For Amazon’s 2nd HQ’s Browse, Larger May Be Better

Most significant US Cities Appear to Have Edge in Amazon Sweepstakes, Midsize Market’s Strength Will Be Affordability

Amazon's latest office lease was for 336,000 SF at 5 Manhattan West in NYC Hudson Yards.
Amazon’s newest workplace lease was for 336,000 SF at 5 Manhattan West in NYC Hudson Yards. While there has been no scarcity of market guesswork in recent weeks on where Amazon will decide to find its new’ co-headquarters,’ we decided to crunch the numbers utilizing CoStar’s unrivaled database of commercial property information using the crucial criteria recognized by Amazon in its Request for Proposition (RFP).

The rankings weighed the percent of a metro’s population holding a bachelor’s degree or greater, the total number of computer and mathematics jobs in the city, the rate of tech-related task development from 2013-2015, the total quantity of proposed workplace tracked by CoStar in the market, the typical price/square foot of workplace homes in the metro based on CoStar sales information, and the cost of the metro based on CoStar apartment or condo rental data.

With this additional analysis of the particular commercial realty accessibility by market, CoStar Market Analytics supervisors identified the San Francisco-Oakland-East Bay city area as the top prospect in the brand-new ranking of more than 50 major U.S. cities that fit Amazon’s requirements and choices for locating a second nationwide head office.

[Editor’s Note: That analysis likewise determined specific advancement jobs efficient in dealing with the HQ2 requirement within markets and those summaries are posted on the individual news page of those markets.]


Six of the country’s 10 biggest cities showed up in the top 10 markets, which are listed in order as follow based on the CoStar Market Analytics ranking: San Francisco-East Bay
San Jose-South Bay
Washington, DC
Dallas/Fort Worth
New York-NNJ

Mainly driving those outcomes were the specific metro areas’ ability to meet Amazon’s need for workplace.

To be clear, Amazon HQ2 is not a common head office website selection opportunity. As stated in the online giant’s RFP, the proposed financial investment by Amazon in its new HQ2 task is expected to generate billions of dollars in brand-new financial investments in the location’s economy and tens of countless new tasks. Bidding metro locations need to have 500,000 square feet of area offered by 2019, and the capability or proximity with other possible HQ2 websites for collective capacity for as much as 8 million square feet beyond 2027.

What put the San Francisco Bay area on top was that it scored in the leading five in all 3 of the workforce classifications: holding a bachelor’s degree or greater, the total variety of computer system and mathematics jobs in the city, and the rate of tech-related job growth from 2013-2015.

A lot of prognosticators have ignored the Bay Area as a potential landing website for Amazon’s HQ2 school, pointing out the area’s high cost of living and workplace rents, and relatively close distance to the Amazon’s initial headquarters in Seattle. Although valid, these cost issues have actually not deterred the world’s largest technology business (and Amazon rivals) such as Google, Apple and Facebook, from continual expansion in the area for good factor. Silicon Valley remains the capital of global tech skill. High-skilled tech employees continue to flock to the South Bay, one of the couple of markets in the nation where Amazon could immediately discover a workforce with the skills required in mass to develop a 2nd headquarters.

Amazon has actually also revealed a preference for the Bay Area in the past 3 years, signing leases for more than 366,000 square feet in that time in San Francisco-East Bay, inning accordance with CoStar information. Include Sunnyvale, CA, and the web merchant has taken more than 770,000 square feet because time.

Beyond Seattle, the only market where Amazon has actually leased more workplace is New York. Last week, Amazon announced that it would be adding 2,000 brand-new tasks in Manhattan at a new workplace at Brookfield’s 5 Manhattan West in Hudson Yards, where it signed for 360,000 square feet of area. That brings its overall workplace leasing in New York-NNJ to more than 978,000 square feet in the last 3 years.Midsize Markets Offer Cost Advantage Beyond providing more

space or more educated tech employees, the mid-size markets have a clear advantage on expense of occupancy and real estate. Just 2 of the top 10 ranked markets made it onto to the leading half of many budget friendly occupancy costs: Atlanta at No. 16 and Philadelphia at 25.

Atlanta ranks second overall among the MSAs evaluated. Substantial points were scored in cost, with the typical housing cost in Atlanta about 50% less than average of the other top 10 contenders. Workplace was also 50% less than the average among the top 10 competitors, highlighting the lower business costs related to the metro

While Austin ranks eighth on the list, it and Dallas/Fort Worth remain in among the most business-friendly states in the country. Texas boasts no income tax, provides generous benefits for corporate movings, which can assist offset a few of the higher property and real estate expenses.

Given that unemployment in Denver is close to 2% (without a doubt the most affordable of any large metro in the country), Amazon would need to rely greatly on net migration to sustain its growth. And because regard, dozens of major companies have actually picked Denver for significant growths or relocations this cycle, including a number of West Coast tech companies.

Philadelphia ranked directly in 10th location. Philadelphia’s sheer size in regards to population and the large scope of office projects in preparation assisted push it into the leading 10. But where it fails is in its smaller pool of innovation workers, where it ranked 41st.

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