Amazon splits HQ between New York and Virginia

After a year of searching, Amazon has announced the locations for its second and third headquarters: Crystal City in northern Virginia, and the Long Island City neighbourhood of Queens in New York City. These details – along with the somewhat unusual decision to co-locate headquarters in two cities – surprised few as the news had been extensively leaked in the days prior. What had not been leaked was the selection of Nashville, Tennessee, as a third investment site. In this city, Amazon will locate a new centre of excellence for its operations business – namely for the company’s customer fulfilment, transportation, supply chain and other similar activities.

Amazon is dividing the expected 50,000 jobs equally between New York and Virginia, while the centre in Nashville will employ more than 5000 people. The company will invest $5bn across the two main cities and $230m in Nashville.

Amazon also announced the incentive packages it has received from the three states. In New York, it will receive $1.525bn based on the company creating 25,000 jobs in Long Island City. The jobs are expected to have an average wage of $150,000. In Virginia, Amazon will receive $573m based on the company creating 25,000 jobs with an average wage of more than $150,000 in Arlington. In Tennessee, Amazon will receive up to $102m based on the company creating 5000 jobs with an average wage of more than $150,000.

Eyebrows were raised when the news was first leaked that Amazon had decided to place its bets on more than one market. For close to a year jurisdictions had been grooming themselves as the ideal location for a mega-headquarters that could handle 50,000 employees. Amazon, though, reportedly felt that it could not source all of the tech talent it needed from one city – and that if it tried, labour would quickly price out of its budget.

By choosing two cities, Amazon will not drive up the cost of labour as much as it might have by focusing its demand in only one metro area, Heidi Learner, chief economist at Savills Studley, said. However, she added: “Amazon already has a significant presence in both the New York and Washington, DC areas – and these are already cities with tech-heavy employment – so I question to what extent it will be able to draw employees without poaching and paying up for talent.”

The lures of Crystal City – which will be referred to as National Landing going forward, at least by Amazon – and Long Island City are well known. They are very close to major central business districts with the requisite amenities that tech workers tend to prefer, but far enough away to have more flexible zoning requirements that Amazon may need to support its dual headquarters. Nashville’s charms may be less well known to some but with Amazon locating there that looks set to change. As mayor David Briley said, Amazon’s decision will “show the rest of the world that Nashville is a premier location for business investment”.