Amazon HQ2

Amazon HQ2 is a planned corporate headquarters in Crystal City, Arlington, Virginia for technology company Amazon. HQ2 was announced in September 2017, and is an expansion of the existing headquarters in Seattle, Washington.

Amazon HQ2
Crystal City area of Arlington County, Virginia in 2005
General information
LocationArlington County, Virginia
Technical details
Floor area6,000,000 sq ft (557,400 m2) office (planned)[1]

50,000 sq ft (4,600 m2) retail (planned)[1]

2,100,000 sq ft (195,100 m2) under construction[1]
Design and construction
ArchitectZGF Architects[1]

Amazon intended to spend $5 billion on construction, saying that HQ2 would house 50,000 workers when completed.[2] The corporation also invited governments and economic development organizations to give the corporation tax breaks and other incentives to entice it to their locality. More than 200 cities in Canada, Mexico, and the United States eventually offered tax breaks, expedited construction approvals, promises of infrastructure improvements, new crime-reduction programs, and other incentives.[3] On January 18, 2018, a shortlist of 20 finalists was announced,[4] after which the candidate localities continued to detail or expand their incentive packages.

On November 13, 2018, Amazon announced that HQ2 would be split into two locations, with 25,000 workers at each: National Landing, a future neighborhood including Crystal City in Arlington, Virginia, and Long Island City in Queens, New York City.[5] Amazon also announced that downtown Nashville, Tennessee, would be the new "Center of Excellence" for its operations business, adding 5,000 new jobs.[6][7] Virginia will provide $573 million in tax breaks, $23 million in cash, and other incentives. New York planned to give Amazon tax breaks of at least $1.525 billion, cash grants of $325 million, and other incentives.[8] Amazon pulled out of the New York location three months later after opposition from some residents and local politicians.[9][10]

Background
Part of the Amazon headquarters in Seattle, under construction in 2015

Amazon was founded in 1994 in Bellevue, Washington, and moved to leased space in the SoDo neighborhood of Seattle. As the company grew, it went through a series of office moves around Downtown Seattle, until announcing a move to a purpose-built headquarters campus in the South Lake Union neighborhood, then a light industrial enclave undergoing urban renewal.[11] As of 2017, Amazon occupies 8.1 million square feet (750,000 m2) of office space in 33 buildings in Seattle, employing 40,000 white collar workers.[12]

Requirements

Amazon's request for proposals outlined several core requirements, as well as optional preferences.[13]

  • Metropolitan areas with a population of over 1 million
  • Within 30 miles (48 km) of a population center
  • Within 45 minutes of an international airport
  • Proximity to major highways and arterial roads 1–3 miles (2–5 km)
  • Access to mass transit routes
  • Up to 8 million square feet (740,000 m2) of office space for future expansion

Optional preferences included airports with direct flights to Seattle, New York City, San Francisco, and Washington, D.C., urban locations, and proximity to major universities.[14]

The deadline for Phase I bids was set at October 19, 2017.[15] A final site was planned to be selected and announced in November 2018, from a shortlist of 20 cities released in January.[4][13][14]

Bids

Submitted

As of October 23, 2017, 238 proposals had been submitted and received by Amazon, representing cities and regions from 54 states, provinces, districts, and territories.[3][16][17] The only U.S. states that did not have a locality that submitted a formal proposal were Arkansas, Hawaii, Iowa, Montana, North Dakota, South Dakota, Vermont, and Wyoming.[18] The Canadian provinces of New Brunswick and Saskatchewan also had no regions submit a bid, along with the Yukon Territory.[19]

Little Rock, Arkansas and San Antonio, Texas later withdrew their submission.[20][21]

Moody's Analytics published an analysis of bidding metropolitan areas and determined that Austin, Texas, ranks highest among Amazon's criteria, followed by Atlanta, Philadelphia, and Rochester, New York.[22] The New York Times also completed an analysis which found Denver to be the best site based on Amazon's criteria, followed closely by Boston and Washington, D.C.[23] Irish gambling site Paddy Power originally listed Atlanta as the odds on favorite to win HQ2, with 2-to-1 odds,[24] but as of January 2018, listed Atlanta and Austin as sharing 3-to-1 odds of winning Amazon HQ2.[25]

Promotional campaigns

Several cities and groups promoted their HQ2 bids by engaging in promotional campaigns and gimmicks, including offers and gifts to Amazon. Sun Corridor, a Tucson, Arizona economic development firm, sent a 21-foot saguaro cactus to Amazon in an attempt to promote the city's bid. The gift was rejected due to the company's corporate gifts policy, instead donating it to the Arizona-Sonora Desert Museum.[26] The city of Stonecrest, Georgia, a suburb of Atlanta, voted to de-annex 345 acres (140 ha) of land for Amazon to establish its own city named Amazon around its headquarters.[27]

Sly James, mayor of Kansas City, Missouri, purchased 1,000 products from Amazon, which he donated to charity. James wrote 5-star reviews for each one of them, in which every review mentioned positive attributes of Kansas City.[28] Primanti Brothers, a chain of sandwich shops based in Pittsburgh, offered free sandwiches to Amazon employees if they chose the city as their second headquarters.[28]

The city of Birmingham, Alabama erected several giant Amazon boxes and dash buttons around public areas. The dash buttons sent out pre-generated tweets to lure Amazon to the city.[28] New York City mayor Bill de Blasio announced that major landmarks in the city would be lit in orange to promote the city's campaign for HQ2.[28]

A group from Calgary sprayed messages onto sidewalks in Seattle's South Lake Union neighborhood urging the company to choose them.[28] During an Ottawa Senators hockey game, fans were encouraged to "make noise" for the city of Ottawa's Amazon bid.[15]

The neighboring American and Canadian cities of Detroit, Michigan and Windsor, Ontario submitted a bid together and campaigned the two cities to be the home of the new Amazon campus. With the headquarters being divided across the Canada–United States border, the company could take advantage of tax incentives offered by both Ontario and Michigan. Amazon would also be able to capitalize on the less restrictive Canadian immigration laws and the lower currency exchange of the Canadian Dollar.[29]

Contrary to other cities, Little Rock, Arkansas, purchased a full-page ad in The Washington Post "breaking up" with Amazon, where they described their decision to not submit a bid, while also touting the city's positive attributes.[30] A few days after the bid deadline, the campaign flew a banner plane over Seattle with the same message.[31]

Finalists
Amazon HQ2 final 20 cities

On January 18, 2018, Amazon announced its shortlist of 20 finalists for the HQ2 bidding process. The list focuses mainly on the U.S. East Coast and Midwest, with Los Angeles the only selection from the West Coast and Toronto the only one outside of the United States.[4][32][33]

Amazon began tours of its finalist cities in late February. Bidding cities also signed non-disclosure agreements with Amazon for the duration of the bid process.[42][43] According to an Amazon spokesperson, the NDA does not cover financial incentives that cities have offered.[44] NBC News reported in May that visits to the 20 finalists had been finished by Amazon.[45] In an interview in September 2018, with The Economic Club of Washington, D.C., Bezos said, "We will have a decision by the end of the year."[46]

Nashville offered $102 million in performance-based incentives, plus a cash grant of up to $15 million based on each new job added. In addition, the Tennessee government offered a cash grant of up to $21.7 million based on each new job added.[47]

In November 2018, The Washington Post and the Wall Street Journal reported that several finalists were in advanced talks with Amazon over the HQ2 decision, including the potential choosing of Crystal City in Northern Virginia.[48] Amazon Director of Economic Development Mike Grella wrote on Twitter that the leaker responsible for informing the newspapers was violating a non-disclosure agreement.[49] Grella also criticized media outlets for speculating on the winning bid for HQ2 based on the travel patterns of Amazon CEO Jeff Bezos, who owns The Post.[50] On November 5, 2018, it was speculated that Amazon was finalizing plans to divide HQ2 evenly among two locations: Crystal City in Arlington, Virginia, Long Island City in Queens, New York, or Dallas, Texas.[51][52][53] Amazon declined to comment on the New York Times and Wall Street Journal reports.[54]

Some of the finalists and rejected bids have used their Amazon proposals to attract investments from other multinational corporations.[55][56]

Criticism and opposition

Steven Strauss, a visiting professor of public policy at Princeton University[57] and an expert on economic development,[58] in an editorial in USA Today suggested that metropolitan areas should be cautious about bidding too generously to win the Amazon bid. He pointed to examples where companies have gone bankrupt or failed to follow up on expansion plans. Strauss also wrote that it was possible that cities could over-pay (the so-called "winner's curse") by providing an overly generous incentive package, which would turn out to be a money-losing proposition for the municipality if all the promised jobs did not materialize.[59]

Conservative and liberal advocacy groups voiced their opposition to various tax breaks promised by cities in hopes of luring Amazon.[60][61]

In early 2018, New York University Stern School of Business professor Scott Galloway predicted that HQ2 would be located in either the New York metropolitan area or the Washington metropolitan area; with the decision to create two locations, Galloway ended up predicting both correctly.[62] He repeatedly called the competition a "ruse" and a "con".[63] Galloway said that "the game was over before it started", claiming that the proximity to both Bezos' home and the capital made the DC area an obvious choice,[64] and that soliciting bids from places that they never intended to move to was solely to gain tax breaks.[63]

Former Seattle Mayor Ed Murray announced that he would begin conversations with Amazon about their long-term plans for the city, while the Seattle Metropolitan Chamber of Commerce characterized the announcement as a "wake-up call" to Seattle to improve the city's business climate.[65] Comparisons were made to Boeing's decision to move its corporate headquarters from Seattle to Chicago in 2001, which came as a surprise to Seattle.[66]

Jim Balsillie remarks that he was disappointed in W. Edmund Clark, the Wynne government czar in charge of the Toronto bid, when in 2017 the latter attempted to sell the buyer on "our competitive advantage... software programmers that cost 34% to 38% less than in the US... that's an edge the government is determined not only to maintain but to sharpen." Balsillie found this strategy to be "misguided... these strategies put our tech workers in a global race to the bottom, competing on cost with the salaries in Poland, Ukraine, and India."[67]

Winning bids

The selections of New York City and Northern Virginia for the HQ2 sites were confirmed early on November 13, 2018.[5][68] Amazon made the official announcement later that day.[69][70][6] In Amazon's announcement, a joint press release was presented by the Northern Virginia bidders that Amazon's HQ2 neighborhood location would officially be renamed "National Landing", which encompasses not only Crystal City but also the nearby areas of Pentagon City and Potomac Yard.[71] Amazon also announced its new operations in Nashville, Tennessee, in November.[72]

Long Island City
Long Island City, Queens, New York City, canceled second location of Amazon HQ2

The subsidies offered to Amazon in New York include performance-based direct incentives of $1.525 billion based on whether the company created 25,000 jobs. This included a refundable tax credit through the state's Excelsior Program of up to $1.2 billion, calculated as a percentage of the salaries Amazon expects to pay employees over the following 10 years. Additionally, the Empire State Development Corporation would give Amazon a cash grant of $325 million based on the occupancy rates of HQ2 buildings over in the following 10 years.[47][73] Under an agreement with New York City's government, half of the property taxes for the city's HQ2 campus would be waived, and the exempt amount would go to the city's PILOT (payment in lieu of taxes) fund to pay for infrastructure improvements in New York City.[74][75] Both states proposed that Amazon be given access to a helipad, and the New York state government also promised to upgrade infrastructure in conjunction with HQ2's construction there.[73]

Amazon was said to have chosen New York City as one of the sites for HQ2 because of the city's highly skilled pool of talent; existing tech, finance, and media industries; and strong university system, including Columbia University and Cornell Tech.[76]

Cancellation

After the HQ2 campus in New York City was announced, officials representing parts of Queens, such as U.S. Representative-elect Alexandria Ocasio-Cortez, Councilman Jimmy Van Bramer, State Senator Michael Gianaris, and Assemblyman Ron Kim, announced their disapproval.[77] Ocasio-Cortez, Van Bramer, and Gianaris all expressed concern that Amazon would receive tax breaks while critical infrastructure, such as the New York City Subway, was deteriorating, and the city's public school and health care systems were underfunded. In a Twitter post, Ocasio-Cortez raised further concerns about the affordability of housing in Queens, since housing prices around the HQ2 campus in Queens began rising in anticipation of the campus's construction.[78] Kim and Fordham University professor Zephyr Teachout wrote an opinion piece in The New York Times in which they stated that the city should "not offer incentives and giveaways to an internet giant known for squashing small businesses."[79] Politico reported that the Long Island City location would be built on land intended for 6,000 homes, including 1,500 affordable homes, to which State Senator Michael Gianaris said, "The more we learn about this deal, the worse it gets."[80]

On February 14, 2019, Amazon announced that it would cancel the planned Long Island City location due to opposition.[81] The company also said that it would continue developing the Crystal City and Nashville locations.[10][82] The New York Times reported that de Blasio and Cuomo were "blindsided" by Amazon's decision when informed by Amazon VP Jay Carney.[83] New York governor Andrew Cuomo blamed Democrats in the New York State Senate for the cancellation, and New York City mayor de Blasio said that Amazon "threw away that opportunity," by making the announcement.[84][85] In response, Ocasio-Cortez stated: "If we were willing to give away $3 billion for this deal, we could invest $3 billion in our district ourselves if we want to. We could hire more teachers, we can fix our subways, we can put a lot of people to work for that money if we wanted to."[86][87][88] Mayor de Blasio, among others, criticized her, and those who had made similar remarks, for suggesting the money, mostly in the form of tax credits, was now free to be spent elsewhere.[89] Activist organizations also argued that, in Amazon's absence, the original plans to build 6,000 homes should be re-adopted.[90]

In the weeks following Amazon's decision, Governor Cuomo phoned multiple Amazon executives and even Jeff Bezos, personally asking them to reconsider and guaranteeing them "support." The Partnership for New York City placed an open letter in The New York Times stating that Cuomo "will take personal responsibility for the project's state approval." The letter is signed by Hakeem Jeffries, Carolyn Maloney, Andrew D. Hamilton, David M. Solomon, David N. Dinkins, and Ajay Banga, among others.[91]

According to an interview with CNBC, Amazon's vice president of public policy Brian Huseman denied that politics rather than logistics were a factor in Amazon choosing to cancel its New York location.[92] In December 2019, Amazon announced that it had signed a new lease for 335,000 square feet (31,100 m2) of space in the Hudson Yards neighborhood to accommodate 1,500 employees. The company already has 3,500 tech employees in the New York City area.[93]

Northern Virginia
1770 Crystal Drive being renovated

National Landing is an area in Northern Virginia encompassing parts of the Crystal City and Pentagon City neighborhoods of Arlington County and the Potomac Yard neighborhood in the city of Alexandria that has been announced as the location for Amazon.com, Inc.'s HQ2 headquarters project.[94] While redevelopment efforts in the area had already begun as early as 2014, the cross-jurisdictional neighborhood was branded and announced as "National Landing" in 2018 as a part of local economic development plans to bring Amazon HQ2 to the area.[95][96] The announcement also included plans to build a graduate-school satellite university campus of Virginia Tech in the area.[97] The "National Landing" name derives, in part, from the area's proximity to Ronald Reagan Washington National Airport.[96]

The area includes an existing Washington Metro station at Crystal City as well as the planned Potomac Yard station.[98] The Virginia Railway Express (VRE) commuter rail system also has a Crystal City station. The Metroway, a bus rapid transit system, runs through the area, with 15 stations covering the area from Arlington's Pentagon City station to Alexandria's Braddock Road station (south of National Landing), with some of this route located in an exclusive busway. Future planning for the area includes a pedestrian bridge to connect National Landing to Reagan National Airport and improvements to the existing Metro rail stations.[99]

Virginia offered performance-based incentives worth $573 million, which included a workforce cash grant of up to $550 million, based on whether Amazon created 25,000 jobs. Arlington County would also give an additional $23 million in cash grants, to be disbursed over 15 years, contingent on the gradual increased revenue from a tax collected from the county's hotel rooms.[47][73]

By March 2019, two existing buildings in Crystal City, 1800 S. Bell Street and 1770 Crystal Drive (formerly 1750 Crystal Drive), were being extensively renovated to serve as temporary office space for Amazon, with smaller renovations being made to a third building, 241 18th Street S.[100][101]

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