various investment projects in one fell swoop,” speculated professor and director of cities at the Martin Prosperity Institute at the University of Toronto, Richard Florida. Investors, likewise, should keep their options open and not write off any market even if it seems unlikely to actually “win” the HQ2 host-city position.
If you’re chasing HQ2 ambitions in real estate, these two markets are probably good bets even if the prediction is wrong.