Amazon picks NYC, Washington DC area for new offices

November 14, 2018 09:28
New York Governor Andrew Cuomo and city mayor Bill de Blasio speak during a news conference on Monday about Amazon's headquarters expansion to Long Island City. Photo: Reuters

Amazon announced on Tuesday that it will build new offices in New York City and in an area just outside Washington, D.C., splitting its second headquarters, or HQ2, between the two locations.

Branching out from its home base in Seattle, the online retail and tech giant aims to spend US$5 billion on the new offices in Long Island City and Arlington, Virginia, and hopes to create more than 25,000 jobs in each location, Reuters reports.

The company expects to get more than US$2 billion in tax credits and incentives, and plans to apply for more. 

Amazon said it will receive performance-based incentives of US$1.525 billion from the state of New York, including an average US$48,000 for each job it creates.

It can also apply for other tax incentives, such as New York City’s Relocation and Employment Assistance Program that offers tax breaks potentially worth US$900 million over 12 years, according to the report. 

In Virginia, Amazon will receive performance-based incentives of US$573 million, including an average US$22,000 for each job it creates.

The company already has large corporate workforces in greater Washington and New York. Apart from the two US East Coast locations, Amazon said it will open a 5,000-person center in Nashville, Tennessee, that will focus on technology and management for retail operations. 

At the outset of its search for new office locations last year, Amazon said it was looking for a business-friendly environment.

The prize, which Amazon called HQ2, attracted hundreds of proposals from across North America in a year-long bidding war that garnered widespread publicity for the company. 

With more than 610,000 workers worldwide, Amazon is already one of the biggest employers in the United States and the world’s third-most valuable company, behind Apple and Microsoft.

Still, it faces fierce competition for talent from Google and other companies working to build new technologies in the cloud. 

Marketing its forthcoming location in the New York City borough of Queens, Amazon talked up Long Island City’s breweries, waterfront parks and easy transit access. Rents there are typically lower than in Midtown Manhattan, which is just across the East River. 

The choice of Arlington, Virginia, just across the Potomac River from downtown Washington D.C., could hand Amazon greater political influence in the US capital, where it has one of the largest lobbying shops in town.

Locating close to the Pentagon may also help Amazon win a US$10 billion cloud-computing contract from the US Department of Defense, Reuters quoted Michael Pachter, an analyst at Wedbush Securities, as saying.

Amazon says it has invested US$160 billion in the United States since 2010 and that the new offices will generate more than US$14 billion in extra tax revenue for New York, Virginia and Tennessee over the next two decades.

It expects an average wage of more than US$150,000 for employees in each new office.

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