Heres How the 20 Contenders for Amazon HQ2 Stack Up

Now that Amazon.com Inc. has whittled down the list of cities it’s considering for its second North American headquarters, it’s time for a new round of everyone’s favorite parlor game: arguing about which city would suit the technology giant best.

After the e-commerce company said it was seeking a second HQ to relieve pressure on its Seattle home base, it received proposals from 238 locations, full of rich economic incentives and goofy marketing gimmicks.

Now it has narrowed the field to 20 places, including three bids from the Washington D.C., area, where Amazon Chief Executive Jeff Bezos has put down roots, as well as proposals from smaller Midwestern cities (Columbus, Ohio; Indianapolis) and major population centers (New York, Los Angeles, Chicago, Toronto and Dallas).

Economic incentives aside — and there are plenty — here are some pros and cons of the places on Amazon’s very long shortlist.

Atlanta

Pros: A major airline hub and home to big corporations, such as UPS, Coca-Cola and Delta. A recent focus on redevelopment projects like the BeltLine — a series of parks built on an old railroad spur that runs through the city — may add to the city’s appeal.

Cons: It’s still not that cool. Amazon prides itself on its urban Seattle locations being walkable and bikable, and a more suburban city like Atlanta may contradict that spirit. Terrible traffic, too.

Austin

Pros: Close to the distribution and business hub of Dallas but much hipper. No Texas income tax, an established tech industry and home to Whole Foods, which Amazon recently acquired.

Cons: Small airport. Despite surging population, still doesn’t feel like a major U.S. city. 

Boston

Pros: Proximity to Harvard, MIT and a wealth of other colleges and universities, an airport with nonstop flights to Seattle and Washington, D.C., and a track record for providing rich relocation benefits, like the incentives the city offered GE in 2015.

Cons: Has some of the same drawbacks as New York—high cost of living, tight residential and commercial real estate markets—without the same cultural amenities and depth of talent. 

Chicago

Pros: A heavy concentration of operations, marketing, finance and sales employees to poach from other industries. Good public transit, walkable neighborhoods and a variety of housing choices, from downtown apartments to traditional suburbs. 

Cons: Shootings in the city have become national news, and the state is still emerging from dire financial straits. Digging its government out of debt could require tax hikes and cuts to public services. 

Columbus

Pros: A major research university in Ohio State, a fast-growing economy and cheap housing.

Cons: The housing is cheap for a reason.

Dallas

Pros: Has been a magnet for corporate relocations in the last two decades, offering high quality of life and access to a deep pool of workers. There’s no state income tax, and unlike Austin, it’s a major city and an airline hub.

Cons: Dallas suburbs may seem pretty stodgy to Amazon employees used to the cultural amenities in downtown Seattle. 

Denver

Pros: Denver is already popular with tech companies. Colorado boasts strong engineering schools and trounces the other finalists when it comes to close proximity to fresh powder. Fresh, and legal, pot, too, for those who partake.

Cons: The exodus of workers to Denver’s burgeoning tech hub has already stretched the local housing market. Doesn’t offer a lot of geographic diversity from Seattle.

Indianapolis

Pros: Tech company salaries would go far in the heartland, and choosing Indianapolis would make Amazon arguably the most important employer in middle America.

Cons: The sheer of size of the Amazon HQ could swamp the city’s residential and commercial real estate markets. As in Columbus, the cheap housing here isn’t a mystery. 

Los Angeles

Pros: The tech giant’s Amazon Studios division—quickly becoming a force in Hollywood, with original streaming TV series such as “Transparent” and “Man in the High Castle”—is based in Santa Monica.

Cons: It’s an expensive place to live, a hard place to build in and, like Denver, it doesn’t offer a lot of geographic diversity from Seattle.

Miami

Pros: The Seattle workforce could use a little sun. Bezos, currently the richest man in the world, attended Miami Palmetto Senior High School.

Cons: Lacks an existing tech ecosystem, has high housing costs and might be under water at some point.

Montgomery County

Pros: This Maryland county is one of three bids in or near the District of Columbia to land on the shortlist. Bezos has put down roots in the area with his acquisitions of the Washington Post and the city’s largest private home.

Cons: Commercial real estate is probably more available here than in the U.S. capital, but the trade-off is asking the company’s workforce to work in the ’burbs.

Nashville

Pros: Good universities, no Tennessee income tax and fame as the country music capital of the world have already made the city popular with major employers.

Cons: Like Austin and Denver, the city has already succeeded in convincing companies to relocate, and the local housing market has struggled to keep up with the flood of new workers.

Newark

Pros: Proximity to New York without the Big Apple’s staggering home prices. In October, then-New Jersey Governor Chris Christie pledged to back the city’s bid to lure Amazon with as much as $7 billion in tax breaks. 

Cons: The city might be a tough sell for workers over San Francisco, Los Angeles or New York.

New York

Pros: Locating in New York would give Amazon access to the world’s top pool of finance and media talent and a growing tech scene.

Cons: Housing prices are already high, one of the reasons locals in Seattle are pushing back against the company’s expansion there. There’s also limited space for new office construction.

Northern Virginia

Pros: Like Washington, D.C., and Montgomery County, Northern Virginia offers an educated workforce and proximity to both the federal government and the Washington Post. Commercial real estate is easier to come by than in the District of Columbia.

Cons: The area isn’t as strong on urban appeal as some of the other contenders.

Philadelphia

Pros: Good transit, large population, and it’s close to New York and Washington, with much lower housing costs.

Cons: Amazon would have to convince workers in those two cities that giving up cultural amenities for cheaper housing is a trade worth making.

Pittsburgh

Pros: Home to top AI and robotics university Carnegie Mellon, which have already drawn top tech companies like Google and Uber. Close to major distribution hubs in the middle of the country.

Cons: It’s far from other major cities and tech hubs.

Raleigh

Pros: Part of an existing tech hub; offers cheap housing, good quality of life and the chance for Amazon to put its stamp on a city in a way that it couldn’t in more established metros.

Cons: Clashes over gender identity and other hot political issues suggest North Carolina is still struggling over its own identity.

Toronto

Pros: A major financial and technology hub and a population that would put it among the top 10 U.S. metropolitan areas. Potentially easier to hire people from abroad because of a more open tone on immigration from the government than in the U.S.

Cons: Housing prices are high compared to cities like Atlanta. The city also doesn’t have much space for housing and commercial development required for HQ2 in the downtown core. Moving integral operations north of the border holds political risks in dealing with the Trump administration.

Washington, D.C.

Pros: A strong technology workforce and proximity to lawmakers and regulators. Bezos put down roots in the area with his 2013 acquisition of the Washington Post.

Cons: Lack of space and zoning restrictions could make it hard to find enough office space. Sticking the headquarters in the ’burbs would make it easier to find land but harder to appeal to workers. And you don’t get a U.S. senator to fight for you on the Hill.

    Read more: http://www.bloomberg.com/news/articles/2018-01-18/amazon-ignites-fight-for-hq2-here-s-how-20-contenders-stack-up

    A Manager of $42 Billion Fears Bubble in World’s Biggest Stocks

    The world’s biggest companies could be hiding the biggest risks.

    That’s because companies such as Amazon.com Inc. and Alibaba Group Holding Ltd are overvalued, according to Robert Naess, who manages about $42 billion in stocks at Nordea Bank AB, Scandinavia’s largest bank.

    “I’m a bit worried about the valuation of these very popular companies,” Naess, portfolio manager, said in an interview in Oslo on Friday. “The big stocks have become more expensive. There’s danger of a bubble in them.”

    Naess and his partner, Claus Vorm, quantitatively analyze thousands of companies, investing in those with the most stable earnings and avoiding expensive stocks, a strategy which has delivered a 10 percent return for the Global Stable Equity Fund this year. It has returned 12 percent on average in the past five years, beating 75 percent of its peers.

    They prefer “boring” stocks, unlike the global behemoth technology companies that have led the global stock rally. Tech stocks sold off at the end of November, with the single worst day on record for the so-called FANG stocks. One of those stocks, Amazon, which has risen 55 percent this year, has a price-to-earnings ratio of 275 for 2017, compared with 18.2 on average for MSCI World Index.

    “Long-term, 5-10 years, stocks that are expensively priced, such as Amazon, Tencent and Alibaba, will give a low return,” Naess, who also shuns Facebook, Inc., said. “I’m pretty certain that in the next 10 years the return on those will be lower than the market.”

    The fund holds Apple Inc. and Alphabet Inc., which are “reasonably priced”. It has also bought a stake in Merck & Co., Inc. and increased in Amgen Inc., CVS Health Corporation and Walgreens Boots Alliance, Inc.

    Naess sees about 12 percent upside for the global developed stock market in the next 12 months provided companies continue to deliver expected earnings growth.

    “2018 looks OK,” he said. “Normally, I think the earnings estimates are too high. But I believe earnings estimate could be too low next year given earnings are so good this year.”

      Read more: http://www.bloomberg.com/news/articles/2017-12-11/a-manager-of-42-billion-fears-bubble-in-world-s-biggest-stocks

      Target to Buy Shipt for $550 Million in Challenge to Amazon

      Target Corp. agreed to purchase grocery-delivery startup Shipt Inc. for $550 million, stepping up its challenge to Amazon.com Inc. by speeding the rollout of same-day shipping.

      The all-cash deal will let Target customers order groceries and other goods online, and then have the items sent directly to their doors from nearby Target stores.

      Buying Shipt further beefs up Target’s logistics operations after the retailer earlier this year acquired software company Grand Junction, which also manages local and same-day deliveries. Target now offers same-day delivery in New York City and can send orders from 1,400 of its stores. Competition in this space is growing fiercer, though, as rivals Wal-Mart Stores Inc. and Best Buy Co. also offer same-day service, keeping pace with Amazon.

      Target’s decision to buy Shipt, rather than partner with it, “shows how serious they are,” Kantar Retail analyst Robin Sherk said. “One-stop shopping was convenient in the 1990s but for today’s families you have to be able to do instant food delivery as well. It’s also a realization that Amazon, this big technology disruptor, has entered the consumer landscape.”

      Four out of five shoppers want same-day shipping, according to a survey by fulfillment software maker Temando, but only half of retailers offer it.

      “With Shipt’s network of local shoppers and their current market penetration, we will move from days to hours, dramatically accelerating our ability to bring affordable same-day delivery to guests across the country,” John Mulligan, Target’s chief operating officer, said in a statement.

      The deal will give Target same-day delivery at about half of its 1,834 stores by next summer, with the number growing to a majority of stores in time for next year’s holiday season. The service — costing $99 a year for unlimited deliveries — will initially encompass categories like groceries, household essentials and electronics before expanding to all major product groups by the end of 2019.

      Improved Position

      “While it will not affect Target’s capability this holiday season, the fact that Target will have this service in place during 2018 will significantly improve its online competitive position,” Charlie O’Shea, an analyst at Moody’s Corp., said in a note.

      Target rose 2.7 percent to close at $62.67 Wednesday, while the news caused a momentary dip for the shares of Shipt’s existing retail partners, Kroger Co. and Costco Wholesale Corp. Kroger ended the day up 1.4 percent, while Costco was little changed.

      Kroger said it’s still optimistic about the company’s prospects for home delivery after expanding its logistics operations in recent years via partnerships with Instacart Inc. and others.

      “We feel really good about the variety of partnerships Kroger has going,” corporate communications head Keith Dailey said. Costco Chief Financial Officer Richard Galanti declined to comment.

      Online Preference

      Consumers’ increasing preference for shopping online, along with Amazon’s purchase of upscale grocer Whole Foods and its encroachment into new arenas like apparel, have sent retailers scrambling to improve their online offerings. E-commerce sales are up about 17 percent this holiday season, according to Adobe Systems Inc., and online merchants racked up a record $6.59 billion on Cyber Monday alone, the company found.

      The question for traditional retailers is how to handle all those internet orders. They could build their own delivery network, but it’s an arduous and expensive process. That’s why many of them are seeking help from e-commerce startups like Shipt and Instacart.

      Founded in 2014, Shipt serves about 20,000 customers through partnerships with retailers including Publix Super Markets Inc., HEB Grocery Co., Kroger and Costco. It will continue to operate independently and plans to expand its business with other retailers, Chief Executive Officer Bill Smith said in an interview.

      ‘Scale Matters’

      “We’ve spoken to a number of our existing partners about this deal and all the conversations have been very positive,” Smith said. “Having multiple retailers allows us to grow our membership base and make it more attractive. In same-day delivery, scale matters.”

      For now, Target shoppers will need to pay Shipt’s $99 annual membership fee to gain access to the service. Once a customer orders, they send a “shopper” into the store to grab the groceries, and then deliver the items. Target is working on how to integrate Shipt into its website and mobile shopping app, Mulligan said.

      The deal is expected to close before the end of the year and will be “modestly accretive” to Target’s profit in 2018, while boosting online sales, the company said. The retailer’s e-commerce sales already grew 24 percent in the third quarter.

      ‘Big Loser’

      Target has worked with Shipt’s rival Instacart for same-day service in cities like Minneapolis and Chicago since 2015, and Mulligan said he “will have conversations with them on where we go next.”

      “The big loser in this deal is Instacart,” said Cooper Smith, an analyst at business-intelligence firm L2.

      Following Target’s announcement, Instacart said it works with more than 165 retailers, including seven of the eight biggest grocers in North America.

      “As an independent company, Instacart doesn’t compete with any of our partners,” the company said. San Francisco-based Instacart has recently expanded its partnerships with retailers including Costco, Kroger, Albertsons Cos. and drugstore giant CVS Health Corp.

      Target and Shipt began discussing the deal in the middle of the summer, Mulligan said. They decided to pursue an acquisition rather than just a partnership in order to plow Target’s resources into expanding Shipt’s business, and to maintain its current level of customer experience.

      Smith will stay in his role, reporting to Mulligan, and its 270 employees will remain in Shipt’s offices in San Francisco and Birmingham, Alabama.

        Read more: http://www.bloomberg.com/news/articles/2017-12-13/target-to-buy-shipt-for-550-million-in-bet-on-same-day-delivery