After a year of highly publicized deliberations, Amazon has chosen two sites for its second headquarters (also known as “HQ2”): Arlington, Virginia and Long Island City, Queens.
Amazon has promised to invest $5 billion and hire 50,000 workers between the two locations. It will also build a smaller “Operations Center of Excellence” in Nashville, Tennessee (which will generate 5,000 new jobs). The company claims that the campuses will create “tens of thousands of additional jobs in the surrounding communities” once hiring and building begins next year.
Amazon fielded some 238 proposals from various governments that wanted HQ2 to land in their city. By early 2018, that list had narrowed down to 20 cities, including Boston, Pittsburgh, Philadelphia, Atlanta, and Newark, NJ. Those locations were heavily concentrated in the Northeast, where many cities already have the infrastructure and talent pools necessary to quickly spin up a massive tech headquarters.
By making the search for a second headquarters into a national competition, Amazon was able to land massive tax and spending concessions from cities. New York offered up direct incentives worth $1.525 billion, contingent on the creation of 25,000 jobs. These include a $1.2 billion refundable tax credit (which comes to roughly $48,000 per created job) and a cash grant of $325 million to develop the headquarters site.
And that’s not all. In exchange for these sweet tax write-offs, Amazon has promised to donate space for a “tech startup incubator” and a new “primary or intermediary public school.”
Meanwhile, Virginia will cough up $573 million in direct incentives, including a $550 million cash grant (which breaks down to $22,000 for each job), as well as investment in transportation infrastructure surrounding the headquarters.
New York and Virginia are already robust tech hubs. Although smaller cities competed for Amazon’s headquarters, it’s pretty clear in retrospect that the company was going to select someplace that could supply the necessary tech talent. Very few areas can quickly provide tens of thousands of tech pros.
For tech pros who live in New York City and Virginia, Amazon-related opportunities are about to multiply exponentially. That’s very good news for cloud, mobile, and e-commerce experts. However, it remains to be seen whether Long Island City and Arlington, both of which already suffer from severe traffic and infrastructure issues, will elegantly incorporate this influx of new workers and buildings. Unless New York City plans to repair and upgrade its subways, for example, another 25,000 workers in Long Island City could strain commutes for everyone.
And of course, there’s always the chance that the plans for HQ2 could go very wrong. Just look at Wisconsin’s negative experience with Foxconn, which transformed into a multibillion-dollar disaster.