Published: Wed, November 14, 2018
Finance | By Kristine Clayton

Amazon chooses LIC and Crystal City for HQ2

Amazon chooses LIC and Crystal City for HQ2

The company confirmed on Tuesday it had selected the Long Island City neighbourhood of Queens and National Landing in Arlington, close to Washington DC, with each getting 25,000 jobs as part of a $5bn total investment.

It's official. Amazon on Tuesday announced New York City and Arlington, Virginia, as the locations for new headquarters.

"We expect HQ2 to be a full equal to our Seattle headquarters", said Jeff Bezos, Amazon founder and CEO.

Some consolation prizes were doled out amid the backlash, with Amazon announcing it would make Nashville, Tenn., a new Center For Excellence for its operations business, which is responsible for the company's customer fulfillment, transportation, supply chain and other activities.

Amazon said it will generate $10 billion in additional tax revenue in NY and $3.2 billion in revenue in Virginia over the span of 20 years. "It's truly a privilege for Savanna to have the opportunity to partner with Amazon in a transaction that has the potential for tremendous job creation for New York City, and we look forward to a successful execution that will bring extraordinary benefits to the neighborhood, the city and region as a whole".

Each city offered tax incentives to the e-commerce giant, including in NY where the company said it will receive performance-based direct incentives of $1.525 billion - meaning it won't receive money if it doesn't follow through on its promises.

Call it HQ2 times two.

The Long Island City space will span four million square feet, with an option to expand to eight million square feet if necessary, and is expected to generate over $10 billion Dollars (roughly $13.24 billion CAD) in tax revenue over the next 20 years.

"We've delivered on those promises and more, and today, with Amazon committing to expand its headquarters in Long Island City, New York can proudly say that we have attracted one of the largest, most competitive economic development investments in USA history".

In an effort to attract Amazon, cities and states promised billions of dollars of tax breaks and other inducements.

"There are places in the middle of the country that are thriving, and just because Amazon didn't pick them doesn't signal that the heartland is doomed", said Joseph Parilla, a fellow at the Brookings Institution's Metropolitan Policy Program.

The US online giant is to invest some $5 billion (€4.4 billion) in the two sites.

Amazon had stipulated that it wanted to be near a metropolitan area with more than a million people; be within 45 minutes of an worldwide airport; have direct access to mass transit; and have room to expand.

Amazon said the split would give it more geographic diversity for recruiting and could also help lessen congestion and cost-of-living increases that would have accompanied one bigger office. Splitting corporate command and control functions among multiple headquarters would be an unusual move, and outside observers speculated that the company may, at some point, choose to locate specific business units in each city, or spur that change by relocating a top executive.

But the new headquarters will be split between Long Island City, New York and Crystal City, Virginia, Amazon said in a news release.

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