Watching Amazon (AMZN) search for its second headquarters over the past year has been an exercise in patience. First, hundreds of cities across North America pitched themselves as potential locations. Then 20 finalists were selected for further investigation at the start of this year. Now, after all that hype, there’s potentially not one final home for HQ2 but two: Crystal City in Arlington, Va., and Long Island City, N.Y.
The locations just outside Washington, D.C. and New York City are understandable picks — Amazon already has more employees in those two areas than anywhere except Seattle, and Jeff Bezos owns homes in both cities.
Both locations, however, will present more challenging talent markets than some of the smaller candidate cities would have. In the case of Crystal City, the military-industrial complex is already a major employer. The Wall Street Journal reports that defense companies already face a tough labor market in northern Virginia, where most of nation’s military contractors and intelligence agencies are headquartered.
“We’re about at structurally zero unemployment, and that’s going to at some point make it more difficult for us to hire, or hire at the rate at which we’ve been,” said Roger Krone, chief executive of government IT specialist Leidos.
Over in New York, Google (GOOGL) is looking to expand its capacity to potentially bring on 12,000 more workers to increase its total staffing there to 20,000, WSJ reports. The Alphabet company is nearing a deal to lease or buy a building in the West Village and expand its existing location in Chelsea, insiders said. Google currently employs about 7,000 workers in New York, or 8% of its global staff.
Factor in the already sky-high costs of living in both metro areas and you can see why some also-ran candidate cities must be wondering why Amazon would choose the split HQ2 locations. Particularly, as Amazon previously said HQ2 would be “full equal to our current campus in Seattle,” with 50,000 well-paying jobs and a $5 billion investment.
One possible reason behind the Crystal City option is that it makes sense for strategic reasons: Amazon is the front-runner for $10 billion cloud-computing contract with the Pentagon, a deal expected to be awarded in the next few months. Yet the question of how Amazon’s full promise will be kept in the event of two HQ2s, still remains to be seen.