THE INC. LIFE

The Top 6 Cities Most Likely to Host Amazon’s Second Headquarters

Inc. spoke with entrepreneurs, investors and analysts who follow the company’s business strategy, and these are the top contenders.

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BY Zoe Henry - 05 Dec 2017

PHOTO CREDIT: Getty Images

Jeff Bezos might be coming for your hometown--depending, that is, on whom you ask.

Since Amazon announced that it would be selecting a new city to launch its second headquarters in September, experts have posited dozens of "most likely" scenarios, ranging from long-shot rural areas like Frisco, Texas, to New York City.

One thing everyone can agree on: It will be a big win for whatever city the e-commerce company selects. Amazon plans to invest $5 billion in the project, while creating as many as 50,000 local jobs. It's received some 238 bids, with Tucson, Arizona, going so far as to send a giant, 21-foot sugaro cactus while Stonecrest, Georgia, vowed to rename itself Amazon.

"The move to build a new headquarters [has] significant implications for the local economy of whatever city it winds up picking," explains Ari Ginsberg, a professor of entrepreneurship at management at New York University's Stern School of Business, who researches business expansion.

Amazon plans to announce the winning city early next year, and in the meantime, analysts are scrambling to make their best guesses. Ginsberg, however, suggests that the most accurate measure of probability actually lies in commercial betting websites, such as the Irish bookmaker Paddy Power. "At the end of the day, we don't know how much weight Jeff Bezos is putting on any of these factors," he says. "Therefore, if I were to bet, I would turn to the prediction markets."

Inc. culled data from a number of sources -- betting sites, shipping experts, investors and people familiar with Amazon, among others -- to come up with the following list of top contenders, ranked (more or less) in order of likelihood.

1. Atlanta

Jeremy Bodenhamer runs a $13 million shipping and logistics firm, so when asked where he thought Amazon might be likely to build its next headquarters, he based his answer on what he knew: "We believe they will select Atlanta." Bodenhamer says the Georgia capital's network of talent--particularly veteran logistics experts, as U.P.S. is already based there--is the main draw. Indeed, among the most important factors to the e-commerce giant, as outlined in a document back in September, is a deep pool of technical talent, as well as convenient access to mass transit and an international airport.

Of course, Bodenhamer--whose business, ShipHawk, is based in Goleta, Calif.--could be wrong. But Amazon would benefit from the city's comparatively low cost of living and available real estate. Nearby Alpharetta, Georgia, for instance, is fast becoming its own entrepreneurial center. Paddy Power currently ranks Atlanta as the No. 1 "bet" to place for Amazon's so-called HQ2, placing the odds at 3:1 as of publication.

2. Chicago

The Windy City has much to offer Amazon. Its central location, network of existing businesses, and supportive political infrastructure makes it a top prediction for Bradley Tusk, the founder of the New York-based political strategy and venture firm Tusk Ventures. Still, one drawback may be the city's endemic financial woes; the state of Illinois is now grappling with $15 billion in unpaid bills, and as much as a quarter-trillion dollars is owed to public employees when they retire. Tusk goes so far as to say "the city and state are on the verge of financial collapse," in an email interview with Inc. Paddy Power places Chicago's odds at a tepid 16:1, coming up behind dark horses Toronto and Pittsburgh. Perhaps to compensate, the city has reportedly offered to give $1.32 billion in income taxes collected from Amazon workers back to the company.

3. Austin

With success stories including Whole Foods emerging from the Texas hub, it's not surprising that analysts are bullish on Austin's chances. Matt McIlwain, the managing director at Seattle-based investment firm Madrona Venture Group, says the city's relative strength in the grocery and retail sectors make it an attractive location, especially as the company continues to experiment with its Amazon Fresh delivery service. Tusk, meanwhile, suggests that Austin's friendly regulatory environment is a big pro. Paddy Power agrees with the venture capitalists, placing Austin's odds at 7:1, just behind Atlanta.

4. Philadelphia

The city's mayor recently told reporters that Philadelphia represents a "Goldilocks zone" for the e-commerce giant, and he may not be wrong. In a report released in October, Moody's Analytics ranked the City of Brotherly Love as the third-most ideal location for Amazon, coming up just behind Austin and Atlanta, while NYU's Ginsberg suggests that Philadelphia is the city that most often appears across these varied analyses. In addition to its proximity to Eastern hubs including New York and Washington, D.C., Philadelphia and the surrounding metro area includes dozens of prominent universities, including the University of Pennsylvania and Drexel. Plus, suggests Tusk, Amazon would get some credit for investing in a city that has struggled with issues such as income inequality and public safety. Paddy Powers give the city's odds 16:1.

5. Boston

The Massachusetts capital has one of the best chances of being selected, according to a recent WSJ report, which combined Amazon's criteria, interviews with site-selection experts, and those familiar with the company's thinking to come up with their own list. The Boston area is, of course, home to major universities including Harvard, MIT, and Boston University, which means that Amazon could have its pick of highly qualified tech graduates. Meanwhile, the Journal found that the city is in solid financial shape, especially when compared with Chicago and Philadelphia. Madrona Venture's McIlwain notes that Boston is especially strong in the machine learning and artificial intelligence sectors, which is likely to attract Amazon as it continues to build out its virtual assistant and Echo smart speaker. (Just last week, the company unveiled its Alexa for Business assistant.) Paddy Power ranks Beantown alongside Austin, giving the city odds of 7:1.

6. Washington, D.C.

The nation's capital might just be the city to watch. In spite of its comparatively high cost of living and labor expenses, Washington, D.C., counts a young, highly educated workforce. Plus, it could behoove Amazon to be proximate to Congress as many on Capitol Hill seek to regulate tech companies more highly. Of course, the city is also home to the Washington Post, which Jeff Bezos already owns. "Washington, D.C., is the odds-on favorite for Amazon's second headquarters," suggested Richard Florida, a business professor at the University of Toronto in an October interview with USA Today. Paddy Power isn't as sure: The site puts D.C.'s odds at 14:1.