Amazon finally reveals choice for its new headquarters

Thursday, 15 Nov, 2018

Amazon will build offices for up to 25,000 people in New York City's Queens borough and in Northern Virginia, near Washington, DC, which brings to a close a year-long bidding war for a second headquarters that will now be divided across the two locations. But the influx is sure to swell already-high home prices and apartment rents and could overwhelm public transportation systems.

Amazon will get "performance-based direct incentives of $1.525 billion" over the next decade based on creating 25,000 jobs in Long Island City, according to the company.

Amazon has set its sights on two of the nation's largest and most powerful metro areas, announcing Tuesday it had chosen a buzzy NY neighborhood and a suburb of Washington for its new East Coast headquarters. It may not only be the home for firms promising 50,000 or more jobs, but Dallas could also be the place that five companies choose to locate (or relocate) creating 10,000 jobs apiece.

"It's ambiguous for the winners, not good for the "losers" and not good at all for the nation", said Mark Muro, a senior fellow at the Brookings Institution. The Foxconn deal, which has since grown even more expensive, has produced a public backlash in Wisconsin.

As part of its promise to Amazon, Virginia will pay to construct a second entrance to the new Potomac Yard Metro station, a project that had been controversially and quietly cut earlier this year due to cost concerns.

While Virginia's offer seemed in line with many other public bids for the number of jobs, LeRoy said, NY has always been among the most generous in terms of giving tax breaks. Taiwanese manufacturer Foxconn, for example, received $4.8 billion in subsidies for a plant in Wisconsin on which it broke ground this year. "Boston just didn't have the strategic advantages, or the volume of workers, that Amazon was looking for".

If the city, DISD and local college and universities were prepared to make a sizable investment to create a mechanism for providing the kind of engineers required by Amazon, they should be prepared to follow through with that investment regardless of the decision by Jeff Bezos.

Namely, Kim said, some of the $34.8 billion in student debt held by New York City residents who have paid taxes, worked, raised families, and contributed to the economy in the state for years could be wiped out for what Gov. Andrew Cuomo and New York City Mayor Bill DeBlasio have happily agreed to pay Amazon. That's based on a tax credit of $3,000 for each new employee. This decision comes after more than a year of Amazon playing the options game, hearing what pretty much every city in America was willing to offer, behind closed doors, protected by the confidentiality of non-disclosure agreements.

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Already, a NY state legislator has signaled he plans to introduce a bill to block the deal by phasing out the economic incentive statutes upon which the agreement is based.

"I don't think we should expect a similar jump", Terrazas said.

Shares in property companies expected to benefit shot up after rumours of Amazon's selections circulated this month. Real estate agents say they're hearing from investors who'd like to become landlords and from sellers who've chose to pull their homes off the market, sit back and wait for prices to go up, up, up.

While the incentives offered to Amazon are sizable, some of the other locations hoping for the nod had offered more.

"It's changed from a buyers' market to a sellers' market just like that", said Rosa, a broker with Douglas Elliman Real Estate.

As word spread in the last few weeks that Crystal City was on the shortlist to land Amazon, housing demand has skyrocketed.

In exchange, the e-commerce giant is due to receive more than $2bn (£1.9bn) worth in tax benefits and other incentives from the state and local governments. The agreement with the state doesn't spell out the structure of the deal with Plaxall, except to indicate that ESD will acquire the properties for a dollar and then transfer them to Amazon.

"It's really a no-brainer", Fuller said.