Amazon HQ2: It's not Atlanta. Company picks NYC, DC areas

In the end, Georgia didn’t convince Amazon that Atlanta is the best location for its second headquarters. Or even the second best.

The Seattle-based tech giant made it official Tuesday, announcing that it will split its proposed $5 billion HQ2 project into two operations. One will be in New York’s Long Island City in Queens and the other in Arlington, Va., across the Potomac River from Washington D.C.

Each will have more than 25,000 Amazon employees and be considered a headquarters along with the existing operations in Seattle, the company said.

Amazon also announced it will create more than 5,000 jobs in downtown Nashville, making the Southern city its eastern U.S. regional hub for tech and management of retail operations tied to customer fulfillment, transportation and supply chain activities.

The decisions are a stinging blow in Georgia where leaders initially had been quietly confident about Atlanta’s chances of landing the nation’s biggest ever economic development prize.

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Georgia Gov. Nathan Deal, who had made Amazon the state’s highest recruitment priority, was understated in his public reaction.

“While it is unfortunate that we will not be moving forward with HQ2, we are excited to have been named a finalist,” he said in an emailed statement.

Amazon already employs more than 4,000 people in the state, Deal said. “Working together through this process has made us stronger, enabling us to announce thousands of technology-related jobs for metro Atlanta in the last year, including well-known companies such as Salesforce, BlackRock, Pandora, Starbucks and others.”

Atlanta made Amazon’s list of top 20 possible HQ2 locations announced in January, but it appears the city wasn’t high in the company’s final considerations.

While news reports in recent days suggested Amazon had made follow-up visits or held additional conversations with Dallas, Newark and Chicago, the company hadn’t had detailed HQ2 conversations with Georgia officials in many months.

An Amazon spokesperson did not say where Atlanta fell in the HQ2 hunt.

“I am very disappointed,” said economist Thomas Smith of Emory University. “If your kid doesn’t get into Harvard, do you say, ‘Well, at least we won’t have all those expenses.’”

Still, metro Atlanta’s economic future is bright, he said. “We’ve still got some juice.”

Brad Dillman, the chief economist for Cortland, an Atlanta-based real estate investment firm, said the overall metro area's trajectory is unchanged by Amazon's decision. "Though Amazon's presence would have brought countless positives related to jobs and intellectual spillovers, Atlanta will continue to thrive," he said.

Amazon said in a press release that its decisions were driven by where it could get enough top workers, particularly in software development and related fields. It said it split the HQ2 project between two cities to improve its ability to recruit people.

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Big incentives

The company faced criticism that it intended to generate a bidding war to pocket extra taxpayer-funded incentives beyond those offered other businesses.

Combined, state and local governments tied to New York, Arlington and Nashville are expected to provide the company with well over $2 billion in incentives.

Georgia and local communities here are believed to have offered an unprecedented amount of more than $1 billion in incentives for the full project had it come to Atlanta, according to insiders.

But there were concerns in Georgia and elsewhere about the troubles that can follow the kind of booming growth Amazon and other companies fueled in Seattle. There, housing prices soared, gentrification worsened, and commuters suffered.

Still, many government leaders said the math added up in the project’s favor.

The competition for Amazon was good for Atlanta, said John Yates, partner-in-charge of the Technology Practice at Morris, Manning & Martin. “We don’t know if we came in third or 50th, but it caused us to look at ourselves, at our educational system, our transportation, the government support for economic development.”

Soul searching

Amazon’s decision might force more soul-searching among state and local leaders about what more the region might do to bolster its appeal.

State and local leaders are still pushing to solve transportation problems.

And issues taken up during the last legislative session may have crippled Georgia's bid and attracted pointed attention from Amazon officials.

One was a Georgia Senate vote to approve a measure that would allow adoption agencies to refuse to place children with same-sex couples. The measure stalled in the Georgia House but drew intense criticism from civil rights groups and others who called it discriminatory.

The second was Lt. Gov. Casey Cagle’s move to block a lucrative tax break that would benefit Delta Air Lines after the carrier ended a special discount program for National Rifle Association members. Cagle’s actions infuriated business boosters. Supporters said it was meant to send a message to a corporate giant trying to influence policy.

Major corporations also pushed back against legislation they view as discriminatory, fearful of so-called “religious liberty” bills could damage their ability to recruit top talent.

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ExploreWhen an Amazon delegation visited Atlanta in March, state and city leaders attempted damage control, and hoped to use the high-stakes visit to resuscitate Georgia’s chances.

Leaders pitched Atlanta’s skilled tech workforce, the state’s network of research universities, globally connected airport and business climate, while glossing over some of the region’s traditional pitfalls, such as a reputation for congestion.

Other cities had many of the same attributes and pitfalls.

Metro Atlanta doesn’t have the size and business or government muscle of New York City or Washington, D.C., nor as large of a transit system. And Amazon chief Jeff Bezos has a massive home in D.C.

Atlanta’s labor pool is simply smaller than New York or metro Washington, said Rajeev Dhawan, director of the Economic Forecasting Center at Georgia State.

At least some companies already in Atlanta were not anxious to compete with a well-heeled behemoth. “You can hear the sign of relief from the chief technology officers of the companies around town. They’d be afraid that Amazon would poach their people.”

Winning cities

Amazon heralded the Long Island City location across the East River from Midtown Manhattan as a diverse community where arts and industry intersect.

It praised the area’s access: eight subway lines, 13 bus lines, commuter rail, ferries, bike-sharing and close access to LaGuardia and JFK airports.

In northern Virginia, Amazon said its plans to locate in the National Landing development will put its workers within walking distance of three Metro rail stations, commuter rail service and Reagan National Airport.

Arlington County Board Chair Katie Cristol wrote that Amazon’s nod is “a validation of our community’s commitment to sustainability, transit-oriented development, affordable housing and diversity.”

Amazon timeline in brief