Published: Wed, November 07, 2018
Money | By Bruce West

Amazon will split HQ2 between NYC, Washington DC, reports say

Amazon will split HQ2 between NYC, Washington DC, reports say

The company had said it will eventually want as much as 8 million square feet of office space to augment Amazon's original headquarters in Seattle.

Even adding 25,000 new employees would strain a city, he says.

The company sent cities across North America into a frenzy previous year when it announced its search.

Reports that Amazon may split its new headquarters between two locations is raising questions about the financial incentives offered by those cities bidding to become the new hub.

Sources familiar with the matter tell The New York Times that Amazon has shifted gears and is now finalizing plans to build two new headquarters, one in Queens and another in the Crystal City area of Arlington, Virginia.

A company spokesman, Adam Sedo, reached by phone in Seattle said that Amazon would not comment on "rumors and speculation". The company had been accepting proposals for its new facility, which is expected to cost around $5 billion. The Times also said that NY state had offered potentially hundreds of millions of dollars in subsidies, according to an unnamed source. Long Island City was considered for the location, along with 20 other finalist cities.

The company's current market value is about $800 billion and analysts estimate Amazon will generate more than $230 billion in sales this year, according to FactSet.

"You could look to Seattle and see that it's had great positive consequences, but it also probably has had some unintended ones that maybe aren't as well received", SunTrust Robinson Humphrey Inc. real-estate analyst Michael Lewis said.

Long Island City and Crystal City would meet Amazon's requirements for a new locale: Both are near metropolitan areas with more than a million people, have nearby worldwide airports, direct access to mass transit and have room for the company to expand.

What qualities is Amazon seeking for HQ2?

Selecting those areas would bring more jobs to places that already have plenty. "Memo to the genius leaking info about Crystal City, VA as #HQ2 selection. And stop treating the NDA you signed like a used napkin", tweeted Mike Grella, Amazon's Director of Economic Development.

The fact a company like Amazon with its vast resources is asking for government subsidies irks New York University's Stern School of Business professor Scott Galloway.

"What comes out of this is that we didn't catch the big fish but we've been catching a lot of smaller fish that are easier to assimilate into our economy and our business sector than it would have been to land a big whale like Amazon".

However, CNBC.com followed the Post story with its own report that a final decision is imminent and might come down to Northern Virginia or Austin.

He does say that this endeavor could be beneficial for the city in the long run.

One of the other areas the online retail giant is considering is New York's Long Island City, according to a source familiar with the talks.

But Alec Karys, a startup adviser and investor, who briefly worked for Amazon in 2004, said the Virginia and NY moves "make no sense" to him. While those kinds of jobs would be fantastic to have in the future, "we need to add housing and transport first", added Wilcox, who previously ran the Billerica company E Ink, which supplies screens for Amazon's Kindle readers.

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