Op-Ed

And the Amazon winner should be...?

Amazon officials visited Dallas in February, sources said a day after company officials confirmed plans to visit all 20 of the metro areas the corporate mammoth put on a shortlist for its coveted second headquarters.
Amazon officials visited Dallas in February, sources said a day after company officials confirmed plans to visit all 20 of the metro areas the corporate mammoth put on a shortlist for its coveted second headquarters. TNS

Since January, when Amazon released the names of 20 cities that will continue to vie for its highly anticipated second headquarters, these cities have been in high suspense. As of now, Washington D.C., Atlanta, and Boston are the leading contenders according to many experts. If I were Amazon, though, I would highlight Austin, Philadelphia and the Raleigh area as the most attractive options. Here’s why.

Amazon’s stated requirements for its new headquarters include sizeable population, a business-friendly environment, local talent, a strong university system, and available real estate options. According to a statistical analysis comparing Amazon’s short list to the United States’ 100 most populous metropolitan areas, city size and amount of local talent carried the most weight in determining the short list. Strength of local talent and relative livability followed close behind.

The 20 remaining contenders are all in populous areas. Presumably, then, Amazon is now free to focus on workforce talent and livability. With that in mind, I have conducted what economists refer to as principal component analysis to gauge which contenders best satisfy those criteria. This technique reduces the 59 variables in my study to seven workable components, which I then weighted to produce an indexed ranking of the 100 cities. The results suggest that Austin, Philadelphia and Raleigh’s low cost of living, presence of cultural and lifestyle amenities, tight community of innovators and strong university influence should make them top contenders for Amazon’s HQ2.

Austin, TX

Rather than locating in its congested northern neighbor, Dallas, Amazon would benefit from choosing this smaller, more eager community that lives and breathes technological innovation. Austin’s technology sector is stronger and growing rapidly; its tech employment has grown by 60 percent over the past 10 years.

Compared with other contenders across the nation, Austin combines high quality of life and low cost of living. It costs 20 to 40 percent less to live in Austin than in its Northeast counterparts. The Austin cultural lifestyle is also young and progressive, fostering an innovative environment.

It is no secret that Texas is a business-friendly state. In addition, Austin is highly educated; approximately 43 percent of the population holds a bachelor’s degree or higher, of which 44.2 percent are in science-related fields.

Philadelphia, PA

Just a short 100 miles from New York City, Philadelphia offers the perks of being an east-coast powerhouse without the high cost of living and traffic, offering proximity to the Big Apple at two-thirds the living cost.

The city has a diverse workforce, from entrepreneurs to corporate employees. Many American and foreign corporate headquarters are already located in Philadelphia including Aramark, Comcast, IKEA, Boeing, ING and SAP. The brilliance of Boston and DC and the excitement of New York are intriguing, but Philly offers a more versatile business environment in terms of location and talent, at costs that are more than 20 percent cheaper.

In Philly, Amazon would be the center of attention, much as it is in Seattle. Finally, it would also stand to benefit from the boom that is predicted for the city in the near future.

Research Triangle, NC

There was originally confusion in the air, but the Greater Durham Center of Commerce confirmed soon after Amazon’s announcement that by “Raleigh” Amazon meant the entire Research Triangle area between Raleigh, Durham and Chapel Hill. The three municipalities, together with the Research Triangle Park, have become a center for scientific research and enterprise, hosting corporations such as IBM, Cisco, Biogen and Lenovo.

Proximity to three top 50 universities — Duke University, North Carolina State University, and the University of North Carolina at Chapel Hill —floods the area with talent. Durham ranks second nationally, and Raleigh ninth, in percentage of population with science and technology degrees. In both cities, over 50 percent of the educated population are in science-related fields. Durham and Raleigh also rank in the top 10 nationally for percentage of general population with a university education.

Triangle area cities also have a low cost of living and offer desirable lifestyle amenities.

Nineteen cities will be sorely disappointed when Amazon’s final decision is announced. But I predict that Philadelphia the Triangle, or Austin will be the one celebrating.

Anna Kropf is a Duke University senior majoring in economics.

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