Amazon has confirmed it would invest $5 billion and create 50,000 new jobs in two new headquarters in New York and Northern Virginia, ending a frenzied year-long bidding war among cities across North America.
As reported by Reuters earlier, the company also announced an additional investment in Nashville, Tennessee that would include 5,000 new corporate jobs. The new Washington, DC metro headquarters in Arlington will be located in National Landing, and the New York City headquarters will be located in the Long Island City neighbourhood in Queens, Amazon said in a statement.
Hiring at both the new facilities will begin in 2019. The world’s largest online retailer started a bidding contest in September last year to attract proposals from cities to build a second headquarters, dubbed “HQ2” that would be an equal to its Seattle office, which spans 8.1 million square feet in 33 buildings.
Regions and cities in 43 US states submitted bids, along with several provinces in Canada and from Puerto Rico. The headquarter split will give Amazon more diversity for recruiting and could also help lessen congestion and cost-of-living increases that would have accompanied one bigger office. The company has already had to navigate similar issues at its more than 45,000-person urban campus in Seattle. An affordable housing crisis there prompted the city council to adopt a head tax on businesses in May, which Amazon helped overturn in a subsequent city council vote.
The particular neighbourhoods chosen by Amazon for its “HQ2” offer lower rents and more attractive zoning than central business districts nearby, a Brookings Institution report said. However, the split could also mean economic benefits for the hosts will be muted relative to expectations, especially given the selected cities’ size versus some of the other contenders. The two areas already have relatively low unemployment rates, and Fitch Ratings has noted that even a full HQ2 represented only 1.5 per cent of the Washington area and 0.5 per cent of the New York area’s labour force.
Some critics had pushed for more transparency from cities and states in the bidding process, warning that the benefits of hosting a massive Amazon office may not offset the tax-payer funded incentives and other costs. Amazon says it has helped boost Seattle’s economy indirectly by $38 billion between 2010 and 2016. Construction and service work increased there, catering to the retailer, and the company says it helped attract other Fortune 500 businesses to Seattle.
Amazon has already been awarded more than $1.6 billion of state and local public subsidies across the United States since 2000, with most of that after 2012, according to a database from the Washington-based government watchdog Good Jobs First.
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