Real Estate

The real reason Amazon's HQ2 will be near Washington, D.C.


If you’re trying to guess where Amazon‘s second headquarters will be, forget about the complicated analyses of metro-area workforces, education levels, housing costs, colleges and tax rates.

Instead, take a look at where Jeff Bezos lives and where he spends his spare time. By that measure, Amazon’s HQ2 will almost certainly be in the Washington DC area.

If the history of corporate relocations teaches us anything, it’s that CEOs often move their companies near their homes. When Newell Brands moved from low-tax Atlanta to high-tax New Jersey, everyone was puzzled — until they learned that CEO Michael Polk lived in New Jersey, about 25 miles from the new headquarters.

The Scott Paper Company, based in the Philadelphia area for more than a century, moved to Boca Raton in the mid-1990s. It’s CEO and chairman, Al Dunlap, had a waterfront home in Boca.

Chipotle is moving its headquarters from Denver to Newport Beach. Why? It isn’t the lower taxes or workforce. Turns out, the new CEO, Brian Niccol, lives there.

In his book “Edge City,” Joel Garreau examined 38 companies that left New York City, 31 of them moved to Greenwich or Stamford, Conn. where the average distance from the CEO’s home was a mere eight miles.

In other words, CEO’s move their companies to locations convenient for the CEOs. And Washington, D.C. is quickly becoming a second home for Bezos.

After buying the Washington Post in 2013, Bezos bought the most expensive home in the district, paying $23 million for the former Textile Museum in Kalorama. The Obamas and Kushner-Trumps live nearby. He’s spending at least $12 million more to renovate it and turn the 27,000 square foot mansion into a lavish complex for living and entertaining.

According to floor plans obtained by the Washingtonian magazine, the home will have 25 bathrooms, 11 bedrooms, five living rooms, three kitchens, two workout rooms, two elevators and a 1,500 square-foot ballroom. It will also have a whiskey cellar, walk-in wine room and multiple bars. The dressing room has its own fireplace.

The property is actually two homes linked by a connecting walkway – one home will mainly be for the family and the other for guests and entertaining, with staff housing, changing rooms and offices, four guest bedrooms, a catering kitchen and “multiple bathroom stalls.”

This is not the typical Washington pied-à-terre for the occasional lobbying trip. It’s a true family home for the world’s richest man. Bezos already checks in regularly with Washington Post Editor Marty Baron. Having the headquarters in DC or nearby northern Virginia or Montgomery County, Maryland would allow him to fulfill both his corporate and journalistic duties in the same regular visits.

Plus, if there is one other focus Bezos will have over the coming decade beyond growing Amazon it is regulators. Having the headquarters in D.C. will allow him to step up his personal lobbying efforts in Washington while also sitting in the corner office.

In other words, Washington is already becoming Bezos’ personal HQ2. So it would make sense to put the offices there too.

Of course, the D.C. area checks all the necessary business boxes listed in Amazon’s requirements: an educated workforce, big airports, lots of tech firms, good culture for young workers and it’s a major metropolitan area. And there is nothing wrong with locating the headquarters for Bezos’ convenience.

He is Amazon — and Amazon is Bezos. If Bezos can save time and travel by putting HQ2 in a city that he’s already visiting regularly and can be comfortable for his family, that helps Amazon and its shareholders.

Who knows. Given his recent battles with the city of Seattle, and the size of his Washington home, he might even make Washington his primary residence — and HQ2 could become Bezos’s HQ1.



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