Amazon's HQ2 Project Doesn't Slow Distribution and Fulfillment Center Expansion

Researched by Industrial Info Resources (Sugar Land, Texas)--In the first week of September, the announcement went out around the U.S. that Amazon.com Incorporated (NASDAQ:AMZN) (Seattle, Washington) would be kicking off a huge project: a new headquarters campus to augment its existing footprint in Seattle. This new endeavor, dubbed HQ2, promises to be a colossal undertaking. It would encompass multiple buildings--enough to eventually house 50,000 employees to the expected size of 8 million square feet of space, which is pretty close to the size of the current headquarters complex in Seattle.

The estimated capital outlay for HQ2 is $5 billion over the 10- to 15-year anticipated lifespan of the project. Amazon has put out a request for proposals to metropolitan statistical areas that wish to be considered for the HQ2 project, as this will be a competitive site-selection process. Naturally, many communities are preparing proposals, hoping to be the winner of this huge project, along with the jobs it entails.

With such a large undertaking underway, it would be easy to assume that this would push other work such as expansion of the company's distribution network into the background, if not halting it as least temporarily. However, this is not the case. In fact, several large fulfillment center projects also recently have been announced.

Ohio seems to be growing in importance for Amazon, as new developments have just started up in Monroe, Euclid and North Randall, outside of Cleveland, amounting to a $452 million investment. The New York/New Jersey area has two new projects in the works, at Staten Island, New York, and West Deptford, New Jersey, which comes to $200 million. Sparrows Point, Maryland, just outside of Baltimore, has a $225 million fulfillment center underway, and Macon, Georgia, has a $70 million facility starting up. Oregon gets to celebrate as well, with new centers being announced in Portland and Salem, with a combined total investment value of $375 million, in addition to a project underway in Troutdale worth more than $178 million. These projects were announced either shortly before or after the HQ2 proposal request went out, and they amount to an additional $1.5 billion capital investment. This does not include at least 27 other projects that were well underway prior to the announcement of HQ2.

Many communities lack the requirements Amazon is searching for in its new HQ2 location. However, most communities would be satisfied with a nice consolation prize--a fulfillment center that also will bring jobs--although not quite as many.

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