Amazon has announced its plans to construct a second headquarter for $5 billion, sending cities into delirium. By far, the company has received around 238 proposals from all around the continent. Major urban cities such as Toronto, New York City and Los Angeles submitted their proposals. A few small cities such as Georgia and Worcester took part in the submissions too.

According to Steve Glickman, Cofounder and Executive Director of the Economic Innovation Group, the very idea of creating 50,000 jobs in a city is almost like winning a grand lottery.

However, hosting the new facility will come with its own set of limitations, which will largely depend on the city that the Company selects as its ultimate pick. Even though the new facility will bring about promising jobs, it may not be very successful in hitting all places with same impact. In case of big cities, a massive economic transformation may not be seen as they already employ a huge number of workers, whereas in small cities, home prices might rise due to limited housing.

According to Nathan Jensen, Professor at University of Texas at Austin, usually people just count the number of jobs, but miss out on the quality. The expected jobs will not only be high paying, but they will be of high quality too. Naturally, the new Amazon facility will employ the most highly-skilled workers in town.

Apart from that, Amazon might also act as an “anchor” that may lure its own supplier or other huge tech companies to the chosen city. The impact of 50,000 jobs will be best understood by looking at the size of city’s local job market. Rob Adams, Director of Texas Venture Labs at University of Texas, stated, “The smaller the town, the bigger the impact.”

According to Apartment List, a site that catalogues apartment rentals all around the country, there will be a 2% increase in annual rent every year in the city where the HQ2 will be housed. Also, the highest rent rise would take place in San Jose, Pittsburgh and Raleigh. Cities like Dallas and Washington D.C. would experience lower rent increases.

Seattle is one of the best examples of how Amazon can transform a city. In 1994, Amazon had arrived in the Seattle area; here, home prices have increased up to 13.5% in relation to last year.

According to a study by Seattle Times, 19% of prime office space is occupied by Amazon. The inrush of Amazon workers have worsened the traffic situation and have stressed out public transit. Amazon has also added to constant construction in the city.

HQ2’s worth and success will be determined by the city it chooses and the perks and tax concessions offered by the city. In order to pay local tax cuts, the city may have to compromise its spending on infrastructure and education. To balance that, Amazon should be asked to invest in these areas of services in an agreement.

According to John Lettieri, Cofounder and Senior Director for Policy and Strategy at Economic Innovation Group, HQ2 could be a “net positive” for the city that wins. However, a much more vigorous development strategy should be tied with the new Amazon project.

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Thomas Mark holds over two decades of experience in the field of Information Technology and specializes in setting up global R&D and innovation strategies. With his innovative approach in developing strategies for innovation, he offers thought leadership programs and pursues strategies for engagement with leading players in the industry on innovation in Information and Technology. He currently works as a Freelance Business Consultant and also writes for leading news publications to offer his views on the recent innovations in the industry.

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