Why Amazon Should Choose Chicago

Amazon said they are going to set up a second headquarters.  Currently, they are located in Seattle, WA.  Seattle is a great town.  But, for a distribution company like Amazon, it’s located in a tough spot geographically.

Certainly, whatever city lands them will put together a massive tax relief package with all kinds of incentives.  Let’s assume that all these are the same so Amazon is indifferent about which city based on the numbers.

I’d also discount Jeff Bezos personal politics.  He answers to his shareholders, not his political leanings.  Don’t let the red/blue divide color your thinking about how Amazon will pick a second HQ.

It’s all about the company strategy.

Amazon will pick a town that is big enough to have an NFL team in it.  That means a city like St. Louis is out.  Columbus, OH is out.  Austin, TX is out.  I also think that they will be east of the Mississippi River, or central in the US.  That means California is out.  I ruled out the Northeast because it doesn’t give Amazon any strategic logistical advantage.

Taking a cursory look at potential places Amazon could set up their second headquarters, I came up with three good candidates and one outlier.

  • Atlanta
  • Dallas
  • Chicago
  • Indianapolis

Atlanta is great.  Good airport.  It’s also sort of central to some of the fastest growing cities in the country.  Charlotte, Nashville, Raleigh, Florida cities, and Texas cities are within easy reach.  Atlanta also has land, and the population to support the headquarters.  There are top tier universities close enough to attract talent.  I don’t know if Atlanta is “the draw” for ACC or SEC university grads or not.  Georgia also has a good tax/regulatory environment.  Atlanta is the HQ for UPS, which is a hand in hand partner to Amazon.

Atlanta certainly can have issues.  They don’t deal with adverse weather there well.  A half inch of snow can shut the city down.  On the bright side, pretty good weather all year and no hurricanes.  Atlanta isn’t a typical “urban city”.  Hard to bike, walk or take public transportation to work.

Dallas has a good airport.  It’s got space and people.  Texas is one of the best states in the country for business.  Texas is growing fast.  The one downside to Dallas is that you can drive for hours and still be in Texas! Dallas has a couple top tier universities, but not a ton of them nearby. Austin isn’t big enough and Houston is an energy town.  Dallas has better logistical features than Houston.

Dallas has a pension crisis similar to Chicago’s.  It’s not a typical “urban city”.  People will not be able to walk to work.  They will have to drive a car.

That leaves Chicago.  Chicago is the best town in the US when it comes to logistics.  Rail, interstate and great airport.  It’s big enough.  Chicago has plenty of vacant land, and much of it is inside the urban center.  There is a ready bench of logistical talent to draw from.  Chicago also has a lot of marketing talent which Amazon needs.  There is also the Big Ten.  Big Ten university grads are naturally drawn to Chicago.

Chicago is urban.  It’s easy to get around without a car.  It has more nightlife and culture than both Atlanta and Dallas. Networking opportunities abound with more corporate headquarters in Chicago than both Atlanta and Dallas.

Here is something that is unknown about Chicago that might be a tipping point.  Chicago has some of the most cutting edge soundstages in the world.  They built them all in the past few years and they are not used at full capacity.  TV shows like Chicago Fire film there.  Ted Reilly and Chicago Media Angels opened my eyes to this.  Amazon doesn’t just have eyes on their existing business along with grocery.  They want to be a media company as well.

Chicago certainly has warts.  The fiscal issues are big.  Chicago is not business friendly.  Illinois is not business friendly either.  The city has lost population, along with all the northern cities.  Growth in the US is south of the Mason-Dixon line.

It’s possible that Amazon could consider a city like Indianapolis.  It’s not very big, but it has logistics.  It’s close enough to Chicago and still central in Big Ten country.  Indiana is consistently the number one state in the country for business.  Indianapolis is a nice little town.

I think it will be a close call between Atlanta and Chicago.  Having the media piece might be the tipping point.

 

  • bob g

    If one changes the NFL city size requirement to a major league city requirement St Louis, Milwaukee, and Columbus return for consideration. With its proximity to Chicago, Milwaukee is also centrally located in the Big Ten and has an additional selection of good feeder universities. And Amazon already has a large presence in SE Wisconsin. This process will be interesting to watch.

    • Dan Kunze

      I agree with this. Don’t discount the recent landing of FoxConn to Southeast Wisconsin (Madison is rumored to be getting a ton of office jobs to support it as well). I am quite sure that Bezos noticed. They could get a mass of cheap land, HQ in Wisconsin and still get the benefit of the Chicago talent without all of the traffic headaches, and more importantly none of the nonsense of the terrible business climate of Chicago/Illinois to deal with.

  • awaldstein

    I think they are going to choose somewhere like Jersey City.

    It has everything they need and will own the renaissance of that town, drawing in talent from everywhere and proximity to rail, airport and well, everything.

    But honestly, I have no idea. Nor vested interest. As a New Yorker, warehouse location and same day realities is what matters and we already have that.

  • Larry Abrams

    Jeff, you make some great points here and Chicago offers an incredible list on the pro side, however the future business climate is so dismal…
    I would add Memphis and Nashville to your list. Along with your Atlanta reasoning, FedEx headquarters in Memphis could have a lot of added value.
    As a matter of fact, I see one of the next MEGA acquisitions being Amazon buying either UPS or FedEx. It makes sense on so many levels. Just remember you heard it here first!

    • Pointsandfigures

      Memphis maybe, except the town is pretty small. Although the area is growing fast when you extend down to northern Mississippi. Nashville is certainly a possibility. However I do think it’s Chicago’s to lose.

  • Abraham_Franklin

    Chicago is dying and nothing can stop that. But hey, if it wants to die even faster it can kiss Bezos’ big toe and offer AMZN amazin’ stuff.

    • Tim Henderson

      Interesting, Chicago is dying? The only city capable of putting the nation’s first Black president in office. The country never had a Black, Latino, Asian, Arab, or American Indian president and Chicago changed that. House music, which the world is crazy over, along with other Electronic Dance Music, created in Chicago. Oprah Winfrey, world’s first Black female billionaire outside of royalty, made that money in Chicago. Chicago, running rapid transit train lines down expressway medians, copied by other cities. Really way too much to list. Chicago isn’t dying, seems you just want it to… which is ignorant

      • Abraham_Franklin

        The only city capable of putting the nation’s first Marxist president in office.

        FTFY

      • emmbee

        great argument, tim. the only thing dying is the thinking of racist arseholes like abe franklin who actually believes in his jaded heart that obama is a marxist. now i’ve heard everything!