Amazon’s high profile search for a second corporate headquarters has concluded. In a press release, the company says:
Amazon (NASDAQ: AMZN) today announced that it has selected New York City and Arlington, Virginia, as the locations for the company’s new headquarters. Amazon will invest $5 billion and create more than 50,000 jobs across the two new headquarters locations, with more than 25,000 employees each in New York City and Arlington. The new locations will join Seattleas the company’s three headquarters in North America. In addition, Amazon announced that it has selected Nashville for a new Center of Excellence for its Operations business, which is responsible for the company’s customer fulfillment, transportation, supply chain, and other similar activities. The Operations Center of Excellence in Nashville will create more than 5,000 jobs.
The announcement also discloses the incentives each community offered and the benefits the Amazon expansion will bring, including:
- As part of Amazon’s new headquarters, Virginia and Arlington will benefit from more than 25,000 full-time high-paying jobs; approximately $2.5 billion in Amazon investment; 4 million square feet of energy-efficient office space with the opportunity to expand to 8 million square feet; and an estimated incremental tax revenue of $3.2 billion over the next 20 years as a result of Amazon’s investment and job creation.
- Amazon will receive performance-based direct incentives of $573 million based on the company creating 25,000 jobs with an average wage of over $150,000 in Arlington. This includes a workforce cash grant from the Commonwealth of Virginia of up to $550 million based on $22,000 for each job created over the next 12 years. Amazon will only receive this incentive if it creates the forecasted high-paying jobs. The company will also receive a cash grant from Arlington of $23 million over 15 years based on the incremental growth of the existing local Transient Occupancy Tax, a tax on hotel rooms.
- As part of Amazon’s new headquarters, New York and Long Island City will benefit from more than 25,000 full-time high-paying jobs; approximately $2.5 billion in Amazon investment; 4 million square feet of energy-efficient office space with an opportunity to expand to 8 million square feet; and an estimated incremental tax revenue of more than $10 billion over the next 20 years as a result of Amazon’s investment and job creation.
- Amazon will receive performance-based direct incentives of $1.525 billion based on the company creating 25,000 jobs in Long Island City. This includes a refundable tax credit through New York State’s Excelsior Program of up to $1.2 billion calculated as a percentage of the salaries Amazon expects to pay employees over the next 10 years, which equates to $48,000 per job for 25,000 jobs with an average wage of over $150,000; and a cash grant from Empire State Development of $325 million based on the square footage of buildings occupied in the next 10 years. Amazon will receive these incentives over the next decade based on the incremental jobs it creates each year and as it reaches building occupancy targets. The company will separately apply for as-of-right incentives including New York City’s Industrial & Commercial Abatement Program (ICAP) and New York City’s Relocation and Employment Assistance Program (REAP).
GeekWire’s Monica Nickelsburg notes the evolution of the search, in which HQ2 became HQ2-A and HQ2-B.
Instead of the 50,000-person, $5 billion second headquarters Amazon promised when announcing the search for a second home more than a year ago, Amazon will split HQ2 in two. Amazon plans to open massive offices in the Crystal City neighborhood of Arlington, Va., and Queens in New York City.
“We are excited to build new headquarters in New York City and Northern Virginia,” said Amazon CEO Jeff Bezos in the official announcement. “These two locations will allow us to attract world-class talent that will help us to continue inventing for customers for years to come. The team did a great job selecting these sites, and we look forward to becoming an even bigger part of these communities.”
Both regions are already major hubs of activity for Amazon, and they signal that the fast-moving company wanted East Coast operations to counter its 45,000-person strong headquarters in the heart of Seattle. It also indicates that Amazon wanted a strong presence in two of the country’s power centers: the financial capital of New York and the political capital of D.C.
In another surprise twist, Amazon said it will also put a new “Operations Center of Excellence” in Nashville, Tenn., promising 5,000 jobs and more than $230 million of investment.
Amazon narrowed the contest to 20 finalist cities in January, then asked for reams of data and made whirlwind two-day site visits, during which cities tried to impress the company’s economic development team.
Then came the big surprise a week ago when the Journal reported that Amazon planned to split its second headquarters evenly between two locations rather than picking one city. The change in plans came after Amazon executives concluded it could recruit more of the best tech talent if it spread the office over two locations. And by halving the size, Amazon would help ease potential issues with housing, transit and other areas where adding tens of thousands of workers could cause problems.
The decision to split what was deemed one of the largest economic development projects in recent history triggered a flurry of criticism about Amazon’s original intentions but also fresh hopes. Some city officials said they would have tailored their proposals to match that need, while others said they thought it increased their city’s chances.
The split also raised questions about how equal the two new locations will be with Amazon’s current Seattle base, which employs more than 45,000 people.
Amazon’s growth in Seattle led to rising real estate values. The Seattle Times reports the HQ2 expansion is unlikely to change that much.
• Amazon already plans, essentially, to add another HQ2 here, as well: The company reportedly expects to add about 4 million square feet of office to both Long Island City, New York and Crystal City, Virginia, the HQ2 picks it’s expected to announce Tuesday. But based on plans already underway, Amazon already is committed to adding another 4 million in Seattle over the next several years – plus more in Bellevue.
• Amazon has 8,200 full-time jobs open in Seattle right now. For perspective, last month about 3,200 unemployed people in King County began actively searching for jobs…
“I do not see that there will be a tangible impact on housing,” said Matthew Gardner, chief economist for Windermere Real Estate. “All things being equal, Amazon is very unlikely to contract its employee base in Seattle any time soon.”
The winners, however, are already looking at a boost to the real estate market and seeing the emergence of a familiar Seattle story.
Anticipation that the online retail giant will open its new headquarters in this Northern Virginia neighborhood of hotels, high-rise condos and office buildings set off a flurry of real estate speculation — even before the official announcement from Amazon Tuesday morning.
But the coming influx of tens of thousands of highly paid tech workers could exacerbate inequality in the Washington region, making it more difficult for renters and first-time home buyers, housing advocates and others warn.
More in the Associated Press.