Business

New Amazon HQ split between New York, Washington suburbs

Wednesday, November 14, 2018

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WASHINGTON, United States (AFP) — Amazon announced yesterday it would split its “second headquarters” between New York City and the Washington suburbs, capping a yearlong contest that saw dozens of cities fight it out for the online giant's US$5-billion investment and 50,000 hoped-for jobs.

The chosen locations are Long Island City neighbourhood in the New York borough of Queens, across the East River from Manhattan, and the Crystal City section of Arlington in Northern Virginia, across the Potomac from the US capital.

“These two locations will allow us to attract world-class talent that will help us to continue inventing for customers for years to come,” Amazon chief executive Jeff Bezos said in a statement.

These will be new headquarters with equivalent status to Amazon's home in Seattle, in the north-western US state of Washington.

According to an Amazon statement, the company will receive “performance-based direct incentives of US$1.525 billion” over the next decade from New York based on creating 25,000 jobs in Long Island City.

“This is a giant step on our path to building an economy in New York City that leaves no one behind. We are thrilled that Amazon has selected New York City for its new headquarters,” said Mayor Bill de Blasio.

“New Yorkers will get tens of thousands of new, good-paying jobs, and Amazon will get the best talent anywhere in the world.”

BIG WIN OR NOT?

Virginia will offer US$550 million in incentives over 12 years based on a similar number of job creations, contingent on adding the forecasted number of “high-paying jobs”, and Amazon will get another US$23 million from Arlington, where the company intends to create an entire new neighbourhood called National Landing.

“This is a big win for Virginia — I'm proud Amazon recognises the tremendous assets the Commonwealth has to offer and plans to deepen its roots here,” said the state's governor, Ralph Northam.

Amazon said in the same statement it would create a new logistical “centre of excellence” for “fulfillment, transportation, supply chain, and other similar activities” in Nashville, Tennessee, creating some 5,000 jobs.

The competition had been derided in some quarters as a “Hunger Games” contest pitting cities against each other, with rival bidders piling up offers of incentives for one of the largest and most successful global corporations.

New York Representative-elect Alexandria Ocasio-Cortez, whose constituency includes part of Queens, said it was unclear if the community would benefit from the massive corporate move.

“Amazon is a billion-dollar company. The idea that it will receive hundreds of millions of dollars in tax breaks at a time when our subway is crumbling and our communities need MORE investment, not less, is extremely concerning to residents here,” Ocasio-Cortez tweeted on Monday.

SHEER SIZE AND SCALE

Amazon's statement said it would create four million square feet (370,000 square meters) of office space in New York, with an option to double that, and that the overall investment would boost tax revenue by some US$10 billion over 20 years.

In Virginia, Amazon said it would invest US$195 million in infrastructure improvements including in mass transit, including a pedestrian bridge to the adjacent Reagan National Airport.

Amazon said it expected its investment would boost tax revenue for Virginia by some US$3.2 billion over the next 20 years.

Neil Saunders of the research firm GlobalData said the new locations make sense for Amazon as it seeks proximity to political power, fashion and technology talent.

Saunders said that “the sheer size and scale of Amazon and its interest across many areas of technology, retail, and various consumer services” suggest a need for multiple locations.

The analyst added that the split helps Amazon avoid a problem of too much growth or congestion in one location.

“Amazon's forecasted strong growth means it wants to avoid the issues it had in Seattle where its expansion caused problems with the supply of labor, property, and put pressure on general infrastructure,” he said. “Being able to balance growth across numerous cities will help alleviate such issues.”

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