The online retailer said it planned to spend upward of $5 billion on the new corporate campus, and house as many as 50,000 employees there. "We're excited to find a second home," said Amazon CEO Jeff Bezos.
Amazon.com has outgrown Seattle.
The online retail giant, which employs about 40,000 people in the city after a hiring boom and urban build-out with little precedent in modern American history, is searching for a second home.
The company, still growing quickly in the city where it has been based for 22 years, said Thursday it would seek to place another headquarters somewhere in North America starting in 2019. Amazon says it expects to spend upward of $5 billion on a new corporate campus, and house as many as 50,000 employees there.
The new headquarters will “be a full equal” to Amazon’s Seattle base, chief executive Jeff Bezos said. “We’re excited to find a second home.”
Amazon plans to hire new executives and teams in the second headquarters, and to give senior leaders the option of locating their existing groups in one or both campuses. Employees currently working in Seattle, Amazon said, may have an opportunity to choose to work from the new headquarters.
A relief valve to house some of Amazon’s future ambitions down the line fits with the reputation of a company famous for taking the long view. Amazon is known for its patience in mastering new concepts, and Bezos has personally invested in a 10,000-year clock to nudge humanity into long-term thinking.
It’s unclear why Amazon chose the unusual move of labeling the expansion a second headquarters, rather than a satellite office.
But the move immediately sparked the first action in a bidding war among states and cities eager for a stake in Amazon’s empire. Mayors around the country were quick to tout their cities as a potential destination for Amazon’s expansion.
Companies frequently manage engineering or research and development hubs from a remote headquarters, as Boeing has done since the airplane maker moved its executive staff to Chicago in 2001. Running a company from two co-equal corporate and research and development hubs, however, is rare.
Amazon didn’t make executives available to discuss their rationale, and declined to comment beyond the early morning press release announcing the move.
Washington state politicians and business leaders were happy to fill that silence, with some interpreting the news as a sign that Seattle’s boom — in housing costs, hiring, and the social rifts that can follow — may have crested.
Others said that’s premature. Amazon, the city’s largest employer and user of office space by a large margin, is still ramping up. On Thursday afternoon the company’s job site listed 6,476 open positions in the city.
The universal reaction to the announcement was surprise.
Seattle City Councilmember Tim Burgess learned about Amazon’s plans early Thursday in the form of a news alert on his phone. “I thought, ‘Uh oh. What’s that mean?’”
More growth, apparently.
Plans for a new headquarters, which Amazon is calling HQ2, seem to chart expectations for even more hiring at a company that has upended brick-and-mortar retail as it reshaped Seattle’s core.
The company now occupies 8.1 million square feet of office space in the company’s sprawling Seattle campus, and the company is on track to grow that physical footprint by half in the next five years.
By then, new or expanded corporate campuses owned by Google, Facebook and Expedia will be anchored near Amazon home in the South Lake Union neighborhood.
“If they want to hire another 50,000 people, and the alternative is putting them in South Lake Union?” said David Sirmon, who teaches business strategy at the University of Washington Foster School of Business. “There are some limits there.”
Born as an online bookseller in Bezos’ Bellevue garage in 1994, Amazon moved to Seattle the following year.
Its reach has grown since to encompass an online retail store that sells consumer goods of all kinds, creative studios producing film and television, computing infrastructure and artificial intelligence development, and a growing, highly automated warehousing and distribution network supplemented by an air cargo fleet.
After sealing the $13.5 billion purchase of Whole Foods last month, Amazon, with about 469,000 employees, is likely the second largest U.S.-based employer, behind Wal-Mart’s 2.3 million.
An eight-page request for proposal Amazon posted online Thursday said incentives offered to offset building and operating costs “will be significant factors in the decision-making process.”
Packages of goodies given to companies that promise jobs have come a long way since Chicago in 2001 snagged Boeing’s headquarters, formerly in Seattle, with tax breaks worth up to $60 million.
When General Electric agreed to move its headquarters from suburban Connecticut to Boston last year, the pot was sweetened by up to $145 million in incentives.
And subsidies to keep or expand manufacturing work in states have added up to billions in tax breaks for the likes of aluminum maker Alcoa, General Motors, Intel, and, in Washington, the package offered to Boeing in exchange for a commitment to build the 777x airliner in the state.
Measured by expected direct employment, Amazon’s scale dwarfs those projects.
“Fifty thousand people,” the University of Washington’s Sirmon said, “is a big carrot.”
Analysts and media speculated Thursday on likely candidates for Amazon’s location, naming software hubs like San Francisco; the Austin, Texas, home of Whole Foods; as well as wildcards with cheaper real estate like Pittsburgh or Detroit.
The company listed other criteria on its wish list, including an urban or suburban core in a metropolitan area with more than 1 million people, a highly educated workforce and a “stable and business-friendly environment.”
Some business leaders in Seattle took that line as a jab at the city council’s progressive politics, which has floated marginally higher taxes on wealthy individuals or companies. Maud Daudon, president of the Seattle Metropolitan Chamber of Commerce, said Amazon’s expansion elsewhere was a “wake-up call.”
“They’re growing like crazy, they need a lot of space, they need a lot of talented people,” Daudon said. “We need to move quickly and proactively to address all of that to keep people here.”
Observers pointed out that Amazon’s own list of helpful characteristics for a second headquarters included availability and diversity of housing, as well as access to mass transit, features that are in shorter supply in Seattle these days as the region deals with record housing prices and a traffic crunch.
Of course, Amazon’s hiring boom — the company employed just 5,000 people in Seattle in 2010 — is widely seen as a contributing factor to those growing pains.
Mayor Ed Murray said Seattle’s economy remained large and diverse. “But, we must also know headwinds are coming,” he said in a statement. “Unprecedented growth will not happen forever.”
Amazon isn’t picky about whether to build or buy its new digs. It said it would field proposals for sites that include 500,000 square feet of space in the first phase, or new construction on a plot of 100 acres or more. Plans may eventually incorporate up to 8 million square feet of office space over more than 10 years.
Speed is a priority. As part of the proposals it is requesting by Oct. 19, the company asked interested municipalities to offer their best guess at the timeline Amazon could expect for permitting and other considerations to be completed.
Amazon plans to announce a decision next year, and start work on the first phase of a new campus by 2019.
“We encourage cities to think big and be creative,” the company said.
In an interview near Amazon’s current corporate mother ship, Matt, an Amazon employee who lives in Woodinville and declined to give his last name, echoed that mantra, which is among the so-called leadership principles repeated from the executives ranks to corporate rank and file.
“It’s great to expand,” he said. “My perspective as an employee is thinking big is a good thing.”
He added: “Seattle will always be home.”
Seattle Times reporters Daniel Beekman and Jessica Lee contributed to this story.