Published: Wed, November 14, 2018
Finance | By Loren Pratt

Cheers, fears as Amazon unveils headquarters plan

Cheers, fears as Amazon unveils headquarters plan

Its New York location will be in a neighborhood of Queens that sits directly across from midtown Manhattan, while its Virginia offices will be in a part of Arlington that local politicians and Amazon are calling National Landing, a made-up area around Reagan National Airport that encompasses Crystal City and Potomac Yard. The decision effectively gives Amazon a major presence in three coastal cities.

Finally, Amazon can also apply for New York City's Relocation and Employment Assistance Program (REAP), which could provide them with a $3000 credit for each employee who needs to relocate to work there. The housing market will be one aspect to watch as Amazon employees and executives start exercising the option to move to NY or Virginia, Bishop recently told KIRO Radio.

Instead, Amazon chose to expand its footprint to two places where salaries and home prices are relatively close to those of Seattle, its current sole headquarters city, said Aaron Terrazas, senior economist at the real estate firm Zillow.

The combined offer from New York State and New York City is considerably richer than the one offered by Virginia, and does not require approval by any local or state legislative body.

Amazon announced that its donating space for industrial businesses, a school, and green space in Long Island City-but those projects were all going to happen anyway as part of a development announced back in the summer of 2017. Both are waterfront communities away from overcrowded business districts, giving Amazon space to grow.

Amazon's requested perks include not just money, but a helipad at its planned new locations in Long Island City and National Landing - a tall order, given that Crystal City now falls within a flight restricted zone where the only allowed flights are those that go through the airport or have to do with law enforcement and the military.

Rather, Amazon's top priority was having access to a sizable pool of highly skilled employees, Farren said, and it likely would have chosen the same two locations even without the subsidies.

The decision ends an intense competition between North American cities to win Amazon and its promise of 50,000 new jobs.

It also led to a lot of free publicity for Amazon. Some city officials said they would have tailored their proposals to match that need, while others said they thought it increased their city's chances.

Amazon is the world's third-most valuable company, behind Apple and Microsoft, so attracting investment from the company is a big deal. The company has faced criticism over the past year that it was looking to fleece taxpayers with a public bidding process that pitted cities and states against one another. To do the deal, the public sites will be put under state control and leased to Amazon for the paltry sum of $850,000 a year, according to the agreement, which also includes a provision for a helipad that would allow Amazon executives to fly directly to and from the campus.

Of course, these are just the benefits of the deals Amazon did sign.

It also has brought additional scrutiny to potential incentives Amazon might receive to locate in certain areas. As well, the company will receive a cash grant of $US325 million.

Amazon hasn't explained how the money and jobs might be divvied up across two different sites.

What do the cities get in return for these payouts?

The choice of its new office sites follows Amazon's September announcement that it would raise its minimum wage for warehouse workers to $15 (U.S.) an hour.

Amazon's decision leaves a group of cities that expended months of resources and time without a clear reward. "No question, there will be pressure on these neighborhoods", Eric Gertler, who sits on the board of New York's chief economic development agency, told CBSN.

Amazon said it will spend $5 billion between both locations on construction and other projects.

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