It's not me, it's you: Why Toronto's chances of landing Amazon's HQ2 are looking bleak

Toronto’s bid for an Amazon.com Inc. (AMZN) headquarters is looking more and more like a longshot. That’s thanks in large part to the fact the tech-savvy city is not part of the United States, according to a pair of researchers from the employment search engine Indeed.

The website’s chief economist Jed Kolko, and his Canada-focused counterpart Brendon Bernard, are following the Seattle, Washington-headquartered company’s search for a host city for its planned US$5-billion “HQ2.”

Neither is willing to completely rule out Toronto, even in the face of a spate media reports suggesting the e-commerce giant will split its expansion between Long Island City, New York and the Crystal City area of Arlington, Northern Virginia, across the Potomac River from Washington, D.C.

Amazon has not publicly addressed reports of a decision. The company shortlisted 20 finalist cities earlier this year after receiving 238 initial bids. Toronto was the only Canadian region to make the cut. The e-commerce giant is widely expected to announce its pick, or picks, by the end of the year.

“It doesn’t seem like Toronto is in the running,” Bernard reluctantly told Yahoo Finance Canada on Wednesday. “We sort of expected that a major U.S. city would likely be chosen. It’s interesting that they are considering two right now.”

Toronto ticks many of the boxes listed on Amazon’s request for proposal document; a tech-oriented labour force capable of filling 50,000 jobs, an international airport, mass transit, higher learning institutions, and a diverse population. The city’s bid, led by the regional investment agency Toronto Global, is outlined in a 97-page response, complete with a letter from Prime Minister Justin Trudeau and glowing testimonials from an array of business leaders.

Kolko said while Toronto has a lot to be proud of, a Canadian headquarters would mean additional operational complexity and political risk for a company increasingly in the spotlight.

“In the current American political climate, there are lots of ways in which the move (into Canada) could bring objections or backlash,” he told Yahoo Finance Canada.

In a Nov. 4 interview with Axios, U.S. President Donald Trump said his administration is looking into potential antitrust violations by Amazon, Facebook (FB), and Google parent company Alphabet (GOOG). Trump has repeatedly targeted major U.S. companies for shifting resources to international markets.

Kolko, who has long-predicted Northern Virginia would be Amazon’s top choice, said close proximity to the centre of U.S. politics is of strategic importance to America’s largest technology firms.

“With tech companies increasingly involved with, and sometimes the targets of, public policy debates, being in the Washington-area could be a big advantage,” he said, adding that Amazon CEO Jeff Bezos has a home in the area, and owns The Washington Post newspaper.

‘Toronto put its best foot forward’

Losing to the New York or Washington, D.C.-areas would in no way imply Toronto’s tech scene is anything less than thriving, Bernard said.

Toronto placed fourth on a recent CBRE Group ranking of North America’s fastest-growing tech talent markets. It’s the first time a Canadian city has cracked the top five.

Bernard notes the venture capital dollars flowing into Toronto is further evidence of the emergence of a global tech hub. He said Toronto was number 12 on a ranking of venture capital investment destination compiled by the Martin Prosperity Institute at the University of Toronto’s Rotman School of Management.

“New York was fourth and Washington, D.C. was eighth. That kind of suggests that Toronto might not be home to as many of the sort of cutting-edge, frontier technology companies that some places in the U.S. might be,” he said. “But it’s definitely nothing to sneeze at.”

Bernard said the success of Toronto’s tech scene “speaks for itself.” Unfortunately, when it comes to winning Amazon’s approval, he said talented Canadians will need to shout across an international border.

“Staying in America has its advantages for Amazon,” Bernard said. “Toronto put its best foot forward.”

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