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Why The East Coast Dominated Amazon's HQ2 Shortlist

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After months of speculation, Amazon released its list of HQ2 finalists this week — and the East Coast dominated.

Amazon hq

The tech goliath whittled 238 proposals down to a selection of 20 metro areas across North America, including major East Coast markets like Boston, New York City, Newark, Washington, D.C., Atlanta and Miami. 

KC Conway, the new chief economist at CCIM Institute — a global real estate organization recognized throughout the industry for its real estate designations — said though the site selection for HQ2 is about talent acquisition and expanding Amazon’s presence across the country, a number of business benefits will also factor into Amazon’s decision.

Below are three reasons Amazon is strongly considering the East Coast for its second headquarters, which will house 50,000 Amazon employees and involve an estimated $5B investment, according to the company.

1. Amazon Already Has A West Coast Presence

Why The East Coast Dominated Amazon's HQ2 Shortlist
Amazon's Seattle campus

As many speculated during the bid process, Amazon chose not to build another corporate campus near its existing 8.1M SF Seattle headquarters. The only West Coast market to make the shortlist was Los Angeles.

The Seattle site boasts 33 buildings, including 24 restaurants and cafés. The tech giant spent $38B on its Seattle HQ between 2010 and 2016, employing more than 40,000 employees directly and boosting job growth in the surrounding community by 53,000. Amazon also injected $43M into the city’s public transportation system.  

2. The Golden Triangle

Warehouse, industrial, distribution center, cargo, freight

Conway said Amazon’s need to be closer to “The Golden Triangle,” will also weigh on its HQ2 choice. The Golden Triangle is a region in the U.S. spanning the Great Lakes and states in the Southwest and the Southeast that account for about 47% of all U.S. gross domestic product. 

Markets within The Golden Triangle are particularly attractive to tech, e-commerce and logistics companies because it is where an abundance of skilled workers reside. Conway said major manufacturers and corporations are already expanding into the area, including companies like Boeing with its move to South Carolina, Mercedes relocating to Alabama and Nike to Memphis. 

Amazon HQ2 is going to follow this easterly growth. Due to the remaking of North America’s supply chain, retail disruption, the growth of e-commerce and a focus on workforce availability and affordability by technology and logistics companies, the Golden Triangle has become a new frontier for growth,” Conway said. 

3. Proximity To Business Customers

Amazon's original headquarters in Seattle.
Amazon's original headquarters in Seattle

Conway said Amazon’s customer obsession will also play a key role in its HQ2 decision. In addition to talent acquisition and being close to top tech talent, Conway said Amazon wants to move closer to its customer base. 

“If you look at Amazon’s business customers now, there’s also a business case — more Amazon business customers [are based in the] eastern United States and the Midwest than there are on the West Coast,” he said.

Businesses using Amazon products and services are broken down as follows: The West Coast boasts about 860,000 Amazon customers, while the East Coast is nearer to 865,000 and the Midwest-Midsouth is around 526,000, according to CCIM research.

“Common sense [says] go where business clients are,” he said.