Amazon HQ2 headed to NYC and Arlington, VA

Nov. 14, 2018

Ever since Amazon announced it was planning to build a second world headquarters somewhere in North America back in September 2017, there’s been rampant speculation about where the technology and e-commerce giant would choose to put its much-coveted HQ2.

On Tuesday, that question was finally answered as Seattle, WA-based Amazon revealed it will divide HQ2 between two sites—New York City, and Arlington, VA. A press release from Amazon Tuesday said it is investing a combined $5 billion in the project, creating more than 50,000 jobs between the two sites, including more than 25,000 employees at each.

The Arlington headquarters is to be located in National Landing, which Amazon describes as a “newly branded neighborhood encompassing parts of Pentagon City and Crystal City in Arlington and Potomac Yard in Alexandria.” Meanwhile, the New York City headquarters will be located in the Long Island City neighborhood of Queens.

“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.”

Additionally, Amazon picked Nashville, TN to place a new Center for Excellence for its Operations business, which the company said is responsible for its customer fulfillment, transportation, supply chain, and other similar activities. The downtown Nashville facility will host more than 5,000 jobs.

Amazon said the investments in each new headquarters will spur the creation of tens of thousands of additional jobs in the surrounding communities, and that hiring at both locations and Nashville will begin in 2019.

Amazon narrowed its HQ2 candidates to 20 cities this past January, and the overall 14-month competition among those sites involved elaborate proposals from city officials aiming to land a tech hub. Those proposals included large tax breaks for Amazon, and that’s what Amazon ultimately will get. Amazon will receive combined performance-based incentives of $2.01 billion from NYC and Arlington. Here’s what the company stated:

New York City“Amazon will receive performance-based direct incentives of $1.525 billion based on the company creating 25,000 jobs in Long Island City. This includes a refundable tax credit through New York State’s Excelsior Program of up to $1.2 billion calculated as a percentage of the salaries Amazon expects to pay employees over the next 10 years, which equates to $48,000 per job for 25,000 jobs with an average wage of over $150,000; and a cash grant from Empire State Development of $325 million based on the square footage of buildings occupied in the next 10 years. Amazon will receive these incentives over the next decade based on the incremental jobs it creates each year and as it reaches building occupancy targets. The company will separately apply for as-of-right incentives including New York City’s Industrial & Commercial Abatement Program (ICAP) and New York City’s Relocation and Employment Assistance Program (REAP).”
Arlington“Amazon will receive performance-based direct incentives of $573 million based on the company creating 25,000 jobs with an average wage of over $150,000 in Arlington. This includes a workforce cash grant from the Commonwealth of Virginia of up to $550 million based on $22,000 for each job created over the next 12 years. Amazon will only receive this incentive if it creates the forecasted high-paying jobs. The company will also receive a cash grant from Arlington of $23 million over 15 years based on the incremental growth of the existing local Transient Occupancy Tax, a tax on hotel rooms.”

At my previous publication, Industrial Distribution, Amazon is a huge topic of discussion, as Amazon has continued to encroach on the business supply market that industrial distributors had previously carved out their own niche for. Now, they’re debating whether Amazon is a friend or foe as they worry about OEMs choosing to sell directly on Amazon instead of utilizing distributors as their primary sales channel. It’s the same case in electronic test & measurement. A quick search for oscilloscopes on Amazon brings up 20 pages of product results, with many well-known T&M vendors represented. Amazon, and other e-commerce marketplaces are great resources for sales channels, whether it’s a primary channel, or just a way to sell excess inventory. Those e-tailers even allow business sellers to sell under a different name.

While Tuesday’s news of Amazon’s HQ2 site selections doesn’t directly impact the company’s influence as a T&M product sales channel, it certainly is yet another sign that Amazon’s presence in the marketplace will only continue to grow at a rapid pace. Plus, Amazon’s tech hub presence in its hometown of Seattle, along with operations in California’s Silicon Valley will now be complemented on the opposite U.S. coast. New York City and the Washington D.C. Dulles Tech Corridor area already host a significant amount of tech and software companies, and bringing in Amazon is sure to put that into hyperdrive.

How do you think Amazon headquarters in Long Island City and Arlington will impact those regions? Feel free to leave a comment.

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