SAN FRANCISCO — Could Amazon go to Washington?
Some say the nation's capital could be a serious contender for the internet giant's second headquarters, dubbed HQ2. But D.C. also has congestion, pricey homes and high labor costs.
Ahead of Thursday's deadline for cities to bid, D.C. was pitching four different locations in hopes of landing what's being touted as the largest economic development deal in years, one that could bring an investment of up to $5 billion and as many as 50,000 jobs.
What DC's dangling: a hip, upwardly mobile urban center with a young, highly educated, tech savvy workforce, an expansive public transit system, biking trails and other neighborhood amenities, not to mention close ties to Amazon's chief executive, Jeff Bezos.
Bezos has expanded his influence in the District as the owner of The Washington Post, and he's putting down roots with the purchase of a 27,000 square-foot property in the posh Kalorama neighborhood that he intends to convert into a single-family home.
Bringing the Seattle-based company closer to the nation's seat of power could be a competitive advantage for Amazon, with growing calls to regulate tech monopolies, billions of dollars in untaxed offshore stockpiles at stake and the habit some tech companies have of getting into hot water for operating on the fringes of state and federal rules.
It certainly would break with the pack mentality of West Coast tech giants. All of the major companies there — Facebook, Google, Apple, Microsoft — have increased lobbying and policy operations in Washington since the 2016 election to deal with a Republican-controlled Congress and the Trump administration, whose policies tend to run counter to the tech industry's stances on immigration and other issues. But when it comes to the heart of their operations and the bulk of their staff, they tend to keep their distance.
"Washington D.C. is the odds-on favorite for Amazon’s second headquarters," said Richard Florida, a University of Toronto business professor. "There are not very many places that have what Amazon needs," he said, noting D.C. has a broad talent base of highly educated people, a diverse metro area, great airports, and a good environment for young singles and married people with families.
Amazon has ignited a bidding frenzy among cities across the country eager to infuse their economies with some tech economy mojo.
The company's asks are big ones: 8 million square feet of office space, direct access to mass transit, an international airport no more than 45 minutes away, a big pool of top talent — all in a metropolitan area with a population of more than 1 million.
Thomas Stringer, a site-selection manager at professional services firm BDO, said D.C. can satisfy much of Amazon's wish list, from quality of life to access to mass transit.
In recent years, the city has become a magnet for young tech workers who have transformed neighborhoods.
An extension of the Washington region’s light-rail system is pushing farther into northern Virginia with the expanding Silver Line connecting downtown D.C. with Dulles airport within a few years.
But maintenance failures on existing lines and falling ridership have undermined the region’s reputation as a beacon of mass transit.
Soaring traffic is already causing headaches and making commutes longer. Another drawback familiar to West Coast tech companies: Washington has one of the priciest housing markets in the country. An influx of 50,000 Amazon workers could force more lower-wage and middle-income workers from the city and put more pressure on housing prices and congested roadways.
Another factor that could cut either way: talent. The D.C. area has a growing tech sector, but labor costs are high. Some tech workers, tired of crowding and gridlock, are decamping to lower priced cities across the nation in search of a higher quality of life.
That could swing in the favor of nearby areas such as Baltimore. The city, is pitching Amazon on Port Covington, a mixed use project on a 235-acre site that will be anchored by athletic apparel company Under Armour. The competitive advantage: proximity to Washington without the sky-high housing and labor costs.
D.C. Mayor Muriel E. Bowser has been courting tech companies to help fill the economic gap created by a shrinking federal workforce.
Brian Kenner, Bowser’s deputy mayor for economic development, says Washington is seeing strong growth in private sector employment, including Yelp's decision earlier this year to locate a sales and marketing hub there. Cushman & Wakefield Inc. in June named D.C. one of the nation's top tech towns.
Kenner would not say what kind of financial incentives the District would dangle but noted that it has been aggressive in the past in pushing for growth in private sector employment, particularly in tech. He also said Amazon would likely qualify for existing incentives such as corporate and real estate property tax breaks.
D.C. is proposing a mix of public and private sites, all of which boast access to public transit and are situated in lively areas full of amenities popular with techies: the shores of the Anacostia River, Union Station, Capitol Hill East and Howard University. The District could easily remedy any zoning issues, Kenner said.
Bezos, says Kenner, is an executive who thinks about where Amazon will be in 100 years. "If Amazon is looking for a place that is going to be relevant 100 years from today, a place that's growing, a place that transportation wise, that is already thinking and implementing things in terms of how it can continue to grow, we feel like we are going to be the best place for Amazon."
Contributing: Nathan Bomey