This article originally appeared on November 5, 2018 by Washington Business Journal.
Many have suspected all along that Northern Virginia — Crystal City specifically — was always a top contender for Amazon’s $5 billion second headquarters that will bring tens of thousands of jobs to the region.
But when The Washington Post reported Saturday that Amazon was in advanced discussions, citing anonymous sources, an Amazon official tweeted an ominous threat: “You’re not doing Crystal City, VA any favors. And stop treating the NDA you signed like a used napkin.”
That poses the question: Would Amazon (NASDAQ: AMZN) really ditch discussions with Virginia over the apparent violation of a nondisclosure agreement? Site selection experts I spoke with this afternoon say that leaks aren’t ideal, but they probably aren’t a deal breaker.
“I can’t see that having any implications,” said Tom Stringer, a managing director with BDO in New York who leads the company’s national site selection and business incentives practice. “If Amazon really wants this and that’s where they’ve zeroed in and someone has leaked it a little bit, they are not going to change their whole business plan.”
That’s not to say that confidentiality and nondisclosure agreements are crucial during early parts of the negotiation process.
“Early on in a process, a company signs an NDA, you share strategic plans with them, you talk about what we’re doing, why we’re doing it, why we think it’s going to grow revenue, why these regions are important, all the data points that go into it — you don’t want the competition knowing that,” Stringer said.
But when a company is quite close to announcing a deal, the negotiations begin involving landlords and the brokerage community — “the worst leakers of all time,” Stringer said.
“They are in the business of talking to try and look like they are involved or to position themselves in some way, shape or form and to create some sort of need or some sort of leverage,” Stringer said. “I have never seen them stick to an NDA.”
Tom Roland, a managing director of MorganFranklin Consulting’s strategy and transformation practice in McLean, said that the recent reports didn’t say anything that could blow the deal. But leaking more sensitive information could.
“If you leak enough sensitive information, or provide sensitive documents to the press, that will absolutely kill the deal,” Roland said. “If they were to say something that was inappropriate, they could disqualify themselves or face penalties for that. Anybody you ask that has any information is never going to speak to you. So what you get is people who are misinformed or saying things that they are not knowledgeable on.”
John Boyd, principal of the Boyd Co., a corporate site selection firm in Princeton, New Jersey, said the leaks by anonymous sources speak to a “lack of acumen and lack of professionalism” related to the people who are engaged in highly sensitive negotiations with Amazon.
“Confidentiality — that is the No. 1 principle for major commercial real estate and site selection activities,” Boyd said. “This is economic development at its highest levels.”
Boyd said he thinks the leaks may even nudge Amazon to make a “surprise” selection of Newark or Chicago, all cities also on the HQ2 short list.
“There is an enormous amount of buzz around Newark and Chicago,” Boyd said. “I think they’re sort of saying, ‘We are either going to do Northern Virginia or we are going to do a surprise.'”
He doubts it will be a deal breaker. Leaks happen all the time.
“It’s embarrassing for the economic development community that is handling this,” Boyd said. “They are not saying, ‘You just blew it.’ They are saying, ‘Keep it up and maybe you will.'”
