Why Newark could be perfect for Amazon's new headquarters

New York, San Francisco and Denver have all been heralded as the best city for Amazon’s new second headquarters, HQ2.

But what about Newark?

Yes, the city in New Jersey. The state, like many others trying to land the estimated 50,000 new jobs and $5 billion in investment, plans to submit a bid by the Oct. 19 deadline. And Newark is the state’s best chance of winning. If you peruse Amazon’s eight-page request for proposals, Newark meets all the minimum criteria outlined.

New Jersey’s largest city is accessible to tech talent (it’s home to New Jersey Institute of Technology, abuts Rutgers University, is about 60 minutes away from Princeton University, and is a brief commute from New York City’s major academic institutions), has an airport and several other transit links (train lines, interstate highways and ports), and maybe most importantly, has affordable shovel-ready sites for the eventual 8 million-square-foot, $5 billion complex that would rival Amazon’s Seattle headquarters.

“Newark has a world-class port and a depth of resources,” says Andrew Sidamon-Eristoff, former New Jersey state treasurer who wrote an opinion piece earlier this week touting Newark’s worthiness. “At the same time, it does not have the kinds of pricing pressures [real estate and living costs] that would be a barrier somewhere else.”

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7 shock-worthy facts about Amazon
7.5 percent of Seattle's working-age population are Amazon employees

Amazon has more than 300,000 employees worldwide, and 40,000 in Seattle alone.

As a portion of the city's working-age population — roughly 528,000 — that comes out to 7.5% of the city working at Amazon.

For perspective, if the same portion of New York City's adults worked for one company, that company would have about 488,000 locals on staff.

Amazon accounts for 43% of all online sales

Amazon used to be a way to buy books online; today, it's the default buying site for just about everything, especially for people who have Amazon Prime.

An analysis by Slice Intelligence released in February found that 43% of all US online retail sales were done through Amazon in 2016.

That's up from 33% in 2015 and 25% in 2012.

1 out of every 4 US adults has Amazon Prime.

Speaking of Amazon Prime, the company now counts approximately 63 million people among its subscriber base, or about 25% of the total US adult population.

That number may underestimate the true coverage, however, since it doesn't account for multiple adults in one household all sharing the same Prime account.

Amazon ships 1.6 million packages a day

Amazon fulfillment is a beast of its own.

A report from 2013 (the latest year for which data are available) found Amazon shipped 608 million packages that year, or 1.6 million packages a day.

As of 2015, Amazon estimated its fulfillment centers were within 20 miles of 31% of the US population, and within 20 miles of 50-65% of its core, same-day-accessible market.

That's enough cardboard to span all of West Virginia

A back-of-the-envelope calculation reveals all those packages (not including padded envelopes) yield roughly 26,400 square miles of cardboard.

The total land area of West Virginia, meanwhile, is just north of 24,000 square miles.

Given the speed of Amazon's shipments, the company could blanket the whole US in cardboard in about five months.

45,000 robots roam the floors of Amazon's warehouses

To help those shipments leave the warehouses on time, Amazon relies on a growing fleet of autonomous robots that fetch packages from their shelves and bring them to human employees.

The 45,000 robots live across 20 fulfillment centers in the US. In 2016, the company increased the fleet 50% from its prior head count of 30,000.

Amazon is more valuable than all major brick-and-mortar retailers combined

The sum total of those investments in infrastructure and supply chain management have made Amazon by far the most valuable retailer in the United States.

Amazon's $356 billion valuation is so big, it's larger than Wal-Mart, Target, Best Buy, Macy's, Kohl's, JCPenney, and Sears combined.

With the recent acquisition of Whole Foods, there are no signs the retailer has any plans of slowing down.

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Mini Amazon campus already exists

Amazon already has a foothold in Newark. In 2008, Amazon acquired Newark-based Audible, an online seller of audiobooks, for $300 million. It has since maintained the subsidiary’s headquarters there. In fact, Audible is redeveloping a historic church in the city for its new home.  

And that’s just a fraction of Amazon’s presence in New Jersey. The company has taken more space there than in neighboring states New York or Connecticut. In the past five years, Amazon has built more than 5 million square feet of warehousing/distribution space and has 13,000 full-time employees in New Jersey, according to a report by Moody’s Investors Services.  

 

Total square footage of Amazon facilities in New Jersey, New York, and Connecticut. [Sources: Moody’s Investors Service, Amazon Press Releases]

While Newark is located north of these Amazon facilities, it could be an ideal location because it is going through somewhat of a revitalization. (In the past, Newark has been plagued by crime, poverty and high unemployment.) Some $2 billion worth of real estate development, including 2,000 units of housing, is planned or underway in the city.

Among those projects is developer Lotus Equity Group’s redevelopment of the Bears & Eagles Riverfront Stadium, which will be transformed into an 8-acre mixed-use project with office and housing. 

Ben Korman, CEO and founder of Lotus, has been speaking to the city of Newark to possibly become the centerpiece of the Newark’s bid. Lotus’s plans for 500,000 square feet of office space could accommodate Amazon’s first phase for HQ2.

“Newark has tremendous infrastructure,” said Korman “There are quite a few sites available that are positioned well for being a tech campus.”  

Amazon HQ2 would give Newark a much-needed boost as developers like Korman help the city become a 24/7 community. Most believe the local government would be willing to provide generous, competitive tax incentives to lure the company. Currently, a few major companies, Panasonic Corp of North America ‘s headquarters, Public Service Enterprise Group and Prudential Financial, call the city home.

Dark horse or longshot

But while Newark scores high when it comes to transit (United Airlines’ hub is at Newark International Airport with direct flights to Seattle) and some would argue access to tech talent, the city is not seen as a real contender.  

“Amazon will end up picking a city where young people want to live, like Manhattan,” says Scott Galloway, a marketing professor at NYU Stern School of Business. “The reality is Newark has a bad brand.”

While Whole Foods Market recently opened in Newark and celebrity chef Marcus Samuelsson will debut a restaurant there, Newark as The New York Times recently put it, “has been a symbol of America’s decaying cities for decades.

Perhaps an Amazon headquarters is just what Newark needs to revitalize its image.

Amanda Fung is an editor at Yahoo Finance. 

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