SAN FRANCISCO (REUTERS) - Amazon.com picked America’s financial and political capitals for its split new headquarters, saying on Tuesday (Nov 13) it will build offices for more than 25,000 people each in New York City and close by Washington DC.
The world’s largest online retailer plans to spend US$5 billion (S$7 billion) on the two new developments and expects to get more than US$2 billion in tax credits and incentives, with plans to apply for more.
Its move ends a frenzied year-long bidding war among cities across North America, splitting the location between two finalists. In addition, Nashville, Tennessee, will become Amazon’s fourth-biggest US office outside Seattle with more than 5,000 corporate jobs focused on technology and management for its retail operations unit.
With more than 610,000 workers worldwide, Seattle-based 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 with Alphabet’s Google and other companies, which routinely offer free food and other perks in sunny California, seen by many as a better draw than Amazon’s relative frugality in rain-plagued Seattle.
“These two locations will allow us to attract world-class talent,” Jeff Bezos, the company’s chief executive and world’s richest person, said in a news release.
Already marketing its forthcoming New York location in Long Island City, just across the East River from Midtown Manhattan, Amazon talked up the neighbourhood’s breweries, waterfront parks and easy transit access. The former industrial area also has a clock counting down the hours until the end of US President Donald Trump’s first presidential term.
The choice of Arlington, Virginia, could hand Amazon greater political influence in the nearby US capital, where it already has one of the largest lobbying shops in town.
Bezos privately owns the Washington Post, which has written critical articles about Trump and, in turn, he has been a frequent target of broadsides from the president. The paper maintains full editorial independence from its owner.
Amazon’s choice largely bypassed the middle of the United States, where many cities had hoped for an economic boost and bid for the new jobs.
“My heart is broken today,” Dallas Mayor Mike Rawlings said.
Amazon already counts greater New York City and Washington among its biggest tech employee bases, after Seattle and the San Francisco Bay Area.
At the outset of the headquarters search last year, Amazon said it was looking for a business-friendly environment, in addition to help recruiting workers.
The company said on Tuesday it will receive performance-based direct incentives of US$1.525 billion from the state of New York, primarily for creating 25,000 jobs. That works out at US$48,000 per job.
It can also apply for other tax incentives, including New York City’s Relocation and Employment Assistance Programme that offers annual tax breaks of US$3,000 per job, potentially worth US$900 million over 12 years for Amazon. What benefit the company would actually get was unclear.
In Virginia, Amazon will receive performance-based direct incentives of US$573 million, based on 25,000 jobs at US$22,000 in benefits per head. Virginia Tech said on Tuesday it plans to build a US$1 billion graduate tech campus in Alexandria, just two miles from the new Amazon headquarters location.
Overall, Amazon will get a boost worth more than US$2 billion for the new offices, on top of US$1.6 billion in subsidies it has received from across the United States since 2000, according to a database from the Washington-based government watchdog Good Jobs First.
Amazon said it has invested US$160 billion in the United States since 2010, including in warehouses, data centres and employee compensation.
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, Amazon said. The company expects an average wage of more than US$150,000 for employees in each new office.
Amazon’s emphasis on new, high-paying jobs earned free publicity as it faced criticism for low wages in its sprawling warehouses.
Amazon earned US$148 million worth of media attention across the English-language press in the two months following the launch of its new headquarters search last September, according to media measurement and analytics firm mediaQuant.
Amazon had received 238 proposals vying to host its next home base after Seattle. New York and Virginia beat out 18 other finalists from a January short list, including Los Angeles and Chicago.
New Jersey made headlines early in the contest by proposing US$7 billion in potential credits against state and city taxes if Amazon located in Newark and stuck to hiring commitments.
Others with less money to offer took a more creative approach: the mayor of the Atlanta suburb of Stonecrest, Jason Lary, said he would create a new city from industrial land called Amazon and name Bezos its mayor for life.
In evaluating its options, Amazon drilled down into the quality of schools, a key factor in keeping workers satisfied. The company evaluated local test scores for college admission and met with superintendents to discuss education in science and math.
It was not immediately clear how negotiations unfolded once Amazon settled on multiple offices, which Reuters and other media reported last week.
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.
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 taxpayer-funded incentives and other costs.
“Amazon is one of the richest companies in the world, but you can’t put a price on community input, which has been missing throughout this entire process,” New York City Council speaker Corey Johnson said in a statement.
Amazon shares were up slightly in midday trade.