Another twist in the saga surrounding Amazon’s search for a second headquarters came Monday, with a report that the e-commerce giant now plans to split its expansion plans between two cities — and it doesn’t look like either one is Boston.
The Wall Street Journal, citing an unnamed “person familiar with the matter,” said Amazon now intends to locate its hotly contested “HQ2” in two metro areas, to give it access to more skilled workers and ease the effects on housing costs and transportation that a single, massive campus could bring.
The New York Times, meanwhile, reported Monday evening that Amazon is close to a deal that would move part of the new headquarters to Long Island City in Queens. The company is also in talks to move to Crystal City, Va., just outside Washington, D.C., the Times reported, citing an unnamed source.
Amazon executives met two weeks ago with New York Gov. Andrew M. Cuomo, the Times said, adding that the state had offered hundreds of millions of dollars in subsidies.
Other published reports suggest talks also continue in Dallas, and Austin, Texas, and perhaps elsewhere.
An Amazon spokesman declined to comment, saying only the company plans to make a decision by year’s end.
While Boston was long considered a strong contender, Amazon’s interest in putting its HQ2 here appears to have cooled in recent months. State Economic Development Secretary Jay Ash said Monday his office has “had no recent contact with Amazon regarding HQ2,” while Boston economic development chief John Barros said it’s “not beneficial” to react to the latest reports.
Meanwhile, real estate brokers say Amazon has not toured the largest chunks of office space available for lease here next year.
That may be a concession to what many say are Boston’s two biggest drawbacks when it comes to hosting such a big corporate campus: already-high housing costs and crowded roads and rails. Those same factors, observers say, may be what’s pushing Amazon to split HQ2 in two and lessen the effect on any particular city.
“I think it makes sense,” said Mark Zandi, chief economist at Moody’s Analytics. “One of the big complaints that I’m sure they heard from communities was that 50,000 employees would overwhelm the housing market and transportation systems and strain government services. I suspect they heard that everywhere they went.”
By dividing the spoils, and the headaches, across two locations, Amazon could tap multiple labor markets as well, perhaps finding better access to tech workers it needs to grow than any one city could provide. Given how tight labor markets are in many cities around the country, that approach could make a lot of sense, said Jed Kolko, chief economist at employment website Indeed.com.
“They want to hire a lot of workers and that would be a challenge in even the biggest of cities,” Kolko said. “Having multiple additional headquarters gives them room to hire the number of people they want.”
At a certain level, Amazon already does this.
The company has expanded well beyond its Seattle roots in recent years, hiring thousands of engineers, developers, and other highly skilled workers in a number of cities around the country, including Boston.
Amazon operates a robotics plant in North Reading and employs more than 2,000 tech workers — many of whom work on the voice-activated Alexa system — at offices in Kendall Square, the Back Bay, and Fort Point. Amazon is also set to break ground by year’s end on a building in the Seaport that could house 2,000 more, and Ash said his office continues to talk with Amazon about more growth here, separate from HQ2.
That existing base in Boston, along with the region’s universities and strong tech economy, had put the city on many observers’ lists of top candidates when Amazon first announced its search in September 2017, and again when it listed 20 finalist regions in January. A search team visited Boston in March, touring Suffolk Downs in East Boston and sites along the Orange Line in Charlestown, Cambridge, and Somerville, and met with tech and education leaders.
Boston Mayor Martin J. Walsh, Somerville Mayor Joe Curtatone, Governor Charlie Baker, and many business leaders lobbied Amazon to bring its second headquarters here, though the region stopped short of offering the sort of multibillion-dollar incentive packages some competitors dangled. Others worried that Amazon’s arrival would drive up already-high housing costs, choke traffic-clogged roads, and vacuum up tech talent from local startups.
Either way, since Amazon huddled this summer to study data from its 20 finalist cities, the company has seemed inclined to take HQ2 in another direction. Amazon’s search team didn’t revisit Boston this fall — as it reportedly did several other contenders — and local economic development and real estate officials say there has been no particularly new contact in recent weeks, though the Baker administration also says it hasn’t been told Boston is off the list.
A final decision is expected soon, perhaps as early as this week, The Wall Street Journal reported. While oddsmakers still favor Northern Virginia, economic development experts who have been following the search closely say, at this point, it’s hard to know what Amazon will pull out of its hat next.
“People ask me all the time, but I’m giving up speculating on this,” said Lawrence Moretti, a Pennsylvania-based site-selection consultant. “Who the heck knows?”