Now comes the hard part.
Chicago made the list of 20 cities or regions that Amazon will consider for its second headquarters, an expansion that promises $5 billion in investment and tens of thousands of jobs over the next decade. Amazon will get serious in the coming weeks, visiting the cities, digging into the details of their bids and assessing whether it can or wants to do business with them.
Amazon didn’t rank the finalists, but the most significant HQ2 competitors seem to be Washington, Boston, Dallas, Atlanta and perhaps Toronto. To stay in the game and win, Chicago has to play to its strengths, which are the combination of size, affordability and infrastructure. Mayor Rahm Emanuel knows this, summing up his pitch for Chicago as the place with the best “access to talent, transportation, higher education, affordability and quality of life.” Emanuel and others are betting that as technology has come to dominate the economy, the industry giants can no longer find enough talent at affordable prices in San Francisco, Silicon Valley, Seattle, Austin or Boston, and they have no choice but to look elsewhere.
One of Chicago’s best selling points may well be a deep bench of versatile corporate talent along with a big pool of tech workers. With its roots in consulting, financial services, risk management, law, accounting, logistics, advertising and even retailing, Chicago has a lot to offer a company planning for its next phase of global growth.
“It’s assumed, because it’s Amazon, the jobs will be highly technical,” said Mark Muro, a senior fellow at the Brookings Institution in Washington. “If you look at what Amazon is, there are a lot of business managers and people in project management. Those are things Chicago is good at that will be highly relevant, and it has good enough tech. If you read (Amazon’s proposal), it doesn’t look like this is about artificial intelligence.”
In addition to Amazon, Google is looking beyond its home in Silicon Valley for a new campus that could house up to 5,000 workers, mostly in administrative and non-tech roles. Chicago is one of perhaps three or four cities Google is considering. Apple said this week it’s looking for a new campus beyond Silicon Valley, starting with tech support workers, and Emanuel has pledged to make a pitch for that facility.
Although a handful of western cities made Amazon’s short list, “I think ultimately this will go east of the Mississippi to give Amazon a new center of gravity for recruiting,” says John Boyd Jr., a principal with Boyd Group, a relocation consulting firm based in Princeton, N.J., who isn’t working on the project.
RANKING THE WORKFORCE
Chicago has the fifth-largest pool of tech workers in North America at 143,190, according to research by real estate firm CBRE, which tracks tech markets. New York is the biggest, at 246,180, followed closely by Washington (243,360) and Toronto (212,500). Chicago is sandwiched between Dallas (161,150) and Atlanta (138,810). Boston isn’t far behind at 115,560.
In terms of growth, however, Chicago is in the middle of the pack, with its tech labor pool growing 33 percent between 2011 and 2015, about the same as New York, Dallas and Toronto, according to CBRE. Atlanta grew at a whopping 47 percent, while Washington increased just 10 percent.
Chicago ranks fourth in technical degrees awarded, behind New York, Washington and Los Angeles.
Google has quietly built an engineering team believed to be approaching 200 people in Chicago. On a smaller scale, Foursquare, a mobile-app company that provides location data, recently ran the numbers on a handful of cities and ultimately chose Chicago for a small engineering office.
“We are growing in New York and San Francisco, but there are competitive pressures,” said Matt Kamen, senior vice president of engineering at Foursquare. “Those are the top two tech recruiting markets out there. The biggest factor was the tech talent in Chicago. This is a trend that’s going to keep going in Chicago.”
Although Amazon’s list includes small cities with fast-growing tech populations that are popular with millennials—such as Nashville, Tenn., and Columbus, Ohio—“at the end of the day, they’re going to pick a bigger city,” said Mark Zandi, chief economist with Moody’s Analytics. “I think it’s going to be East Coast. The D.C. region is definitely in the lead. Outside of D.C., I think it would be Atlanta.”
Although big tech companies tend to have deep pockets, costs also will be important to Amazon, says Mark Sweeney, a principal at relocation consultant McCallum Sweeney in Greenville, S.C. “Chicago, like Atlanta and Dallas, can be more competitive on cost of labor and housing,” he said. Chicago has one of the lowest costs of housing among the 20 finalists, based on data from Trulia.com.
Technology companies such as Amazon look for high-growth cities, which are talent magnets, says Dave Porter, an economic development executive who helped Austin win a major Apple expansion in 2010.
That could be a challenge for Chicago, which trails all but one of the cities on Amazon’s list in population growth between 2010 and 2016, according to census data analyzed by William Frey at Brookings. The Chicago metro area grew 0.6 percent. Pittsburgh fell 0.6 percent. Austin topped the list with 20 percent growth. Dallas-Fort Worth was third at 13 percent. Atlanta grew 10 percent, and Washington increased 9 percent.
OVERCOMING OUR REPUTATION
Violence and crime in Chicago have made national headlines. Arne Duncan, who leads Chicago CRED, a nonprofit effort to place gang members in private-sector jobs, says he’s never been in Iraq or Afghanistan, but he doubts they have cities where more than one student was murdered every week of the academic year like Chicago. “This is a war zone,” the former education secretary says. “This is a crisis.”
Chicago faces related image challenges in dispelling a reputation for political corruption and shaky government finances. That means Chicago’s bid team will have to stay on message, something that will be particularly challenging with elections for governor and mayor in the background. Just hours after Amazon announced Chicago was in the running, both Gov. Bruce Rauner and Emanuel publicly reminded Amazon and its competitors of some its weaknesses, but what Chicago really needs is to play up its strengths.