Amazon selects New York & Arlington, VA for HQ2 ・people, mass transit, sustainability

Amazon has selected New York City (the Long Island City neighborhood of the borough of Queens) and Arlington,Virginia (the Crystal City neighborhood, across the Potomac from Washington, DC) for its HQ2.

In agreements with the local and state governments, Amazon stipulates that the two locations will house at least 25,000 employees each. The new sites will require $5 billion in construction and other investments.

Direct access to rail, train, subway/metro, bus routes (mass transit) at site has been a core preference of Amazon, stipulated in the Amazon HQ2 RFP.

Significantly, Amazon’s HQ2 RFP stipulates that it will develop HQ2 with a dedication to sustainability:

Sustainability: Amazon is committed to sustainability efforts. Amazon’s buildings in its current Seattle campus are sustainable and energy efficient. The buildings’ interiors feature salvaged and locally sourced woods, energy efficient lighting, composting and recycling alternatives as well as public plazas and pockets of green space. Twenty of the buildings in our Seattle campus were built using LEED standards. Additionally, Amazon’s newest buildings use a ‘District Energy’ system that utilizes recycled heat from a nearby non-Amazon data center to heat millions of square feet of office space – a system that is about 4x more efficient than traditional heating. This system is designed to allow Amazon to warm just over 4 million square feet of office space on Amazon’s four-block campus, saving 80 million kilowatt hours over 20 years, or about 4 million kilowatt-hours a year. We also invest in large solar and wind operations and were the largest corporate purchaser of renewable energy in the U.S. in 2016.

Amazon will develop HQ2 with a dedication to sustainability.

Of the cities selected, Emily Badger of The New York Times observes:

Tech companies feed on highly educated and specialized workers, specifically dense clusters of them where workers and companies interacting with one another are more likely to produce new ideas. Washington and New York, as it turns out, are two of the most highly educated regions in the country, with already large pools of tech workers.

Drop a big Amazon headquarters into Washington or New York, and economists expect the 50,000 workers there to be more productive than if the same 50,000 jobs were dropped into Indianapolis. Simply putting them in New York, near so many other tech workers, increases the likelihood that Amazon invents more services, connects to more markets, makes more money.

Those added benefits are so strong, economists say, that it’s worth it to companies like Amazon to pay more — a lot more — for office space and employee salaries in New York City.

‘If you are in the business of making new things — whether it’s a new product, or a new way of delivering things, or a new service — and it’s something that is unique, and it keeps changing and it needs updating, the most important factor of all is human capital,” said Enrico Moretti, an economist at the University of California, Berkeley. “It’s not like making soap, or like making textiles.’”

See:

Amazon HQ2 RFP

Amazon Announces New York and Virginia as HQ2 Picks,” Karen Weise, Technology | The New York Times, 13 November 2018

In Superstar Cities, the Rich Get Richer, and They Get Amazon,” Emily Badger, The New York Times, 7 November 2018

Amazon expanding into physical stores, agrees to acquire Whole Foods Market

Amazon announced today that it has agreed to purchase Whole Foods Market.

Amazon (NASDAQ:AMZN) and Whole Foods Market, Inc. (NASDAQ:WFM) today announced that they have entered into a definitive merger agreement under which Amazon will acquire Whole Foods Market for $42 per share in an all-cash transaction valued at approximately $13.7 billion, including Whole Foods Market’s net debt.

Amazon to Acquire Whole Foods Market, BusinessWire, 16 June 2017

The New York Times reports that Amazon wishes to expand beyond online retail into physical stores.

The company is experimenting with physical stores. The Atlantic reports that “Amazon needs food and urban real estate.” The company has opened a small chain of book stores across the country. In Seattle, Amazon has opened two drive-through grocery pickup locations;  customers order their items online.

With Whole Foods, Amazon will acquire more than 460 stores in the United States, Canada and Britain.

“’The Whole Foods acquisition provides them more physical locations. They’re going to be within an hour or 30 minutes of as many people as possible.’”

Mikey Vu, partner (retail), Bain & Company

Whole Foods’ urban and suburban locations are extremely valuable for Amazon’s delivery business.

“’Amazon did not just buy Whole Foods grocery stores. It bought 431 upper-income, prime-location distribution nodes for everything it does.’”

Dennis Berman, financial editor, the Wall Street Journal, via Twitter

Whole Foods, The Atlantic reports, “needs help.” While Whole Food Market sales were approximately $16 billion in the 2016 fiscal year and while the United States grocery industry produces approximately $700 to $800 billion in annual sales, the grocery business is low-margin. Whole Foods revenue growth has fallen every year since 2012. Whole Foods investors have been encouraging the company to sell itself to a larger grocer like Kroger.

Under the terms of the proposed deal, Amazon would pay $42 a share for Whole Foods, a 27 percent premium to Thursday’s closing price.

Completion of the transaction is subject to approval by Whole Foods Market’s shareholders, regulatory approvals and other customary closing conditions. The parties expect to close the transaction during the second half of 2017.

Amazon to Acquire Whole Foods Market, BusinessWire, 16 June 2017

Whole Foods was founded in 1978 in Austin, Texas.

See:

Amazon to Buy Whole Foods in $13.4 Billion Deal” | Michael J. de la Merced & Nick Wingfield, The New York Times, 16 June 2017

Amazon to Acquire Whole Foods Market” | BusinessWire, 16 June 2017

Why Amazon Bought Whole Foods” | Derek Thompson, The Atlantic, 16 June 2017

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