Amazon has selected two locations for its new company headquarters: the Long Island City neighborhood of Queens, New York, and Crystal City, a neighborhood in Arlington, Virginia. The Wall Street Journal cited “people familiar to the matter.” Amazon was expected to make a formal announcement later on Tuesday.
The online retail giant received hundreds of bids from cities nationwide after announcing the desire to open a second headquarters in September 2017. Amazon predicted the second location would create 50,000 jobs for the chosen area. The company’s base in Seattle employs 45,000 people.
But ultimately, Amazon decided that it made more sense to open two additional locations instead of just one. The Wall Street Journal was the first to report on November 5 that Amazon had altered its plans and would split its investment between two cities. Amazon declined to comment when the news first began to leak.
The newspaper spoke to Jeff Finkle, President of the International Economic Development Council, who predicted that the new locations would become “just a regional office or a back office or a major office but not a co-headquarters” with Seattle.
Here’s what you need to know.
1. New York City Did Not Offer Extra Tax Incentives To Lure Amazon
New York City’s bid to Amazon was put together by the city’s Economic Development Corporation. The proposal offered 62.5 million square feet of space across three boroughs, 13 million of which were located in Long Island City.
However, New York City bucked the trend of other cities that submitted bids and did not offer extra tax incentives to attract Amazon. By comparison, nearby Newark, New Jersey offered Amazon $7 billion in tax breaks and other incentives. Montgomery, Maryland’s bid included $8.5 billion in financial incentives.
Despite that lack of extra incentives, New York City’s massive population appears to have been a major factor behind Amazon’s choice. The company expressed concern about being able to hire enough workers with the necessary tech qualifications. According to the New York Times, the city explained in its Amazon bid that the area has more than 300,000 workers in the tech industry, twice the number working in San Francisco. New York’s public transportation options was also appealing.
Amazon is already familiar with New York City and had been expanding its presence there. According to Curbed New York, the company leased 360,000 square feet in a 16-story building in west Manhattan. It serves as the home of Amazon Advertising. Amazon also has a massive fulfillment center located on Staten Island.
In the days leading up to Amazon’s announcement about a second headquarters, New York Governor Andrew Cuomo explained that he was doing everything he could to sway Amazon. He joked to reporters on Monday, November 5, “I’ll change my name to Amazon Cuomo if that’s what it takes. Because it would be a great economic boost.”
2. Crystal City, Virginia’s Proximity to Washington, D.C. Made it an Attractive Option for Amazon
Like New York City, Crystal City did not publicly disclose the contents of its proposal to Amazon. It was unclear if the city offered any extra tax incentives, as other cities did. But as pointed out by the New York Times, Virginia is viewed as a business-friendly state due to lower taxes and regulation.
Crystal City had long been considered a leading contender due to it being part of the greater metropolitan area of Washington, D.C. CEO of Amazon Jeff Bezos owns the Washington Post and has a home in the region. As reported by Forbes, Amazon was also likely attracted to the idea of being geographically close to lawmakers, as the company faces scrutiny over hiring and wages, and as politicians discuss antitrust legislation.
Crystal City and Queens, New York are both among the cities with higher costs of living, compared to other areas that submitted bids. But both could offer access to a large pool of potential high-tech employees. Crystal City’s location near Reagan National Airport and public transit system were also seen as attractive factors. In addition, there was plenty of office space available. Curbed reports that about one-fifth of its office real estate was empty. And one developer, JBG Smith, owns large portions of the land in Crystal City; the company has about 7 million square feet of commercial space. Working with one company could make it easier and quicker for Amazon to finalize plans.
3. The Decision to Split Between Two Cities Could Alleviate Housing & Traffic Concerns
Amazon’s decision to divide its investment between two cities, rather than selecting just one, was two-fold. As reported by the New York Times, people living in areas named as finalists expressed concern about the impact the company would have on their respective communities.
Amazon had promised to invest $5 billion and create $50,000 new jobs that would pay an average salary of $100,000. Not all of those jobs would be filled by current residents, no matter what city Amazon chose. That’s a lot of new people that would need housing. Extra traffic congestion was also a top concern among communities.
Splitting between two cities could expose Amazon to a larger talent pool. The Wall Street Journal, citing a source “familiar with the matter,” reported that company executives were concerned about being able to hire enough tech workers in one city alone.
4. Amazon Began Accepting Bids For HQ2 in September 2017 & Received Proposals From 238 Cities
The quest to become the site of Amazon’s second headquarters is more than a year in the making. The online retail giant began asking for bids in September 2017. The company shared that it received proposals from 238 cities, all hoping to secure the headquarters that is expected to generate 50,000 jobs for the selected region and as much as $5 billion in investment.
A large number of bids came from the east coast. The tri-state area of New Jersey, New York and Connecticut accounted for 20 of the proposals. 24 cities in Massachusetts also submitted bids, according to a list compiled by Quartz.
In January 2018, Amazon narrowed the list to 20 top contenders:
• Columbus, Ohio
• Los Angeles
• Montgomery County, Md.
• New York City
• Northern Virginia
• Raleigh, N.C.
• Washington, D.C.
5. Amazon Has Grown Quickly in Seattle & Needs More Space
Amazon had about 5,000 employees in its Seattle offices in 2010. In just eight years, that number has grown to 40,000 with workers occupying more than eight million square feet of office space. The Seattle Times reported in 2017 that Amazon occupied 19 percent of the office space in the city, more than the next 40 companies combined.
Rising home prices, rents and traffic issues have been blamed on Amazon’s growth. According to the Seattle Times, the rising prices pushed many workers further outside of the city limits, expanding the population of people commuting at least 90 minutes to work. That being said, the growth has also led to historically low unemployment rates.