Amazon Confirms New York, Northern Virginia Picked For HQ2; Will Invest $5BN To Create 50,000 Jobs, Get Over $2BN In Incetives

As reported last night by the WSJ, moments ago Amazon confirmed that it has selected New York City and Arlington, Virginia, as the locations for its 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, according to a blog post. The new locations will join Seattle as 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.

“We are excited to build new headquarters in New York City and Northern Virginia,” said Jeff Bezos, founder and CEO of Amazon. “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.”

Some more details: the new Washington, D.C. metro headquarters in Arlington will be located in National Landing, and the New York City headquarters will be located in the Long Island City neighborhood in Queens. Amazon’s investments in each new headquarters will spur the creation of tens of thousands of additional jobs in the surrounding communities. Hiring at both the new headquarters will begin in 2019. The Operations Center of Excellence will be located in downtown Nashville as part of a new development site just north of the Gulch, and hiring will also begin in 2019.

For all those asking, here are the details of the Queens location:

Located just across the East River from Midtown Manhattan and the Upper East Side, Long Island City is a mixed-use community where arts and industry intersect. It is a diverse community with a unique blend of cultural institutions, arts organizations, new and converted housing, restaurants, bars, breweries, waterfront parks, hotels, academic institutions, and small and large tech sector and industrial businesses. Long Island City has some of the best transit access in New York City, with 8 subway lines, 13 bus lines, commuter rail, a bike-sharing service, and ferries serving the area, and LaGuardia and JFK airports are in close proximity.

Further from the post, 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.


So what does Amazon get in return?  The company 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).

As for the Northern Virginia location, 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.

In other words, investing $5BN to grow while getting over $2BN back in direct incentives, with potential upside for more.

Finally, Amazon dedicates a section of its blog post to answer "what role did economic incentives play in Amazon picking these locations and what incentives have been agreed?" and answers: "Economic incentives were one factor in our decision—but attracting top talent was the leading driver. Our agreements with each location may be downloaded:"

Read the full blog post from Amazon here.

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As previously leaked by the NYT and WaPo, moments ago the WSJ reported that Amazon has picked New York City (specifically Long Island City) and Northern Virginia as the homes for second and third headquarters, ending a 14 month public contest that started with 238 candidates and ended with a surprise split of its so-called HQ2.

Starting with a list of 238 candidate cities, Amazon narrowed the contest down 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.

Why did Amazon pick these two east coast venues? Because, according to a prior report by the NYT, Amazon already has more employees in those two areas than anywhere else outside of Seattle, its home base, and the Bay Area. The two cities are expected to add a combined 50,000 employees to the company's workforce which as of Sept 30 stood at just over 613,000 full and part-time employees.

The imminent announcement is expected as soon as Tuesday, according to the WSJ's sources. Other cities may also receive major sites, some of the people said.

Confirming previous reports, WSJ writes that Amazon is dividing the second headquarters evenly between New York’s Long Island City and Arlington County’s Crystal City neighborhoods, which are both located directly across from the major city centers. The decision effectively gives Amazon a major presence in three coastal cities.

The big surprise emerged one week ago when the Journal first 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.

Those wondering why Bezos decided not on one but two HQ2s, the answer is simple: money.

Picking multiple sites would allow it to tap into two pools of talented labor and perhaps avoid being blamed for all of the housing and traffic woes of dominating a single area. It could also give the company greater leverage in negotiating tax incentives, experts said.

And now comes the bad news: as Amazon’s search dragged on, residents in many of 20 finalist cities worried about the impact such a massive project could have on housing and traffic, as well as what potential tax incentives could cost the community. And New Yorkers, already tormented by some of the highest taxes in the nation, are about to find out, which is why Jeff Bezos may find the locals less than hospitable even before the foundations are laid.

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 some 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.

As for what's really in it for Amazon? The answer is simple: lots and lots of tax breaks.