Did Amazon’s Monumental HQ2 Choices Surprise You?
After 14 months of waiting, Amazon has finally announced the new locations for its East Coast headquarters. Rather than one central hub, the online-retail behemoth decided to split into two: Long Island City in Queens, N.Y., and Crystal City in Arlington, Va.—just outside of Washington. The company also plans to open a smaller location in Nashville, Tenn., which will become its Center of Excellence for its Operations business, which handles the company’s customer fulfillment, transportation, supply chain and other similar items.
Amazon plans to invest roughly $5 billion to construct the locations, and each building will house 25,000 employees (Nashville will have 5,000 employees).
“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.”
Though there were 20 contenders for the new location, it probably doesn’t come as much of a surprise that New York and Washington were chosen (yes, the physical address is in Virginia, but let’s be real—it’s basically D.C.). New York is to the East Coast what Silicon Valley is to the West Coast, and Bezos recently paid millions to own the Washington Post.
According to its website, Amazon was looking for a location with strong local and regional talent—particularly in software development and related fields. The site also notes that economic incentives played a part in the decision.
According to the New York Times, Amazon could receive more than $2 billion in tax incentives across the two locations. In New York, as much as $1.2 billion of that will come from the state’s Excelsior Jobs Program, a discretionary tax credit. Another $550 million in cash incentives may come from the state of Virginia, but that number depends on the amount of jobs Amazon creates. If it doesn’t reach the projected 25,000 employees, incentive payments will be smaller.
Margaret O’Mara, a historian at the University of Washington told the New York Times that the headquarters selection process was a “genius” move meant to extract more incentives from the vying locations.
“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.”