Amazon picks NYC and northern Virginia as HQ2 winners

After a year of hype and anticipation, Amazon picked not one, but two locations for its HQ2 project.

The world’s largest online retailer on Tuesday selected Long Island City in New York City’s Queens borough and National Landing (a new name for the Crystal City neighborhood) in Arlington, Virginia, outside Washington, DC. The picks, which were already widely anticipated for the past week, are expected to each land 25,000 well-paid jobs.

“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 CEO Jeff Bezos said in a statement.

Amazon also said it has selected Nashville to host a new 5,000-person “center of excellence” for its operations business, which handles customer fulfillment, transportation, supply chain and other activities. It plans to start hiring at all three locations next year.

New York is offering Amazon $1.525 billion in incentives, and Virginia $573 million, pegged to the company’s proposal to create 25,000 jobs at each location. Tennessee is offering up to $102 million for 5,000 jobs. As part of these agreements, the positions in all three cities will need to have an average wage of $150,000, Amazon said.

In New York, Amazon agreed to donate a site for a new primary or secondary school, and fund infrastructure improvements and green space.

Tuesday’s decision got positive responses from Virginia’s public officials, who said they plan to use the new site to build up the area’s tech jobs. New York City Mayor Bill de Blasio and Governor Andrew Cuomo, both Democrats, lauded the plan. “This is a giant step on our path to building an economy in New York City that leaves no one behind,” de Blasio said in a statement.

New York City is about to get tens of thousands of new, good paying jobs and Amazon is about to meet the most talented workforce in the world in one of the most diverse places on the planet.

However, not all New York politicians were pleased with the situation. Alexandria Ocasio-Cortez, an incoming Democratic congresswoman representing Queens and the Bronx, was among several local leaders questioning the deal, tweeting: “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.”

After growing in Seattle over the past two decades, Amazon in September 2017 announced plans to create a second headquarters, dubbed HQ2, in North America. It set off a buzzy, reality-show-like contest among cities to snag the development. Amazon planned to announce by the end of this year where it would locate HQ2.

The size of the project is breathtaking: Over the next 15 to 17 years, Amazon said it planned to spend $5 billion to develop an 8-million-square-foot site and hire 50,000 employees. Those numbers are now split in half, with $2.5 billion in spending on 4 million square feet of space and 25,000 employees at each location. By comparison, Amazon’s Seattle headquarters, which spans 33 buildings, cost $3.7 billion to build and employs 45,000 people. The new locations will add to Amazon’s already rapidly growing staff of 613,300 people worldwide.

While the company first presented HQ2 as a “full equal to Amazon’s headquarters in Seattle,” some have already quibbled that Amazon is instead building two large regional offices, not two more headquarters.

Still, HQ2 serves as another sign of Bezos’ huge ambitions, with his company spreading from retail into entertainment, health care, cloud computing, robotics and artificial intelligence.

The project was so heavily sought after by local politicians that Amazon was offered billions of dollars in potential incentives and serenaded with gifts, silly videos and over-the-top gestures. As part of his efforts to snag the project, Cuomo even said: “I’ll change my name to Amazon Cuomo if that’s what it takes.”

But it won’t be all puppies and rainbows for the cities that landed HQ2. Traffic and rents are expected to surge. Homelessness has become a persistent problem in Seattle after housing costs shot up. Some of those problems may be mitigated by splitting the project between two cities, but they’re unlikely to go away entirely.

Also, there’s always a chance Amazon’s big promises will fizzle, or its plans may change, resulting in far less investment and fewer jobs than promised.

Let’s run through some of the most pressing questions about HQ2 and what they could mean for Amazon and its future homes:

Why does Amazon want to build HQ2?

Earlier this year, a company spokesman said Amazon is looking to tap into a new talent pool, particularly in software development and related areas, “to continue hiring and innovating on behalf of our customers.”

With plans to hire 50,000 more people in high-demand fields, Amazon likely needed to look beyond Seattle. Competition for top talent with Microsoft and Boeing, as well as skyrocketing real estate prices, would make such a large expansion in Seattle difficult and expensive.

Amazon’s rocky relationship with its hometown is probably another factor. The city government this year imposed — then quickly repealed — a new tax on major employers. As the tax was being considered, Amazon paused some of its local expansion plans, which some saw as a hardball tactic to pressure Seattle’s government. Many locals are critical of Amazon’s fast growth, which has resulted in more jobs and a stronger economy, but also higher housing costs and more traffic. Amazon said it wanted to find a “stable and business-friendly environment” for its next home, which some might read as, “friendlier to Amazon than Seattle.”

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