Over the past two years, there has been no prize bigger than the Amazon HQ2, and there probably won’t be another that comes close for decades. Hundreds of sites vied for it, hundreds of millions of dollars were spent in pursuit of it, and thousands of people devoted untold numbers of hours making their best case. In the end, two winners emerged, New York City and Arlington, Virginia.
Based on our long relationship, New York State (Empire State Development), engaged our team of Newmark consulting colleagues - experts in site selection, real estate development, labor analytics, cost modeling and HQ strategy – early in the proposal process, inviting us to play an advisory, consulting and strategic planning role in positioning New York to Amazon.
Sizing the prize
The stakes for any HQ relocation are big, but in the case of Amazon they were astronomical. There simply is no brand bigger. The company’s revenue exceeds the GDP of entire countries, and its HQ has an enormous value chain and admirable multiplier effect. Early on in the process it was reported that Amazon’s headquarters would drive 2.5% to 3.0% increase in State Gross Domestic Product in some of the candidate locations. Another factoid is that over 233,000 hotel visits from out of towners occur every year in Seattle. Other indirect and induced economic impact is well documented by Regional Economic Models, Inc. (REMI), who New York retained to measure these enormous economic and fiscal impacts.
I’ve worked on extremely large, high profile location projects before – Nike and Corning come immediately to mind – but the prestige associated with the Amazon project is unprecedented, as was the scale of the challenge facing every site competing for HQ2.
Getting started
Early on, the key is focusing on organizational capacity, and in this area New York State and New York City are to be commended. They played a giant resource management game very well, arming their team with the right leaders from all impacted state and local entities and focusing on solid alignment of many public and private stakeholders to frame their case and produce a single, explicit, compelling and consistent message.
Regarding public/private sector partnership; it’s hard to overstate the significance of that collaboration once the decision is made and it’s time to implement. The real work delivering on promises begins now! In my opinion, New York was able to showcase a number of significant developments, I suspect, like Hudson Yards and its development of the Navy Pier area as evidence of its proven public/private track record, something I believe was helpful to Amazon’s decision. Not to mention all the vendors, construction workers, etc. that will be needed to take the Long Island City concept to fruition.
Everyone on the New York team was pointed in the same direction, and everyone knew and accepted their role; some were on the front-line, meeting with Amazon when they came into town; some were in the background, keeping the front-line armed with substantive arguments; and some were in the middle, helping to coordinate it all. That's one key role the Newmark team played – that of facilitator. Amazon, as any sophisticated organization would, had its antennae up for that one voice and a consistent – or inconsistent – message, from day one. In New York, they found focus, consistency and an attitude that every issue is researchable and solvable.
The importance of using advisors
Corporate relocation opportunities the size of Amazon’s – or even 1/10th its size – may come along only once every decade or two; competing for them is a Herculean, resource-heavy, expertise-driven pursuit, one even the city and state of New York were ill-equipped to undertake without the help of an outside advisor. I know in this case Amazon did not rely heavily on an outside advisors, but if you look at their selection team several were former advisors or economic developers.
Hopefully without coming off as self-serving, I strongly advocate for strategic partners, like the many excellent site selection advisors you would find in the Site Selectors Guild (www.siteselectorsguild.com) who do this work every day and know what it takes to win. There is a strong case to be made for bringing the necessary skill-set, best practices and, perhaps most importantly, an objective perspective to the table from the outset of any attempt to attract corporate HQ relocations.
Robert Hess
Vice Chairman, Global Strategy Team Lead
rhess@ngkf.com