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Amazon Announces New York and Virginia as HQ2 Picks

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Packages move along a conveyor belt at the Amazon.com Inc. fulfillment center in Robbinsville, New Jersey on June 7. MUST CREDIT: Bloomberg photo by Bess Adler.
November 13, 2018 11:21 am

SEATTLE — Amazon laid out its plans for two of the biggest economic development projects in the country on Tuesday, announcing that it will put major corporate outposts in New York City and Arlington, Virginia.

The two locations, in Long Island City in Queens and Crystal City in Arlington, just outside of Washington, will eventually house a total of more than 50,000 employees, the company said in a statement. It also said the new sites would require $5 billion in construction and other investments.
The company also said it would develop a smaller site in Nashville that will focus on operations and logistics.
The announcement capped a frenzied, 14-month competition among cities across the country looking to lure the tech giant for what executives had initially billed as a second headquarters, or HQ2. Many politicians saw it as an opportunity to remake their city or a neighborhood for the tech era. Critics warned against using public money to help one of the most valuable companies in the world and of the potential for higher housing costs and traffic problems.
Instead of choosing one site, Amazon decided to build two major outposts. The decision will let the company tap into the labor markets of New York and Washington and retain bargaining power with two localities for decades. In tandem, the new major sites will make Amazon one of the largest private tech employers on the East Coast and may, ever so slightly, help shift tech talent eastward, away from Silicon Valley and Seattle.
Amazon announced its search in September 2017 for what Jeff Bezos, the company’s founder and chief executive, said would be a “full equal to our Seattle headquarters.” Almost 240 locations submitted bids. They used marketing gimmicks — Tucson tried to send a giant saguaro cactus — and formal proposals like training programs and billions in tax incentives.
In January, the online retailer narrowed the list to 20 locations, with places in nine of the 10 largest regions in the country. In the end, Amazon chose to build in two affluent areas with deep benches of high-skilled talent — and where Amazon already had more corporate employees than anywhere else outside the Bay Area and its hometown, Seattle. Bezos also owns homes in both new areas.
The two locations have parallels. Both sit just across a river from the heart of an iconic metropolis. Both are also seen as having a lot of unfilled potential: Crystal City is a neighborhood filled with office buildings developed in the 1970s for defense contractors, but has had high vacancies after the Pentagon reorganized in the years after the Sept. 11 attacks. And Long Island City is a mixed neighborhood home to new apartment towers, low-rise manufacturing and the country’s largest public housing complex.
As the search dragged on, in some places the anticipation turned to antipathy and anxiety, with residents concerned about how their regions could manage a potential housing shortage and congestion that could come with an influx of well-paid workers. Many regions also debated whether one of the largest companies in the world, run by the richest man in the world, needed taxpayer funds.
While Amazon’s criteria made clear that attracting a large, educated workforce was paramount in its search, its public competition, and the promise of $5 billion in investments, proved irresistible to the boosterism of elected and development officials around the country. Only a few places, including San Jose, California, and San Antonio, publicly declined to throw millions at the giant. Privately, even among the 20 cities on the shortlist, some officials admitted that they were unlikely to land the headquarters.
Amazon was always going to choose the best labor market, but the “genius of the HQ2 process” was the competition that let it squeeze out more incentives, said Margaret O’Mara, a historian at the University of Washington.
“This has been a hallmark of Amazon and other tech companies since the very beginning,” she said. “They have been unwilling to pay any tax unless they absolutely have to, and they have leveraged their market power and the psychic place they hold to get away with it.”