The 411 on HQ2

In something of a split pot, Amazon announced its second headquarters will be split between two locations: Crystal City, near Washington, D.C., and Long Island City, N.Y. 

That Amazon chose two of the most expensive labor and housing markets in the nation for its two new headquarters "suggest that the decision to look beyond its original Seattle home is less about low costs and more about room to grow," according to Zillow senior economist Aaron Terrazas. The economist says that both metros should be able to absorb the 25,000 jobs the new headquarters will bring, and, "Given their size and more responsive housing supply, locals should not necessarily expect the same surge in rents and home values that Seattle has witnessed alongside its own Amazon boom."

But just because Amazon slows hiring [in Seattle], there are still lots of other sources of new demand. It also matters what kind of functions they have in each location – New York is a natural fit for sales and marketing, and DC is a natural fit for legal work. The fact that Amazon selected two of the country’s largest, most established regions for HQ2 underlines just how few truly viable alternatives there are for major tech hubs. Tech jobs are certainly growing beyond their traditional clusters, but the historically dominant plays clearly remain dominant.

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