What Amazon’s HQ2 decision says about New York

| USA Today

In Rochester and Buffalo, leaders spoke about how joining forces to lure Amazon’s second headquarters would be an unprecedented boon for the region.

The same hopes and dreams were made in Syracuse and Albany as the upstate cities were three of the four bids that New York submitted to the retail giant for its $5 billion project.

“New York is submitting proposals from every corner of our great state, but we are one New York — and we will work with you to create the greatest possible benefit to Amazon and to all New Yorkers,” Gov. Andrew Cuomo wrote to Amazon founder Jeff Bezos on Oct. 19.

But it was the state’s fourth bid that made Amazon’s cut from 238 proposal to just 20: the New York City metropolitan area.

Upstate vs. downstate

Amazon’s announcement was exciting news for New York City and the Hudson Valley, which submitted a series of sites to be included in the regional bid.

And experts said the New York City metro bid has promise with a large talent pool, massive transit system and high-tech workforce. That includes parts of the lower Hudson Valley, which is touting its former IBM campus in East Fishkill and other underused tech parks to lure Amazon.

But for the rest of the state, it was once again looking up at the vibrant New York City area — where three out of four jobs in the state were created between 2009 and 2014.

“There was nobody our size that made the list, so obviously Amazon was looking for the larger metro areas,” former Lt. Gov. Robert Duffy, who heads the Rochester Chamber of Commerce, said Thursday.

Indeed, Amazon’s decision to eschew smaller metropolitan areas surprised some analysts.

Why not the rest of NY?

Moody’s Analytics ranked Rochester as the fourth best metro area for Amazon behind Austin, Texas; Atlanta and Philadelphia.

Mark Zandi, the chief economist at Moody’s Analytics, said Rochester and Portland were the only two of its top 10 picks not to make Amazon’s cut.

He said Amazon didn’t put as much weight on the cost of doing business as Moody’s expected, sticking largely to the biggest cities in the nation — mainly on the East Coast.

“It was clear they put very little weight on business cost,” Zandi said Friday. “That’s not really in the mix. That really helped out Rochester, the low cost of doing business compared to other places.”

Others, though, said the picks were in line with what they envisioned.

Patrick Anderson, founder of the Anderson Economic Group in Michigan, had all his top six picks for Amazon locations selected. His picks included New York City, which he has ranked number one, but not anywhere else in New York.

Having the workforce to handle as many as 50,000 jobs, including 10,000 in the first five years for the second headquarters, appeared paramount to the Seattle-based company, he said.

“The size of the workforce was extremely important to Amazon, and that’s something that hurt not just Rochester, but other cities that were toward the bottom of our 35 metros” that he ranked, Anderson said.

What’s next?

But he gave high marks to the New York City-area bid, as well as the one for Newark, New Jersey, which also made the top 20.

He said Amazon might consider spots in the metro area, but not necessarily in the middle of Manhattan, which would be the most expensive place to operate.

So that’s where locations in the suburbs or outer boroughs could be attractive, Anderson said.

“It’s a very large workforce. It’s a strong mass transit system, and it’s a lot of technically trained people able that are able and interested in working there,” Anderson said.

Cuomo has sought to revive the upstate economy through heavy incentives, totaling $8 billion a year, an investigation by the USA Today Network’s Albany Bureau last year found.

So state and local leaders outside the New York City area said the exercise in applying for the Amazon bid was not futile. Instead, it can galvanize the region around its strengths.

Even if Amazon went to New York City, it could be a boon for the entire state because of the tax revenue it could bring in. Then again, a package for Amazon would like include millions, if not billions, in taxpayer-funded subsidies.

New York has refused to release details on its proposal to Amazon.

“With an unrivaled diverse workforce, unprecedented investments in world-class infrastructure and a vibrant 21st century economy, we are proud that New York is a finalist for Amazon HQ2,” said Howard Zemsky, president of Empire State Development, the state’s economic-development arm.

Upstate New York not making the short list shouldn’t be an indictment of the region, said E.J McMahon, founder of the fiscally conservative Empire Center, a think tank in Albany.

While McMahon has been critical of Cuomo’s upstate efforts, he said it was clear Amazon was looking at the largest metros in the nation.

“I don’t think it says anything in particular about upstate New York except for the fact that the upstate metro areas are really fairly small,” he said.