We’re in suspense

Economic expert says Austin could land part of Amazon HQ2 as new rumors swirl

Expert says Austin could land part of Amazon HQ2 as new rumors swirl

Lady Bird Lake boardwalk and Austin skyline
Austin is still in the running, says one local economist.  Visit Austin, Texas/Facebook

Amazon reportedly will split its second headquarters between two communities, rather than putting it in one place, meaning Austin or Dallas could land 25,000 jobs created by the e-commerce giant. It’s highly unlikely, though, both of the Texas finalists would be in line for an HQ2 presence.

On November 5, The Wall Street Journal reported Amazon’s surprising plan to divide HQ2 into two. Each HQ2 location will gain 25,000 jobs, rather one location picking up 50,000 jobs, which was part of the original scenario. By doing so, Amazon will disperse the pressures on housing, transportation, and talent that HQ2 will intensify.

Two days earlier, The Washington Post (owned by Amazon CEO Jeff Bezos) reported that Amazon is in “advanced talks” about putting its second headquarters, nicknamed HQ2, in Northern Virginia. Specifically, the Post reported that Crystal City, just outside Washington, D.C., is the frontrunner.

However, CNBC.com followed the Post story with its own report that a final decision is imminent and might come down to Northern Virginia or Austin. Or, CNBC.com added, Amazon might split HQ2 between those two locations.

“My gut feeling is that the size of this project cannot be easily supported by a single community, and therefore they will split this project into two communities,” Austin economist Angelos Angelou, principal executive officer of economic development and site selection consulting firm AngelouEconomics, tells CultureMap.

“Austin would get high marks for attracting talent, its revered quality of life and its entrepreneurial environment,” Angelou adds. Amazon already employs more than 900 people in Austin. It also operates a distribution center in San Marcos and owns Austin-based Whole Foods Market.

Site selection consultant John Boyd in Princeton, New Jersey, says either Austin or Dallas would make sense as an HQ2 site because Texas has an attractive business climate and has the country’s second largest congressional delegation behind California.

Ray Sturm, CEO of AlphaFlow, an automated investment platform for real estate, notes that concerns have been expressed about Austin’s ability to support the entire HQ2 project. But the city “realistically” can support a split version of HQ2, he says.
 
While those concerns haven’t been dogging Dallas nearly as much, the addition of half of HQ2 might mean Big D would experience an unprecedented boom in real estate, complete with the sort of price spikes experienced in spots like San Francisco and Silicon Valley, according to Sturm. He envisions a similar effect on Austin’s real estate market.

Wherever the split HQ2 winds up, “there will be two very happy cities. Twenty-five thousand jobs is nothing to sneeze at,” Boyd says.

Northern Virginia is one of three HQ2 finalists in the D.C. area. Austin and Dallas are the two finalists in Texas. In all, 20 shortlisted regions are vying for what now amounts to HQ2 and HQ3.

Adding to the confusion stirred by the Washington Post and CNBC.com, The Wall Street Journal reported November 4 that aside from Northern Virginia, Amazon is also engaged in late-stage talks with New York City.

But, as one Wall Street Journal source noted, Amazon is “anything but predictable,” meaning the company might go in a different direction altogether.

Officials in Austin and Dallas have been mum about where they stand in the HQ2 process, and Amazon executives have remained tight-lipped. Seattle-based Amazon is expected to unveil its HQ2 as soon as this week.

Boyd says Northern Virginia always has been an HQ2 frontrunner and would represent a “safe choice” for Amazon. However, he adds, don’t count out a finalist like Newark, New Jersey, which would offer not only a talent pool and transportation access, but also would enable Amazon to deliver a “social impact,” given that roughly one-fourth of Newark’s residents live in poverty.

In citing Newark, Boyd points to recent comments by Bezos that he’d rely on “heart” and “intuition” to make the HQ2 choice.

“This is a company full of surprises. So while Northern Virginia will probably win HQ2, I think a surprise is still very much possible,” Boyd says.