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Amazon picks Virginia, New York for second HQ

Hey there, time traveller!
This article was published 14/11/2018 (559 days ago), so information in it may no longer be current.

Amazon will build new offices in New York City and Arlington, Va., ending months of jockeying between potential locations across the country vying for a US$5-billion investment that promises 50,000 high-paying jobs over almost two decades.

Amazon also said it will create more than 5,000 jobs in Nashville, Tenn., at a new operations centre that’s responsible for fulfilment, transportation, supply chain and other activities.

The anticlimactic ending to a more than yearlong search — multiple office projects rather than a single second headquarters — shows Amazon thinks it’s better to tap multiple labour markets for future growth rather than try to house everyone in one city.

The sites in Long Island City, Queens, and in Arlington will be a boon for the New York and Washington, D.C., metro areas and highlights Amazon’s willingness to target big talent pools with pricey payroll over smaller markets offering lower costs of living. It’s a disappointment for the 18 other cities, including Toronto and Chicago, many of which offered billions of dollars in tax breaks to lure the world’s largest internet retailer.

Amazon captured North America’s attention in 2017, when it announced plans to build a second headquarters, prompting gushing overtures from politicians and publicity stunts from hopefuls eager to stand out. Most cities and states kept their offers private.

Since Amazon pared the list to 20 cities in January, speculation has been rampant, with lists handicapping supposed front-runners. Amazon had a broad list of criteria, including a population of one million, proximity to a major airport and a strong university system, without clearly identifying which factors were most important. Many guessed Amazon wanted to be close to Washington, because three of the finalist sites were clustered around the American capital. Another theory was that Toronto — the only Canadian city on the list — might be chosen to serve as a hedge against U.S. President Donald Trump’s policies limiting immigration. Amazon is a frequent target of Trump’s criticism.

A robust talent pipeline and room to grow — not big financial incentives — helped push Arlington County, Va., to the top of Amazon’s list, said Victor Hoskins, head of the county’s economic development agency. The Washington, D.C., area stood out with a large educated workforce of three million people and a transit system that has plenty of capacity.

In negotiations and multiple visits over the past year, Amazon wanted to make sure the community had space for its new offices and a transportation system that could handle shuffling them around, he said. From the county, Amazon will get a portion of hotel taxes expected to be US$23 million over the next 15 years. Amazon generates 300,000 hotel stays a year in Seattle, Hoskins said. The state offered additional incentives.

The search was also a not-so-subtle message to the City of Seattle, where some political leaders have blamed Amazon for skyrocketing property values, gridlocked highways and a growing homeless crisis. Tension between Amazon and the city spilled into the public spotlight earlier this year, when the city council approved and then overturned a payroll tax on big employers to pay for affordable housing and programs to fight homelessness. Amazon, the city’s dominant employer, threatened to push growth elsewhere if it was approved.

Now New York and Virginia face the challenge of balancing the benefits of Amazon’s investment with the growing pains that can come with fast expansion and an influx of wealth. The company has helped fuel a tech boom in Seattle, where cranes building new office towers, apartment buildings and hotels dot the skyline.

And while New York’s top politicians enthusiastically wooed Amazon, some local lawmakers said the US$808-billion company shouldn’t receive "massive corporate welfare" in order to invest in the city and instead should use its resources to help solve public problems such as aging subways.

In its release, Amazon said New York will get more than 25,000 full-time, high-paying jobs, about US$2.5 billion in Amazon investment; four million square feet of energy-efficient office space with the chance to expand to eight million square feet; and an estimated incremental tax revenue of more than US$10 billion over the next 20 years. Amazon will receive US$1.5 billion if it meets its job-creation goals.

Amazon also agreed to donate space on its campus there for a tech startup incubator and for use by artists and industrial businesses; the company will also donate a site for a new public school. It also pledged to invest in infrastructure improvements and new greenspaces.

"I said we would build a new New York state — one that is fiscally responsible and fosters a business climate that is attractive to growing companies and the industries of tomorrow," New York Gov. Andrew Cuomo said in the statement from Amazon.

Arlington will benefit from the same number of jobs, investment and office space as Long Island City. The site will also benefit from an estimated incremental tax revenue of US$3.2 billion over the next 20 years as a result of Amazon’s investment and job creation. Amazon will receive US$573 million in incentives if it meets the job-creation pledge.

Virginia Gov. Ralph Northam said it was a "big win" for the state.

— Bloomberg News

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