Amazon Selects New HQ Sites in NY and VA
Seattle-based online retailer selects two east coast cities for its latest headquarters.
After the year-long search for Amazon’s second headquarters, instead of choosing one city, the company selected both the Long Island City neighborhood in New York City and the Crystal City area of Arlington, Virginia, a suburb of Washington D.C. The Seattle based online retailer chose these two locations because of the skilled workforce found in these metropolitan areas. In addition, Amazon decided to create a new operations center in Nashville, Tennessee. Amazon expects the new investment to produce 50,000 jobs and more than $5 billion in capital spending within the metropolitan areas. This large amount of capital invested makes these headquarter selections some of the most influential real estate decisions in the United States.
Jeff Bezos, the founder and CEO of Amazon, initially desired the new headquarters to be the same as the current Seattle location which currently occupies 8 million square feet in 33 buildings. However, since Amazon’s plans evolved into having two locations, people speculate that Crystal City and Long Island City will receive half the expected employees and capital spending. Amazon has not publicly stated how the operations between the two locations will be shared.
What is certain is the economic benefit to the Nashville area created by the new operations center. The city will receive 5,000 full-time jobs with an average wage of $150,000 per year, $230 million in investments, 1 million square feet of office space, and incremental tax revenue greater than $1 billion over the next 10 years. Amazon is also receiving numerous performance-based incentives totaling $102 million due to the large amount of new high paying jobs within the area. For example, over the next seven years, Amazon is receiving a cash grant from both the state of Tennessee and city of Nashville totaling $80 million for the newly created 5000 jobs. The company will also receive a tax credit of $4,500 for each new job over a seven-year span to offset franchise and excise taxes.
The Crystal City location in Arlington makes logical sense for Amazon due to office space being readily available, the campus’s proximity to Ronald Reagan National Airport in Washington, D.C., and ease of public transportation. JBG Smith is the predominant landlord and developer within the area, so Amazon’s next step is only a negotiation with the development firm. Like Nashville, the retailer expects to create 25,000 new high paying jobs, a 4 million square feet office space, and an incremental tax revenue of $3.2 billion over the next 20 years. Numerous financial incentives are also expected totaling $573 million for the company, with additional investments of $195 million to the campus’s surrounding infrastructure and neighborhoods.
Long Island City, the neighborhood within the Queens borough, beat out other New York City boroughs because it is closer to both air and highway transportation. Queens also boasts turnkey office space with millions of square feet of land available for future expansion. 25,000 new jobs, a 4 million square feet office space, $2.5 billion in area investment, and an incremental tax revenue of $10 billion over the next 20 years is expected for the Long Island City neighborhood. $1.525 billion in incentives and the New York State’s Excelsior Program tax credits will be utilized by Amazon to offset expenses.
Amazon creating a second headquarters was described by some political leaders as “the greatest economic development opportunity in a generation.” In Seattle, Amazon spurred job growth, revitalized neighborhoods, influenced the urban residential boom, and inspired other tech companies to open satellite offices in the Seattle area. The rapid growth however did strain the Seattle housing market and further congested highways and public transportation. Despite the few pitfalls, the economic impact for both Crystal City and Long Island City will be overwhelmingly positive.